Justifying the decision to replace your current ERP system
Buying a new ERP system can be a daunting proposition for any company. When assessing the economic feasibility of such investment, it is important to build a compelling business case to justify your purchase (worth a read - Enterprise Software: The real cost of ignoring the warning signs).
We hope the following steps will go some way in helping you to make a more informed decision.
Understand your business software needs
It is essential that you begin by focusing on the goals of your business. Once you know where you want to go you can envisage how your ERP software might help you get there.
- What are you trying to achieve?
- What are your short term and long term objectives?
- How do you intend to satisfy these objectives?
- How relevant is your current business software to your business strategy?
- What do you need from your software to get to where you want to be?
- What challenges does your current system pose right now?
- Talk to the users of your software. What are their expectations from the software and how is your current system fulfilling their needs?
Quantify the impact of staying with your current ERP system versus moving to new software
To do this you will need to carry out a cost/benefit analysis. This will help you determine which alternative is likely to provide the greatest return for the proposed investment.
Identify the potential costs and benefits of implementing and using new software and compare it to the cost and benefits of your current software system (if you have one).
Analysis should take the form of;
- Quantitative data (i.e. measurable data, including the cost of the software, implementation, training, support, maintenance, hardware requirements etc) and,
- Qualitative data (i.e. data with a high degree of subjectivity - difficult to quantify but still an important variable – including the benefits gained from ease of use, time saved, access to a seamless flow of accurate, real-time information, having a mobile workforce or even a truer picture of where your business is at etc).
For most companies, the primary factor shaping the business case for a business management software upgrade is ROI (Return on Investment). Companies expect a new system to pay for itself in a very short period of time. This goal is entirely achievable with the right solution. From our experience, the perfect fit software for your business will see a return on your investment within a year to 18 months.
To sum up…
- Summarise how the proposed software solves problems your current system doesn’t.
- Involve internal users of the system to gain consensus and support.
- Show the impact the new software will bring to the whole organisation.
Research systems and request a software demo
- Research suitable business management software applications. Which solutions closely match your requirements?
- Consider industry-specific ERP packages as off-the-shelf applications can be lacking in valuable information, functionality and flexibility.
- Research suitable providers – Choosing which business management software to purchase is a challenge in itself but selecting which ERP provider to go with is a critical decision that needs careful consideration.
- Request a live software demonstration to evaluate whether the software fulfills your business requirements and if the provider will be accommodating to your needs. Demos are FREE with no obligation to buy so it is a good way to find out if the new software will benefit your business and achieve all your business objectives.
- With all this information documented, you should have a clearer picture of whether an investment in new software makes sense for your business. It is also the only basis on which the success of the project can be measured on completion.
- Request a site visit to similar businesses using the software so that you can see it in action.
Worth A Read - ERP - A Total Business Management System
Want to know more about ERP software? Our 'What is ERP software and do I really need it' is a comprehensive overview that covers all aspects of ERP software; from the benefits to how to successfully implement it.