Walk Before You Run – Choosing the Right ERP System

January 23, 2013 in Entrepreneurship, SME/SMME

By Christophe Letellier, CEO of Sage ERP X3

Christophe Letellier

Christophe Letellier

Choosing an ERP system is one of the most strategic decisions for mid-market companies and their CEOs face a significant dilemma. Should I choose a system for today, or for how my company may look in five to ten years? Should I go for a full system or start small with a limited number of functions? Should I try to cover 100-percent of my needs or only aim for a fraction of them? Do I have to cover all my requirements with one single ERP system? Should I go for a comprehensive, full function system requiring a 12-18 month implementation, or for a simpler system with fewer functions that could be implemented in weeks? What balance will get me the best return on my investment?

I could go on and on with questions that are all relevant, but instead I would suggest reversing the thought process.  Rather than trying to solve all your outstanding issues with a new system, which will usually replace something that you are currently using, I would suggest thinking about how to improve what you already have. All of us would like to aim for the best in terms of ERP software, but in doing so we often ignore the ‘better’ solution.

The value of an ERP system lies in its integration across a company and the data gathered when using it. Start with a modern solution that is well integrated and covers 80-85-percent of an organisation’s functional needs. The last mile is by far the most costly and often the one that has the most problematic ROI.

Why look for perfection when 85-percent would help you make a giant leap in efficiency?  Go with as standard a system as you can to start with. Implementation will be significantly reduced, both in terms of cost (three to five times cheaper) and duration (up to ten times faster, in a matter of weeks). A properly integrated system will immediately make your processes more fluid, improve cross-functional collaboration, reduce operating costs; and most importantly, help you understand what you really need for the next step.

I encourage you to have a look at what our customer, Omega Refrigeration, did. They chose to go standard and not only did the company’s ERP system go live in just 44 days, but it started to see benefits just a few weeks after the implementation. Very soon after deployment, Omega Refrigeration was able to plan the expansion of the system.

One of the biggest mistakes often made is attempting to replicate existing business processes within a new system. It implies significant tweaks in the ERP system through customisation. On top of making life miserable for future upgrades, it also changes the way an ERP solution behaves, severely curbing the benefit that is derived from all the best practices that has led to the development of the built-in processes. Performance can also be dramatically reduced and future evolutions will be more difficult to leverage.

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