Mid-Market ERPs Must be Agile, Effective & Relevant
I’m tired of hearing from IT industry experts that claim the majority of mission-critical Enterprise Resource Planning (ERP) projects turn sour because of the customer. Failed ERP implementations, at least within the small and mid-size markets, have one key reason for faltering… the technologies promised simply did not mirror the same characteristics which propelled SMB organizations to the levels of growth where they needed to deploy an ERP, in the first place!
It’s easy to blame lack of executive buy-in and user adoption, poor project planning, etc. but those excuses will only come from the Software Vendor and the Integrator who sold you the software. And even if you fire your ERP implementer and replace them with an expensive consulting firm to rescue the failed project, don’t hold your breath. If the Software was the wrong choice from the start all the executive buy-in and change management you can muster may be just an enormous waste of time and money. Not to mention lost customers because your ability to compete and add value during this whole process deteriorated. To quote Bruce Springsteen, it would be like “pokin’ that dog with a stick”.
Fact is, if the ERP solution you have chosen is not as Agile, Effective & Relevant to you as you are to your customers … then you may as well add yourself to the 75% of failed ERP implementations Gartner claims. And if it’s Cloud ERP, Gartner forecasts a failure rate of 90%!
Don’t get caught up in the Cloud ERP marketing hype and choose the wrong software that restricts you with narrow deployment and licensing options and functionality. Imagine this … you decide you want to buy the latest concept car. The car takes a year to build, 2X longer than originally promised and double the price because of costly integrations to connect the bleeding edge navigation, safety equipment and new concepts in fuel cell technology because suppliers weren’t willing to invest in the R&D until the mainstream market was ready. Oh, and the promised performance had to be cut in half because of unforeseen design errors. Sure, if you have the deep pockets, an “early adopter” mindset and your brand demands that you be at the leading edge, than the investment is worth it to have the first one in your neighborhood.
But if you expected the end result to be an automobile that was promised with all the features and functionality that was shown to you in the prototype and for the original price agreed to, than I guess you have a right to call the project a failure. But the only failure on your part is trusting whomever sold it to you, in the first place. Certainly not because you lacked buy-in!
In this article I will attempt to clearly explain why mid-market businesses succeed and why the ERP they choose needs to have these same characteristics.
SMB’s Competitive Advantages versus Big Business
Of the many unique qualities SMBs have to compete successfully with large enterprises, three characteristics, in particular, stand out:
To be Agile is to be flexible, adaptive and responsive; you have the ability and willingness to change directions quickly, even adapt to new or different business models on the fly in order to capitalize on new opportunities and be able to react in real time,
You are also highly Effective – SMB entrepreneurs deconstruct complexity and are often experts in
minimalism. You understand that the key to success is explaining to your customers, in a simple and uncluttered way, that your products and services will enable them to focus on their key success factors. And you simply cannot do this if your own organization is tied down with inefficient or outdated processes or if you put your prospects or customers through too much red tape to get effectively serviced, and
You strive to always be Relevant – ultimately, your need to be Agile and Effective is to support the absolute requirement of becoming and staying relevant to your customers. Relevance is what keeps you in the category of “Disruptor” verses being disrupted by emerging technologies that automate processes or new business models that change the game.
In fact, having these three key traits enables you to embrace disruptors in your industry and use them against the large established enterprises before they have a chance to displace you!
Disrupting Business as Usual
Two of the largest industry-agnostic and proven disruptors transforming organizations today include the Internet and advances in technology specific to ERP for small and midsized businesses.
The impact of the Internet and, specifically, cloud computing, has been enormous. Companies and consumers interact in a B2B or B2C environment, performing business functions online in minutes instead of days. This online environment encourages collaboration throughout the supply chain, driving cost efficiencies and added value. And a company’s brand, indeed its reputation, is constantly being evaluated and graded through social media in real time; in fact, the internet has enabled a mobile society where consumers expect access to systems and data anywhere, at any time, on any device.
The second big disruption is improvement of business solutions, specifically ERP solutions. Today a midsize customer has access to cost-effective ERP features that, up until now, were only available to billion dollar companies with deep pockets. In the last few years the total cost of ownership has been drastically reduced due to the innovations in hosting and Software-as-as-Service (SaaS) applications. Integrated applications have become a necessity in doing business today, and not only are they available at a reasonable price, but measurable returns on investment are attained quickly in such a way that often the decision not to modernize may come at significant business risk. Choosing the wrong software could be just as disastrous, too.
Getting Connected to Compete
As a business grows its key business functions often become more automated with specialized software applications, but they also become more disconnected departmentally. Disconnected business functions typically include areas within Finance, Warehouse & Distribution, Sales, Sourcing, customer service, and so on. This disconnection results in:
Duplicate data entry which translates into time wasted and errors made. And that often leads to multiple versions of which data is true causing you to possibly make incorrect business decisions,
You may have islands of automation with information not shared across departments that need access to it,
If you have multiple disparate software systems they become resource intensive, requiring extensive maintenance, updates, and critical integrations may be cost-prohibitive. And your end users may have multiple systems to keep trained up on as well, and
Forecasting and valuable business intelligence is hindered when more time is spent on determining what data is accurate versus strategizing based on real-time metrics and trends at an enterprise level.
A modern ERP system integrates all these disconnected applications to create the connected business. And the benefits include:
Information is updated across the entire company instantly and is consistent across the enterprise, hence the single version of the truth a modern ERP system provides. The key here is that critical business data is relevant, consistent and available in real time,
Productivity of users is improved because a modern ERP system has the same user interface across all applications, is much more intuitive to use, and can be tailored by role,
Because it is one integrated system, end user training and overall maintenance is significantly less, and
You will automatically enable a mobile workforce to work anywhere, anytime, on any device with a modern ERP solution.
Now, let’s dive into the three areas you must demand of your ERP software so that it helps, not hinders, your efforts to continue to be Agile, Effective & Relevant …
Tool-Agnostic. Live Free or Die
Not that long ago some software applications were only operable on specific operations systems or web browsers. And expensive and clunky mobile applications had to be developed if you wanted to extend the application to smart phones.
Make sure your ERP software is modern and built for today’s demands. It should run on any standard O/S or web browser. You should be able to can access 100% of your application’s functionality, including customizations, whether you use devices running on Windows, Mac OS, Linux, or Android. And if you need complicated and resource-intensive client software or VPN technology to extend it beyond your HQ than clearly it’s not agile and effective.
All. Or Nothing.
You, not the SW Vendor, should have control as to who should have access to what data. You do NOT want to have to buy a license every time you want to add a stakeholder or user group to have access to your data. You should not have to jump through hoops and expensive user license purchases every time you decide to incorporate a dealer network to order online, or extend your CRM to part-time resources during peak periods. As the Internet has proven, the value of a system is proportional to the number of people who use it. Make sure you have control and flexibility with who you can give access to what data.
To Be (Cloud) or Not To Be. That is the Question!
This month Microsoft announced that their flagship on-premise ERP, AX 2012, will no longer be available to purchase or upgrade to as of June 1, 2017. Obviously a big blow to those organizations preparing to upgrade their older versions of AX 2012 R3 (if they want to stick with a proven on-premise AX product). There is a tremendous push by Microsoft and Oracle towards Cloud ERP, resulting in a narrow set of options with stringent conditions if companies do not want to relinquish local control of their mission-critical ERP and prefer to keep their system on premise.
And in this new multi-cloud world, you better read the fine print with respect to ERP licenses tied to usage by indirect access. Two months ago SAP UK won a lawsuit against a British beverage manufacturer, Diageo ( read the case here) where SAP is claiming license fees for usage of data created in SAP but then stored in an Oracle database and extracted using Salesforce.com for online ordering and access by Diageo sales staff. Although its unlikely SAP will get the full £59m it’s claiming (actual award is TBD in further court proceedings), it’s still a significant precedent, none-the-less. The mid-market may be less likely to get hit with this kind of issue but don’t be too sure … any cloud-based solution means Big Brother is constantly monitoring your usage and access.
Certainly, there are organizations that embrace the cloud and bleeding edge technologies like IoT, Big Data, chatbot, blockchain, etc. and other applications creating the multi-cloud world we live in now. But they are in the minority, regardless of all the hype. Think carefully before you choose a SW vendor that restricts your ability to control your data and where your deploy it. I tend to think Gartner is onto something when they warn of a 90% failure rate with Cloud ERP.
So, unless you can somehow convince your customers that it’s their fault they didn’t receive the products and services they expected from you during a difficult ERP project, I suggest you make sure you choose an ERP that is just as Agile, Effective & Relevant as you are!