Monday, March 11, 2013

Is it time to replace your outdated system?

First of all, you have to find out if your system is actually outdated.  This is answered not only by how old your Enterprise Resource Planning (ERP) solution is, but also by how many releases behind you are and how well is your staff utilizing the solution now.  If all of your departments are integrated using the system and there are not a lot of manual processes, you may very well be using the system to its full potential. 


That, by the way, is not the answer to the question if the system is outdated.  It is like the comparison of system up-time versus up-and-available-time.  It is a key component, but only a component.


How efficient are your operations?  How much time do your employees spend doing their various tasks? 


Several years ago I had a conversation with a CFO about replacing some workstations.  The issue of cost came up as it usually does when discussing equipment.  The old workstations were slow and gave his people the opportunity to get and sometimes drink a cup of coffee before it finished starting up.  During the day there were numerous delays waiting, waiting, and waiting.  PC workstations have come down in cost significantly over time and I asked based on some examples if he thought any particular staff member would save between 10-15 minutes a day (2 minutes saved every hour is 16/day).  The number is reasonable.  I suggested we average down to be conservative and estimate 1 hour a week in time savings and to be even safer, just 40 weeks a year.  That is a conservative 40 hours saved or an entire work week.  Now multiply that by the number of workstations and their average hourly wage (not even counting employer overhead) and it now became obvious that new workstations would actually be free or have at minimum a high Return on Investment (ROI).


How efficient is your ERP system?


How much time does it take to post transactions?  Are you even posting everything?  Your system may work, after all if you are still in business after that last few years, then you must be doing something right.  Is everyone using the same system?  How prevalent are spread sheets and other office tools?  How many silos of information exist and how do you cross check the information?  How long does that take?  Do you have any metrics to perform and analysis?


You may not even know there is another way to do the same-old-thing.


Doing the same old thing a different way may be as foreign as... 


If you are old enough to remember the high jump competition from years past you know that everyone used to jump over the bar with their stomachs down for the most part (to be fair there were multiple methods including, straddling, western roll and scissors kick).  Basically this is was the way it was always done.  Then along came someone called Dick Fosbury in the 1968 Olympics with a new concept. Run up there, jump and have your back towards the ground and carefully unfold your legs as you go over the bar.  Jumpers today follow a more or less standard 10-step run up approach to build the speed needed to clear the bar. Momentum caries the jumper over the bar.  The Fosbury Flop as it is called is now is the way jumpers jump and clear the bar.  Now the mere mention of jumping the “old” way is foreign.


Your ERP solution follows the same concept when you start to consider if it is outdated.  You need to work with someone that has figured out the new approach.  It will feel awkward in the beginning, it always will when you do the same old thing a different way.  Is there no way you could do something old a new way more quickly, could you?  How long have you been doing it the old way?  How much time is reasonable to learn and perfect your processes a new way?  How long did it take you to develop the methods you use now?


Remember the first word in ERP is Enterprise.  ERP solutions work best when they integrate the entire operation. 


It takes an investment in time to look at what you are currently doing with fresh eyes and determine if there are better ways.  Seamlessly collecting information in as near real-time as possible across all departments is a critical component.  This ultimately will help to drive down inventory levels and potentially achieve a just-in-time (JIT) inventory or a system that is close to JIT. 


Collecting data or information is the first part.  The second is analyzing the information to spot trends and enable quicker, smarter decisions.  Establish metrics and then track and measure results.  Tweak the process, repeat and gain a more efficient operation.


You need to take your time to search for the ERP system that works, fits your business culture and your budget. 


You will need look at your solution provider as a business partner, if you want any level of success.  How is their customer service?  How is yours?  An ERP solution is like a marriage.  Easy to get into, not so easy to get out of, so you need to take your time and choose wisely.  Are they large enough to provide stability and commit to future enhancements?  Change is the constant and system requirements will continue to evolve.  Are they small enough to know you and treat you like your business and success is equally important to them as it is to you?


We started talking about the possibility of your system being outdated.  We ended up with customer service.  Why upgrade any system?  If it works, then why mess with it, right?  Remember how frustrating adding fax support was to your operations?  How about email?  Now, can you imagine going back to faxing, modems and that fun curly paper?  If you cannot or will not service your customers, then someone else will.


What will the next 10 years bring?


Dolvin Consulting is your business partner.  We work with industry experts, like IBM and VAI to deliver real world solutions, to your real world challenges.  Contact us today to see how we can help your team deliver the right solution that will grow with your business over time.



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