Should I Fix or Replace My Old Truck? What About My Old ERP System?

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Here’s the problem. I like my old truck.  She’s comfortable. I know all her quirks and just how to rev up the engine to make sure she doesn’t stall at the traffic light. She’s gotten me almost everywhere I wanted to go, until lately. But, to get her fixed will cost me time and money. She may be all right and run pretty well afterwards.  I can probably get a few more years of loyal service out of her, but after spending that money I’m still faced with the same old hauling limitations, her antiquated safety features along with poor mileage. What is the tipping point/justification for getting rid of her and investing in a new truck?

These are similar issues facing a CEO when thinking about a new ERP system.  Sure, the old system can still process orders, collect cash and manage inventory.  But when you look under the hood, you find that the order entry people have to take “detours” to satisfy your customers’ requirements, outstanding AR is creeping higher, and inventory management is an uphill climb.  Does reporting your way really mean Excel or green bar reports, and maybe the info is “basically” right? 

The most effective approach to investigating a new ERP system is to develop a clear definition of your organization’s goals, objectives, strategic imperatives, and business requirements. Start out by asking your managers to provide a wish list of what they need to make their departments more efficient. The analysis should clearly prioritize and differentiate between the “must have”, the “like to have”, and the wish list items. Also, talk to others in your industry and do your own web research. Find out what is costing you money – and quantify it. Are your labor costs rising because of out-of-stock situations, or are your warehouse people running around looking for that new stock that just arrived?  Find out the industry averages for order turnaround.  Let’s exceed that which will result in more satisfied customers and increased revenue.   

There are two ways you can approach the vendor selection process. You gather all this information and ask three vendors to strut their stuff. The demos are all good with enough eye candy to wow the team. It’s a classic “features and functions” demo. So what is the probability of success under this scenario?  Pretty dismal.  According to the Standish Group, the project success rate is a not very encouraging 35%. A higher percentage of projects, 46%, are challenged. That’s defined as the expected benefits fell short of the vision, along with being over budget and over the projected implementation time frame.  The remaining 19% of projects are cancelled altogether.

To address these risks, our organization has developed an effective implementation methodology that inserts a diagnostic workshop in advance of gathering functional requirements. This approach ensures that both you and your advisors are crystal clear on the organizational goals and objectives, business strategies and expected business outcomes prior to crafting the solution. The output of this process becomes the beacon for guiding the project. 

The net result of this will be a business value assessment that will mitigate the risks and build a case for moving forward with the project or simply repairing that old truck for the time being. 

Have you come to that fork in the road? 

If your organization is located in the Arizona or New Mexico area, contact Sherwood Systems for assistance in determining if a technology solution can help your organization better serve your business needs. (877) 943-9696

By Ed Bonaski, Sherwood Systems – Arizona Microsoft Dynamics GP Partner

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