Say you bought your ERP software in 2019. Think about how much has changed in society since then. There has been a whole global pandemic and economic crisis' that have formed as a result. AI technology has grown and become a key factor in the business world. There is even a new head of the British monarch in King Charles after Queen Elizabeth passed away. You may think that your current ERP system is relatively new, but things change quickly.
Many businesses will acquire an ERP software system and feel that they have trapped themselves in a corner. It’s possible that the software didn’t include all the required functionality, it’s quickly grown outdated, or the vendor offers them poor support. Despite knowing that the software and/or the vendor is problematic, some businesses will continue to stick with it since they’ve already invested lots of time, money and resources into the chosen software.
What is ERP Software?
An ERP system is an all-in-one solution that integrates all of your operations together and automates manual processes. It’s a long-term investment into a system that will ultimately help speed up your processes, cut costs and be instrumental to your growth as a business. Prior to switching ERP systems, it's important to understand that ERP software should be all-encompassing. It helps you manage all of your business operations including accounting, inventory management, order entry, contact management, warehouse management and more.
What is the Goal of Switching Software?
The goal of switching to new ERP Software is ultimately to better align with your business objectives and maximize your ROI. You have to consider what your long-term goals are and how a software solution can help you reach them. In general, an ERP software should help you reach your business goals by:
- Integrating all aspects of business
- Growing with your business (scalability)
- Increasing productivity
- Improving customer service
- Optimizing data security
- Reducing operational costs
- Enhancing decision-making
Exploring new vendors/publishers
The software vendor evaluation process is crucial when searching for ERP software. As important as functionality is, the vendor is who you’re ultimately working with and who you will be depending on for implementation and support. You want to make sure that you are working with good people. Otherwise, you may be left dealing with unexpected costs, lack of proper support/training, failed implementation and more. Spend an ample amount of time researching vendors to ensure you find the right one.
The Sunk Cost Fallacy and Software Change
The sunk cost fallacy is known as a phenomenon in which someone is reluctant to abandon a course of action because they’ve invested too heavily in it, even though abandonment may be the best option. You might be under the belief that since you’ve already paid for a software solution, you might as well continue with it considering how much time and money you’ve spent.
The sunk cost fallacy is something many managers and decision-makers fall prey to. It stifles a business’ growth by discouraging them from adapting to change even when its necessary. It’s important, however, to always take the most profitable course of action despite your sunk costs, even if that means undergoing another ERP software change and implementation process.
Have you or anybody at your company made a similar statement to the one below?
“We need to get our money’s worth for our current ERP software, we don’t want to waste money investing in a new one.”
13 Reasons Why You Should be Switching ERP Software
It’s possible that with the knowledge you had at the time, your company made the decision they thought was best. Although you can’t undo any decision, you can still control what you do moving forward. Here are some reasons why it’s never too late to switch ERP software if you aren’t fully satisfied with it:
- Sleazy Sales Tactics By Your Current Vendor
- Lack of Real-Time Data
- Adapting to the Latest ERP Software Trends
- Industry Specific Functionality
- Multi-Channel Support
- Cloud-Based Software
- Barcode Scanning
- Manual or Incorrect Processes
- Integration Limitations
- User Friendliness
- Your Current Software is Discontinued or Bought Out
- Your Processes Have Changed
Sleazy Sales Tactics by Your Current Vendor
If your current vendor was dishonest with you during the sales process and exaggerated their software’s capabilities, then there is no shame in going with a new one. If you were made false promises or given false hope by a vendor, you owe it to yourself to learn from that experience and move on to a vendor that’s trustworthy. To prevent this from happening again, make it as much of a priority during the evaluation process to determine that a software vendor is reliable and honest as you would researching the software’s functionality.
Lack of Real-Time Data
If your ERP software is outdated, then it may lack real-time data and you will have to wait longer than you need to view necessary reports. This makes it harder to respond to changes in a timely manner and will ultimately slow down your decision-making process. For example, if a warehouse is close to running out of stock, it is critical for an inventory manager to access that information in real time so that they can replenish inventory immediately. This will ensure that they have enough stock to be able to meet demand and avoid low inventory levels. When decisions are unable to be made on time, your processes will become delayed, and it will ultimately take longer for your product to reach the hands of your customers.
Adapting to the Latest ERP Software Trends
There are many trends and new software developments that are constantly happening within ERP technology. Currently, many of the latest ERP systems include APIs for third-party integration, cloud deployment, personalization, and robust data analytics (etc). If your current vendor is slow to adapt to the latest trends or if they are providing updates at a high additional cost then, that can be an issue. Ensuring you choose a software vendor that has most of their updates built into their monthly costs is crucial to ensure that you can take advantage of the latest trends in ERP technology.
Industry Specific Functionality
Increasingly, more businesses need software that can fit their industry-specific needs. Pharma distributors for instance need to be able to comply with DSCSA regulations and others laid out by regulatory bodies such as the FDA and DEA. To do so they need serialization, suspicious order monitoring, and more industry-specific functionality. Likewise, food distributors also need to comply with trade regulations, and consumer protection laws and be able to trace products in the case of a recall.
The reason your software might be lacking industry-specific functionality could be that the vendor’s sales team didn’t do a good job of evaluating whether you would be a good fit. It’s important that you make sure the vendor’s sales team isn’t afraid to say “no” and regularly turns down prospects that wouldn’t be a good fit for their software. Any vendor that says that their solution works for all businesses is being dishonest as there is no such thing as a one-size-fits-all ERP solution. If your current software is not suitable for your specific industry, then it makes sense to switch to a software that is.
Successful businesses nowadays aren’t selling through one channel as multi-channel support is now expected by buyers. These channels include online orders from your own site, from marketplaces like Amazon or Shopify, from your retail brick-and-mortar locations, from sales reps in the field, and other retailers and distributors. Your current ERP software needs to provide functionality to help you take advantage of these different channels and seamlessly integrate them together. If your current software does not provide e-commerce integration, built-in POS functionality, and a B2B Online Ordering Portal (for B2B Businesses), then they are not helping you integrate your sales channels.
Many businesses are switching to Cloud ERP software because it provides increased data security, less costs in the long run, and fewer worries about updating or maintaining the infrastructure. If your vendor is not providing you with a cloud solution, and you instead have to rely on your own on-premises servers, then consider the long-term costs of on-premises software moving forward.
Wireless barcode scanning is an essential part of warehouse operations, yet only 60% of businesses currently have mobile capabilities. Instead of using pen and paper, barcode scanning allows you to easily automate the receiving, picking, packing and shipping process to reduce the time spent doing so and eliminate human error. Your current ERP software should allow you to easily and affordably integrate as it is essential to eliminate manual processes.
Manual or Incorrect Processes
If you’ve found that much of your staff is still having to do a lot of their work manually despite the investment into your current ERP software, then it’s possible that your software isn’t the right fit.
Say for instance your systems are not integrated and you have accounting and inventory data on separate systems, then you will be dealing with a lot of manual processes by having to rekey information. You also might have a lot of manual processes because the system your using is older and has no automated capabilities forcing you to manually pull reports.
Some automated processes that you currently have may also be incorrect processes. For instance, Quickbooks and other accounting systems may allow you to import transactions, which is not the best option for auditing purposes. You should not be using bank records as a transaction source, but instead the record of when you issue the initial invoice. Some systems also threaten your transactional integrity by allowing you to change transaction logs.
Another reason you might still be doing things manually is if your vendor cannot do the necessary out-of-box custom work to accommodate the unique needs of your business. Choosing a software solution that does almost everything you need it to on its own while being able to provide small pieces of custom work is necessary to avoid manual processes.
An ERP solution should be able to be easily integrated with other software. Your software is not an all-in-one solution if it lacks the APIs to be able to support third-party integration. If you find that there are important aspects of your business operations that are unable to be integrated with your current software then that can be problematic. For example, you might need to sign lots of electronic documents, and having to do so manually or through software that is not integrated with your ERP system can be cumbersome.
No matter how user-friendly software is you will need support from time to time. The support or lack thereof by the vendor can make or break software. There are many ways that a vendor supports their customers whether it’s through the initial training process, help-desk tickets, consultations, custom work (etc). It’s possible that the software may have been okay, but the support you’ve received thus far from your vendor has been generic and lacked personalization. You may have spoken to the same support person twice and they didn’t even remember your name or company!
It’s possible that your current software just isn’t user-friendly enough. A user-friendly system includes a sleek interface, easy accessibility to key features/tools, and access to custom reports. A user-friendly system will allow you to customize the interface to your needs by allowing you to pin modules and display the most important reports that you need. Vendors who truly care about providing a user-friendly experience for their customers will listen to them and apply their feedback.
Your Current Software is Discontinued or Bought Out
If your current vendor has discontinued their software and it is now sunset software then you should replace it, or you will risk being stuck in the past and miss out on newer software features. Without updates, you will also notice slower speeds and some areas of your software might not work as well as they once did. Not to mention, there is no support provided to you when software becomes sunsetted.
Your current software might have also been recently bought out from a larger company. If that is the case, it’s possible that your vendor might not be as helpful as they once were and provide the personalized support that you were used to.
Your Processes Have Changed
Your software might still be the same as it’s always been, but if your own business processes have grown beyond the software’s capabilities then it may be time for a change. Say for instance your business is shipping a lot more products in and out of your warehouse than you were when you first started with your current software. This may have resulted in you losing product and having a disorganized warehouse where you’ve been unable to keep track of where your products are at any given time. You may have been fine with standard ERP features in the past, but as your business has grown and your warehouse has become more complex, you may need to find ERP software that provides
How to Prepare to Switch ERP Systems
Once you’ve determined that it’s time to switch ERP systems, the next step is preparing for the change. Although switching ERP systems may be necessary for the future of your business, it is a big investment that should be effectively managed. Here’s how you can prepare:
Plan for Costs
The cost of ERP software can depend on various factors. It’s important to understand them to not only be able to effectively budget but to prepare for hidden costs and avoid paying unexpected costs. Understanding ERP pricing will allow you to know what you’re paying for and effectively compare ERP software against each other to make a final decision. To understand how ERP Pricing works so that you can plan for costs, download our ERP Pricing Guide.
Prepare for Business Disruption
During an ERP implementation, there are large data migrations that can cause downtime or disruptions to your business. When doing a trickle data migration, your business slowly migrates data over time in phases which means you must use your old system and new one simultaneously as data is being migrated. Historically, using two systems simultaneously usually doesn’t end well as there are inconsistencies between the two systems which can cause confusion. On the other hand, a big-bang data migration means all your data is migrated at once resulting in down-time when the data migration is scheduled to occur. Overall, having a plan in place to deal with possible downtime and disruptions to business that might occur can help ensure your business runs smoothly during the implementation process.
Devise a Change Management Strategy
When switching systems, there are bound to be employees within your organization who are unhappy with the change. Employees are used to working in a certain way with specific processes, and they will now have to learn a completely different system. Consider openly communicating details about the change and why it’s important to get employees to buy in. It’s critical that you are proactive in implementing a change management strategy to get employees to support the change to a new ERP system. Otherwise, you risk having disgruntled employees which will be a blow to your company’s work environment and culture.
If your current ERP system is not meeting your business needs, switching to a new ERP system can be just the digital transformation that your company needs. A new ERP system can help you improve your business processes, customer service, efficiency, visibility, decision-making and significantly lower your costs. Switching ERP systems however requires careful research, planning and communication among members of your organization. Take the time to identify your needs and what’s most important for your business while finding a vendor that aligns with your values so that you can successfully transform your business.