Multiple reasons jumped to my mind based on past experiences. Here are a few typical ones:
- Outgrown a small package, spreadsheet crawl
- Consolidation after acquisition or new system required after divestment
- Reduction of inventory valuation or improvement of other financial indicators
- Need better visibility and to reduce time spent on month end processing
- Reporting consolidation
- Bad or no support from the current provider
The other night I watched a Shark Tank episode while in Dallas. Kevin O'Leary who is one of the sharks said: “There are two reasons why a new product is successful. It solves a problem or it reduces costs”. In this episode, he went on saying that the product presented by the innovator was neither, therefore he was out.
Kevin’s comment is spot on.
A key aspect of investing in an ERP is to define what problem(s) we want to solve. Once this is identified with clarity, the search for an ERP is much easier as the core issues to be resolved are usually few. If you come up with dozens or hundreds of issues, a further analysis may be required to separate the problems that are core from the ones that have a minor impact to the business.
The next step would be to ask the vendors to demonstrate how they can solve your core problems, provide some proof points through visiting reference sites, and walk you through the new processes in detail to ensure that the solution provides the promised added value.
Using the above approach will set you on the right path to successfully choose the right solution for your business. It will maintain the focus of all stakeholders on the real issues, cut useless sales pitches and rhetoric’s, and save you a fortune by avoiding the many so-called experts that want to help you select the right system (usually they won’t be around once they are paid).
The focus on core issues should be the starting point to create a short list of ERP vendors. It should then be complemented by a more detailed process, ensuring that the solution is a good fit, and the vendor, a good longstanding partner for your business.
So before sending a list of 5,000 questions or more to all ERP vendors under the sun, how about starting with the core problems, requesting a detailed response on how the vendors you've preselected can solve them.