Small and medium-sized enterprises (SMEs) frequently face the challenge of updating their business processes and integrating new technology. One common scenario is manually updating Excel spreadsheets daily or weekly, knowing automation could save significant time but lacking the bandwidth to implement necessary changes. Maintaining the status quo often results in inefficiencies that can hinder business growth.
Key highlights
- Common Enterprise Resource Planning (ERP) Software Problems
- When to consider replacing your ERP (or introductory software)
- Steps on selecting a new ERP
- The best time to implement a new ERP
- How to ensure your ERP lasts 20+ years
Common ERP Software Problems
Poor Fit
One of the significant issues in selecting an ERP system is ensuring a proper fit between the software's capabilities and the business's actual needs. A common mistake is making decisions based primarily on cost rather than on a thorough understanding of the company's requirements. This cost-driven approach can lead to selecting a solution that either lacks essential features or includes unnecessary functionalities, ultimately resulting in inefficiencies and frustration. For example, an inexpensive ERP system may appear attractive but could fall short in supporting key business processes, necessitating costly customizations or additional third-party tools.
Wrong Vendor
Selecting the right vendor is as crucial as choosing the right ERP software. A vendor experienced in your industry is vital for ensuring a smooth setup, implementation, and training process. When you partner with a vendor unfamiliar with your sector or one accustomed to working with companies of a significantly different size, the challenges you face may stem more from setup, implementation, and training issues than from the software itself. An industry-specific vendor understands your unique requirements and can tailor the ERP system to meet those needs effectively. Additionally, the vendor’s experience with similar businesses ensures they can anticipate and mitigate common pitfalls, facilitating a more efficient and trouble-free implementation process.
Beyond technical expertise, finding a vendor that aligns with your corporate culture and values is essential for a successful long-term partnership. A vendor who shares your business ethos is more likely to understand your goals and work collaboratively to achieve them.
An increase in software license costs
Ever hear the term bait and switch? It describes a situation where a customer is “baited” into purchasing something due to certain promises or low prices, only to have that promise or price “switched” at a later date. This is why it’s important to always read the fine print when evaluating different software solutions, the functionality offered and the price. You want to make sure that the price you agree to today, will not all of a sudden increase. While increasing prices is a natural part of doing business, you want to make sure that you understand any price increase implications from the beginning. Some vendors may charge you a certain “discount” rate for the first year, only to increase that rate for the years following.
Feature Overload
Feature overload is a prevalent issue in ERP software selection. It occurs when businesses get caught up in the myriad of features available, often leading to confusion and poor decision-making. To avoid this, it’s crucial to focus on essential features rather than getting bogged down by minor details. ERP systems are designed to be comprehensive, offering a wide array of functionalities to cater to different business needs. However, this abundance can be overwhelming. Companies often get sidetracked by features that sound impressive but may not be necessary for their specific operations.
This is a common pitfall in ERP software selection, but it can be avoided by focusing on what truly matters. By identifying your core needs, creating a feature hierarchy, limiting your shortlist, engaging key stakeholders, avoiding distractions, and testing systems, you can make a well-informed decision that supports your business effectively. Prioritizing essential features ensures that your ERP system will enhance your operations rather than complicate them.
The Software is No Longer Supported
This is a no-brainer: once you learn that your software solution will no longer be supported, it's time to start looking for a replacement. Even if you rarely use support, it only takes one instance where you can't connect, encounter a data issue, or need help for your business to suffer. Some vendors may also decide to "sunset" their software, meaning they stop developing the system and fixing bugs. While different from losing support, this indicates the product is nearing its end of life and will soon be unsupported. This is another crucial reason to seek a replacement, ensuring your system always benefits from the latest technology and features.
Poor technical support
Your ERP software is the backbone of your operations, so having access to expert support is crucial to ensure systems run smoothly and questions are addressed promptly. It is essential to work with a software vendor who takes the time to understand your business and is committed to helping you succeed. If you feel like "just another number" to your current vendor, it may be time to find a partner who values your business. A good vendor should provide personalized support tailored to your specific needs, fostering a sense of partnership and collaboration. They should be proactive in offering solutions and improvements, ensuring that the ERP system continues to meet your evolving requirements.
Beyond technical expertise, finding a vendor that aligns with your corporate culture and values is essential for a successful long-term partnership. A vendor who shares your business ethos is more likely to understand your goals and work collaboratively to achieve them.
When to Consider Replacing ERP Systems
Understanding when and why to replace your existing systems is a daunting task. We’ve simplified it by creating a series of questions and notable indicators of inefficiencies when reviewing your business.
Questions to ask yourself
- Can we improve efficiency?
- Is there a way to increase revenue?
- Are customers satisfied with our service?
- Are we losing money in any areas?
- Do we need more staff for growth?
- Is our staff overworked?
These questions boil down to one: “Is the company running efficiently and effectively?” If the answer is "no," it might be time to consider new ERP software.
Recognizing Inefficiencies in Daily Operations
- Manual Task Overload: If you’re manually updating Excel spreadsheets daily or weekly, consider automation to save valuable hours each week.
- Operational Bottlenecks: Inability to process new sales orders timely, increasing errors, and inventory issues are red flags.
- Cash Flow Management: Struggling with daily cash flow visibility indicates a need for a more robust system.
- Increased Sales Errors: More frequent errors in sales and shipping processes.
- Back Orders: Growing back orders due to inventory mismanagement.
- Overtime Dependency: Staff needing overtime to complete daily tasks.
Ignoring these issues can lead to severe consequences, including:
- Inability to grow your business
- Strained customer relationships
- Loss of customers and revenue
- Increased operational errors
- Poor employee morale
- Cash flow management problems
Is your current software approaching its end-of-life? Discover how sunset software could impact your business and learn how to navigate this critical transition. Don't let outdated systems hold you back — read our blog post for essential insights and solutions!
Steps to Select a New ERP System
The software selection process is challenging for several reasons: (1) accurately assessing how well each software option meets specific needs, (2) comparing different software companies/vendors effectively, and (3) understanding the vast amount of information available about various solutions.
Many companies believe that evaluating more vendors increases their chances of making the right decision. However, this often leads to decision paralysis, a phenomenon known as the “paradox of choice.” When consumers are overwhelmed with too many options, they frequently end up making no decision at all. While researching different ERP systems is essential, engaging with vendors by discussing requirements and viewing demos should be limited to a shortlist of ideally two to four vendors. This approach helps prevent information overload and allows for clearer comparisons between each vendor.
To further simplify the software selection process:
1. Create a List of Must-Haves vs. Wish-List Features: Most ERP vendors offer similar base functionality, so it's crucial to distinguish between essential features and nice-to-haves. This will make it easier to compare different systems. Consider whether the user interface is the most critical factor, if custom report creation is necessary, or if after-sale support is important.
2. Compare Vendors as Apples to Apples: Ensure that the vendors being compared belong to the same software tier. For example, comparing an introductory system like QuickBooks with a mid-market system will lead to confusion due to significant differences in cost and functionality.
3. Invest Time in Making a Decision: To avoid information overload, allocate sufficient time for evaluating all software options. Allow a day between each demo to regroup, start the search several months before you plan to implement the system, and involve the right people in the process.
If you think new ERP software might be needed for your company, do thorough research. With numerous ERP solutions on the market offering varying functionality and price points, it’s important to understand your specific needs and budget. Seek a solution that meets your requirements and adjust your budget accordingly. For instance, there's no need for a tier-one solution if a tier-two solution can meet your needs at a lower cost, or for software lacking Lot Tracking if you are in the food or medical industry.
While it may seem daunting to add another task to your to-do list, avoiding the "I’m too busy" mindset is crucial for implementing a system that will ultimately save time and reduce stress. Consider this an investment in both your business and your mental well-being.
To avoid the "I’m too busy" trap, follow these four steps:
- Understand the benefits of the new system
- Stick to a firm process and deadlines for making decisions
- Decide on a shortlist of vendors
- Make the search a priority
Before you start speaking with software vendors and to ensure you are adequately prepared to have a conversation, answer these questions internally:
- What do I need the software to do to solve my problem(s)?
- Do I have any "Special" software requirements that will need to be developed?
- Is the company committed to a change?
- Do we have a realistic budget?
- Is the "Decision Maker" on board?
- What is the process we will use to evaluate, decide and implement new ERP Software?
The Best Time to Replace ERP Software for Your Business
Many ERP implementations fail due to various factors. To increase your chances of success, consider implementing the system at times that can ease the process:
1. During a Slow Period: Implementing during a slower business period allows you to dedicate more time and attention to the process. With fewer distractions and urgent tasks, employees can focus on understanding and learning the new software, leading to a higher success rate.
2. Incremental Training: Absorbing all the information at once can be overwhelming. Train employees in small increments, allowing them to ask questions and clarify any doubts. This gradual approach ensures better understanding and retention of information.
3. Starting with Smaller Businesses: If you have multiple subsidiaries, start with a smaller one. This allows you to learn and resolve any issues on a smaller scale before moving to larger subsidiaries. It helps you navigate potential roadblocks more efficiently.
4. Stable Organizational Structure: Avoid implementing during organizational changes, such as hiring new staff or key employees being on leave. Ensure roles are clearly defined and understood. Employees focused on their changing roles may miss important training and process information.
How to Ensure Your Enterprise Solution Lasts 20+ Years
While there's never a perfect time to implement new ERP software, some times are better than others. Waiting for the perfect moment might mean waiting forever, but following these guidelines can improve your chances of a successful implementation.
There are several strategies to maximize the longevity and return on investment (ROI) of an ERP solution, with some companies successfully using the same system for over two decades.
Choose the Right Vendor: Selecting a vendor tailored to your business's growth trajectory is crucial. Introductory systems, ideal for startups and small businesses, often focus on specific functionalities like accounting but may lack scalability as your operations expand. They typically have limits on transaction volumes, user numbers, and lack features for broader business needs such as inventory management and eCommerce. Instead, opt for an ERP solution like Blue Link that offers foundational functionalities alongside capabilities for eCommerce, POS, lot tracking, and barcode scanning. These features may not be immediately necessary but are vital for future growth and market expansion.
Implement Regular Upgrades: Regular software upgrades, usually included in monthly license fees, are essential for maintaining system efficiency and longevity. These upgrades not only fix bugs but also introduce new features that enhance operational efficiency and keep your business competitive. Ensure your chosen vendor consistently updates and customizes their system to align with industry advancements and your evolving business needs.
Evaluate Productivity Gains: Assess your current software's impact on productivity. Are there inefficiencies costing hundreds of work hours annually? Have you hired additional staff to manage tasks that could be automated by a robust software system? Are customer service responses slower than competitors'? If so, investing in a new ERP system could quickly offset these costs and improve overall business performance.
By selecting the right vendor, embracing regular upgrades, and assessing productivity gains, you can ensure your ERP solution remains a cornerstone of efficiency and growth for decades to come.
FAQ: How to Replace ERP Solutions
- What are common ERP software problems for SMEs? Small and medium-sized enterprises often face issues such as poor software fit, inadequate vendor support, feature overload, and outdated systems that no longer receive updates.
- When should I consider replacing my ERP or introductory software? Consider replacing your ERP system when you experience inefficiencies like manual updates, operational bottlenecks, cash flow management issues, increased errors, or dependency on overtime to meet business demands. Also consider if the support offered by your vendor meets the needs of your business.
- What steps should I follow to select a new Enterprise Planning solution? Start by identifying your business needs, distinguishing between essential features and nice-to-haves, comparing vendors effectively, and involving key stakeholders in the decision-making process. Focus on selecting a vendor with industry experience and cultural alignment to ensure a smooth implementation and ongoing support.
- When is the best time to implement a new ERP system? Implement ERP during a slower business period to minimize distractions and dedicate sufficient time to training and system integration. Incremental training and starting with smaller subsidiaries can help mitigate risks and ensure a successful rollout. Avoid implementing during significant organizational changes to maintain focus and clarity.
- How can I ensure my enterprise solution lasts 20+ years? Choose an ERP vendor that supports scalability and growth, offers regular software upgrades, and provides personalized support tailored to your business needs. Evaluate your current software's impact on productivity and consider upgrading to a system that enhances operational efficiency and aligns with industry standards.
- How can I improve productivity with a new ERP system? Invest in a system that automates manual tasks, streamlines processes, and improves customer service response times. Assess the ROI potential of upgrading to a more efficient ERP solution that meets your current and future business needs.
- What are the consequences of delaying ERP system replacement? Delaying ERP replacement can lead to decreased efficiency, strained customer relationships, operational errors, increased costs, and missed growth opportunities. Addressing these issues promptly with a new ERP system can positively impact your business's overall performance.
- How do I navigate the ERP vendor selection process effectively? Ensure thorough research, create a clear list of requirements, and engage with a shortlist of vendors through demos and discussions. Prioritize vendors that offer comprehensive support, regular updates, and solutions aligned with your business goals.
- What should I consider before committing to a new ERP system? Before committing to a new ERP system, consider factors such as scalability, vendor reputation, ongoing support, integration capabilities, and the ability to meet regulatory requirements specific to your industry.
