There’s no science or formula for determining when exactly you need an enterprise resource planning (ERP) system—whether adopting ERP for the first time or upgrading to a newer solution. Nor is it something where you simply wake up one day and know you need one. But there are a number of leading indicators and tangible business challenges that can be a sign that an ERP system could be a valuable solution to provide operational efficiencies and business value for your organization.
That said, it is not a decision to be taken lightly. The new implementation (or upgrade) of an enterprise resource planning (ERP) system is typically one of the most stressful, expensive, and disruptive initiatives that companies tackle.
- The buy-in (and participation) of the executive leadership
- (In almost all cases) the involvement of numerous departments, whereby it is sure to fail if there is not collaboration (and agreement) on the “must haves,” the “nice-to-haves”
- The prioritization of when (if using a phased approach) to deploy each piece of functionality
So, when do you know that it’s time to consider an ERP implementation for the first time or an upgrade of an existing system? The signs tend to come from challenges and inefficiencies between the sales/customer organization and finance, as well as burdensome technical processes and/or systems.
Here are 10 common indicators that it may be time to implement (or upgrade) an ERP system:
- It takes more than three disparate systems to sell, fulfill, and account for business transactions
- You’re experiencing a growing amount of inventory discrepancy and/or reconciliation problems
- Accounting is increasingly more inefficient and is taking longer
- You’re having trouble successfully managing cash flow
- The organization is not able to process sales orders in a timely manner
- You have persistent and/or growing morale problems throughout the organization, particularly in finance
- Increased errors in sales orders and the delivery of products or services
- Employees are “working around” the systems in place and/or putting their own systems in place as “work-arounds”
- You’re noticing employees working inordinately long hours on a consistent basis
- There is a constant and/or increasing flow of customization requests within the existing IT systems
If these issues (or similar ones) sound familiar, it’s likely a new ERP system would benefit your organization. But just deciding on the need for a new ERP system is the easy part! In our next post, I’ll walk you through what to expect when implementing a new ERP system.
In the meantime, if you have questions—we're here to help!