Is there a right time to buy ERP?
We’ve all heard the saying before—timing is everything. But what about when buying an enterprise resource planning (ERP) solution? Is there a right time to buy, and how much is at stake if you wait too long?
ERP is a powerful tool for two key business objectives—syncing up the sales and operations teams and making accurate and reliable sales and inventory forecasts. But getting up and running with ERP can be a big investment—both in terms of time and money—so many businesses put it off as long as they can.
For major business decisions like implementing ERP, it helps to enlist the advice of an expert. I sat down with Alan Fang, chief operating officer at ERPLogic (an Arena partner and reseller of SAP Business ByDesign) to discuss the details of implementing an ERP system.
Interview with Alan Fang, COO at ERPLogic
How do you know when it’s time to implement an ERP solution?
Alan: Timing is unique for each company and each industry, so there is no hard and fast rule on when the time is right to buy ERP. At ERPLogic, we’ve seen companies in stages across the board decide they will benefit from ERP. Whether a company is just starting out, ramping up its sales or even in decline—it can use ERP to establish a clear vision and better understand its financial health.
While ERP isn’t a “cure all” solution, there are three common situations that can be resolved with the right ERP system.
1. Executives no longer trust the numbers.
Executives rely on sales and inventory numbers to make important decisions about future business moves, and things can take a turn for the worse when those numbers are inaccurate. ERP systems provide real-time, accurate insight into the current state of the business’s financials, so execs can rest assured that the numbers are reliable.
2. Operations and Finance can’t agree on a singular set of numbers.
What if Sales is expected to hit 10M in sales for the quarter, but there is only enough inventory in-stock to sell 5M? Without the proper insight into this business reality, both teams are set up for failure. And, when failure occurs, it’s difficult to know where accountability lies. Was the sales forecast overly optimistic or did operations under-buy?
The Sales/Opps disconnect is one of the most common reasons why companies turn to an ERP solution. When an integrated ERP system is coupled with solid sales and operations planning (S&OP) procedures, you can maintain accountability and enable sales and operations to function cohesively off of one set of numbers.
3. A company needs predictive performance.
The ability to predict future performance—for better or worse—drives effective planning, decreases risk and maximizes opportunity. While a company cannot achieve predictive performance with an ERP system alone, a fully integrated ERP system allows an organization to operate under one set of numbers and enables predictability by reconciling sales and inventory forecasts.
What might happen if a business ignores the warning signs and continues to operate without an ERP system?
ERP helps sales departments sell inventory with confidence, allows buyers to better track warehouse goods, and eases the transition between “old” and “new” models. If you fail to adopt ERP after you see the warning signs, there are a number of problems you are opening your business up to.
Most importantly, without a systematic way to track inventory and sales, you run the risk of getting stuck with excessive inventory and scrap. This is particularly true for businesses with limited shelf-life products like the fresh foods industry. Fresh goods have a firm shelf-life, and managing this type of sale with QuickBooks or an antiquated inventory system is both time consuming and leaves room for error. The same is true for consumer packaged goods companies, who must regularly offer products with a new look and feel for every season.
What should a business look for when selecting an ERP vendor?
ERP is a point solution that can seriously stall your business if it doesn’t work properly, so it’s important to find a vendor with a proven track record that you trust. Just like choosing a doctor, you need to know that the vendor will be there for you to help you implement and troubleshoot your new ERP solution.