ERP Software is not a fire extinguisher

Mark Canes

Many businesses start looking into new ERP Accounting Software in response to significant and immediate problems. For example, the existing entry-level system has reached its capacity, or a new line of business has caused an extra 10 hours of manual work every week. There's a burning desire to select and implement a new system ASAP, and so the person responsible for screening vendors focuses just on that one issue. In other words, fight the fire.

At a high level, the two biggest problems with this approach are:

  1. Choosing the wrong software for the business as a whole: it solves your immediate problem, but turns out to be inappropriate for other aspects of your business.
  2. In focusing on that one requirement, you eliminate software vendors who appear not to be a quick fix for your raging fire, but who ultimately would have been an excellent fit with your needs and budget, including the issue that started the ball rolling.

Let's consider a real life example. A company started operations around 2007 as a distributor of paints, simply buying and selling drums, and using a basic accounting package. As they grew, they started using manually updated Excel spreadsheets to supplement that system with data such as lot numbers and color-match details.

In 2011 they started creating custom paint colors for several customers, by mixing stock paints in certain proportions - in essence these were bills of materials. Their software did not accommodate any type of production control, so they quickly selected and implemented a software package that handles the bill of materials / production activity.

However, after a few weeks they ran into two major snags. Firstly, the new software could not track lot numbers through the bill of materials, resulting in even more data being manually input and maintained in Excel.

Secondly, the new system did not handle multiple units of measure, but their customers for these newly created products were requesting pricing in different measures: some wanted it priced per gallon, others per litre, and also by weight. The implications here were even more onerous, requiring manual creation of "invoices" in Excel for those customers.

Ultimately this company went back to the drawing board on their software search and ended up replacing software for the second time in under 2 years. A very costly and demoralizing experience indeed.