ERP system: 10 signs it’s time to switch from spreadsheets and silos

All too often, a rising company is so focused on the daily work of developing new products and services, exploring new markets, expanding its workforce, and serving customers that it overlooks the bigger-picture, longer-term needs of the business itself.

This is especially the case when it comes to IT infrastructure. Company leaders are so bent on growing and scaling the business—usually for all the right reasons—that they miss or ignore the signs that their business software is in urgent need of an upgrade and an ERP system.

As a result, a reliance on spreadsheets and disparate, non-integrated systems creates and reinforces inefficiencies that hurt the business in myriad ways.

Modern ERP: Companies that are thriving vs those that didn’t survive

Modern ERP solutions provide companies with the flexibility and agility needed to adapt quickly to whatever happens next.

Replacing siloed systems with an ERP system

If you believe your company is headed down this path, don’t worry. You’ve already taken the first step toward addressing the problem by recognizing that the culprit isn’t people, but rather the non-scaling, siloed systems you’re asking them to use.

Now, executive leaders have a choice: stick with the status quo and watch the company and its people continue to bear the burden of unwieldy technology or find a better way of doing business under a single system of record for managing core processes like finance and accounting, human resources, manufacturing, procurement, and supply chain.

This better way forward often involves finding an enterprise resource planning system—a software package comprised of integrated modules or business applications that talk to each other and share a common database.

How do you know when it’s time for your business to consider an ERP system? Here are 10 telltale signs:

1. Mounting costs: Your systems are expensive to support and maintain. Vendor support for the software is spotty, pricey and often unhelpful. Expensive, often unstable custom software integrations are required for systems to talk to one another. Ultimately, the company ends up throwing good money after bad to maintain the status quo and losing ground to competitors that have more mature business systems.

2. Information silos: Data is scattered, obscured and difficult for people to access. This lack of timely, trusted, and accessible information stifles strategic dialogue, planning and collaboration within and across teams. This makes sustaining a cohesive, collaborative culture difficult.

3. Suspect data: The “garbage in, garbage out” adage applies here. People don’t trust data because it’s stale, error-prone or poorly formatted. There’s no single, reliable source of truth within the organization, and no guardrails to encourage people to be good stewards of data.

4. Obstructed visibility: Departments and teams lack insight into activities across the business, making it really hard to track the progress of a customer order from initiation to fulfillment and delivery, for example.

5. Burdensome business processes: Heavily manual processes quash productivity and force people to waste valuable time on repetitive, unnecessary tasks, keeping the business from being as nimble as it needs to be. Invoicing is slow and error-prone, for example, hampering cash flow.

6. Over-reliance on gut instinct + guesswork: In the C-suite and across the business, decision-makers lack fresh, accurate and timely data as well as intelligent modeling and data analytics capabilities to provide them with real-time insight into metrics and KPIs. Decisions are based on putting a finger in the wind rather than using analytics capabilities to provide optimized pricing recommendations, for example.

7. Subpar customer experiences: Customers must struggle through multiple systems and touchpoints with your company to get the information they need, while employees have difficulty providing customers with real-time information about orders and requests, which hurts your brand image.

8. Tech frustration + overload: Employees sour on the company’s systems and tech tools, so they develop time-consuming work-arounds or avoid them altogether. Not only does this create inefficiencies, but it also leads to subpar employee experiences that make it hard to attract and retain talent.

9. Missed opportunities: Salespeople miss cross-sell and upsell opportunities because they lack the full picture of customers— timely insight into purchase history, preferences, eligibility for rebates and the like.

10. Knowledge seepage: Valuable institutional knowledge is leaking irretrievably from the company because there’s no system for capturing, storing and socializing it across the business.

If issues like these have surfaced within your organization, it’s probably time to consider upgrading to a modern ERP system designed for a growth-minded business. This comes a whole new set of questions to answer, including whether to buy an ERP solution that comes with standardized, default elements so you don’t have to reinvent the wheel, or to invest in a heavily customized system.

Deciding between standardized and customized ERP

If your business depends on highly differentiated processes and capabilities and non-standard technology, if demonstrating tech thought leadership is priority—and if it’s clear that the benefits of a heavily customized ERP system will far outweigh the costs—then custom could be the best option.

But that approach can come with drawbacks: resource dependency and staffing effort; high project, administration and infrastructure costs; extended project duration; an inability to leverage prevailing tech standardization trends; and risks related to regulatory compliance and security.

Pursuing a more standardized ERP system, on the other hand, may be the best option for companies that rely on non-differentiating or commodity processes for functions like HR, finance and accounting, and that see the appeal of using proven technology with extensibility.

Companies that deploy an ERP system that comes with standardized best-practice processes, tend to see these benefits:

• lower resource dependency and staffing effort
• lower total cost of ownership
• faster deployment and time-to-value
• built-in regulatory compliance and security features
• the ability to leverage standardized processes
• automatic access to product innovation/upgrades

Going with a more standardized, less customized system could require a heavier lift with change management. It also may mean sacrificing control over functionality, software releases, and the overall solution roadmap.

If, after weighing the pros and cons, you decide pursuing a standard ERP system is the best route, you’ll need to figure out what capabilities to look for and how to manage the transition. There’s a lot ahead, but you’ve already put your company in line for growth.

Editor’s Note: This article first appeared in Digital Commerce 360 and is republished here with permission.