How Do You Know When It's Time for ERP at Your Company?
ERP vendors might tell you that any time is the right time for ERP… if you have the right sized check, but that’s not true. There is actually a specific point in the trajectory of your business growth where the implementation of ERP should enter the picture.
In the early days of your business (we’ll call it Stage 0 – Execute) your main focus is on finding customers, getting orders, and delivering them on time. A lot of energy goes into finding the right way to make and/or distribute the right product(s). Keeping the shipping door busy, and customers from walking out the door, is what it’s all about. Transactions are being manually entered and tracked, and your management may be thinking about getting some sort of accounting system.
Next, in Stage 1 – Manage, your team is making the effort to manage every aspect of the business – inventory levels, planning and scheduling, purchasing, the sales order process, etc. Problem is, your staff is using spreadsheets, email, disconnected “sidecar” applications, whiteboards and other disparate means of holding and sharing data! Nothing is integrated, so efficiencies are lacking. On top of that, your most valuable company knowledge may exist inside the heads of your key personnel, who could walk out the door.
Time for ERP
Stage 2 – Measure – marks where your company starts to feel the heat; business is cooking, and now management wants and needs to measure everything happening, across all departments. You may or may not have scorecards of metrics in place, but you need ’em. But first, you need ONE version of data with a high degree of integrity, that everyone at the company can see. Time for ERP, which will begin processing all transactions, amassing information needed for decision making.
No More “Gut Checks”
Stage 3 – Control – means now that ERP is well indoctrinated with employees, control becomes a big issue to management. Transactional data is being turned into actionable information, with decisions taken on process changes. Real-time data capture is now expected at the push of a button, and the company can create “what if” scenarios. “Gut checks” are replaced with reliable data. Phase 2 ERP functionality begins – perhaps mobile WMS, or shop floor reporting in real time on touchscreen devices, etc.
Sky’s the Limit: ERP+
Stage 4 – Improve – Now the focus of ERP is less operational and more about strategic growth and having a leaner organization, asking: What opportunities exist in the technology to enable continuous improvement? How can ERP help launch that new product line, develop that new supplier relationship, penetrate that new market, etc. You may integrate CRM and ERP systems… build web portals with SharePoint for your customers and/or vendors… tap into sophisticated forecasting and planning tools, and more in this stage of ERP+.
Do you recognize what stage your company is at? Don’t let the best time for ERP implementation pass you by, but then again, make sure you’re ready. With great technology power comes great responsibility (and growth)!
Looking for more information on ERP software? Check out our side-by-side comparison of leading platforms in the Top 20 ERP Software report. You can also browse exclusive Business-Software.com resources on enterprise resource planning software by visiting the ERP research page.