How do I know when to Replace my ERP?
By ArMand Nelson, Director of Retail Strategy, BTM Global
Enterprise resource planning solutions (ERPs) are an essential system for businesses that want to integrate and manage core businesses processes to improve efficiency and sales. And yet, companies that have grown or evolved in recent years may find that their current ERP can’t keep up.
As a NetSuite Alliance Partner, we see this often and work with companies to implement a modern ERP that offers more functionality and easy integration. But the decision to move to a new ERP can be a difficult one. When’s the right time to make the move? Can you just “get by” for now?
What a modern ERP delivers
Compared with ERP systems of the last 10-15 years, modern ERPs have made significant strides when it comes to integration and ease of use. For example, all database ties are links between tables, so there’s no need to spend time linking a database. Point-of-sale (POS) and websites talk with the one database, and users have far more choices when it comes to determining and automating exceptions, roles and reporting.
How to know when it’s time to replace your ERP
A lot of factors go into deciding when to switch out your ERP for a modern system. The more efficiencies to be gained, money and time to be saved, and customer improvements you can identify, the easier the decision will be. Here are a several clues that it may be time to implement a new ERP for your organization.
Your data is everywhere
Like papers scattered across an office floor, business data comes from many sources. You’re dealing with POS data, ecommerce data, vendor data and customer data. Visibility is murky, and reporting is a complicated and manual effort that requires a lot of spreadsheets.
A modern ERP system integrates all of this for you in one spot; one data model with the apps built in and integrated out-of-the box. Users can access and pull the data they need, build their own customized reports, and get better clarity into exactly what’s happening within the business.
Lack of automation
Switching to a new ERP will gain you dashboards that can be customized to the data each user needs for their daily work – no more digging through files to gather the numbers.
For example, a dashboard can be created to automatically display exceptions, such as which products are selling below cost or aren’t making margin targets. Users can drill down to discover the why behind the numbers; maybe the item is marked with the wrong price at a store location, for instance.
Clunky systems slow you down
Your current ERP vendor may promise new functionality that’s right around the corner. But if the ERP is built on an old platform, the upgrade and functionality will never be as easy or streamlined as a wholly re-imagined, modern system.
Let’s look at the COVID pandemic and the retail industry as an example. Although lots of retailers offer buy online/pick-up in store options, most people scaled back their visits to brick-and-mortar locations in 2020. So retailers implemented buy online/ship from store options, which was easy for those with the right ERP but a herculean effort for those relying on an old system.
Poor reporting, poor planning
Today’s ERPs deliver data elements you need to hold and report on, such as item attributes, secondary suppliers, related items, kits and serialization. The latter is especially important if you sell items that need to be tracked, like TVs or firearms.
Reporting goes hand-in-hand with more accurate planning; your current ERP may tell you that you need to order more product, but a new ERP will tell you how much of that product you need to buy and where it should be shipped based on the current rate of sale.
Fixed data types that hamstring ecommerce
The ability to create and attach more item attributes will improve your customers’ online shopping experience. New ERPs can hold more attributes than older systems, including the secondary supplier attribute for sites that sell from more than one vendor. Additionally, the ability to relate one item to another – such as suggesting golf tees if someone shops for golf balls – helps drive sales and makes online shopping faster and easier for customers.
Audit trails and manual tasks
How many manual AR/AP tasks could you automate? With a new ERP, you’ll be alerted to billings that don’t match receiving records. For records that do match, payments can flow through automatically without the need for human involvement. Instead, your teams can focus on more strategic areas of the business or customer-facing initiatives.
If your audit trailers are incomplete or riddled with errors, a modern ERP will change that. A complete audit trail will help you determine who did what, where data may not match up, and ensure you’re following all financial and industry regulations. No more guesswork or finger-pointing.
You decided you need a new ERP. What’s the next step?
First, identify which areas of your business need the most improvement – such as merchandising, replenishment, or forecasting – and then determine the functionalities you absolutely need within those areas. You may be tempted to claim that EVERY area is important, and that may be true. But to begin, what are you lacking today that is preventing you from growth? As you look at potential ERP systems, focus on those areas and what the new system can deliver within each one.
Ensure any new ERP can do 80-to-90 percent of your core functions, but the system might not do it exactly the way you perform the functions now. You may have to change business processes to match the new ERP; if not, you’ll spend more money and time in modifications with your implementation partner. Modifications can certainly be necessary, but think hard about what you can adjust to save you time and money.
Ultimately, finding a good ERP implementation partner is important for helping to guide you through how best the ERP can fit your business now and far into the future.
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