Are You Doing Enough Digitally for Your Business?
At the beginning of the year, I had to take a long, hard look at how much (or, as it turned out, how little) I was using digital means to optimize my business decisions. After speaking with a potential data management partner, I settled on implementing some Enterprise Resource Planning (or ERP, for short) software. ERP programs are designed to take a company’s data and condense it into forms that high-level managers can read and understand. An ERP is often a large software package that a company might use for all of its accounting, inventory, sales, costs, and HR data. The software will then take all of that data and generate meaningful information from it. Unlike humans with our limited “computing” capacity, computers can synthesize a large amount of raw information: an ERP takes all of the data that a company generates and uses it to create business intelligence and then presents that intelligence in front of the right people so they can make informed choices.
The Right Stuff
ERP systems are going to be different for every company and industry. Two companies can use the same ERP system very differently. I received several recommendations from friends with disparate companies, but they didn’t steer me in the right direction: I didn’t know how they were using their programs, nor how they mapped to their companies’ requirements. After meeting with an ERP provider, I learned that implementation needs to be a collaborative effort across all departments. You’ll need to get an internal committee going to search for possible systems. I’d highly recommend engaging a local business systems consultant who can offer assistance. ERPs are a highly complex topic, and you’ll want to know which questions to ask.
An ERP solution is not an IT project—its implementation must be a company-wide cultural shift that’s led, managed, and supported by management and ownership at every single level. There is nothing simple, quick, or easy about implementing an ERP solution. A long-time ERP consultant and implementer advised me that any company going from nothing to an ERP will encounter at least one high-level person who’ll have difficulty with change. This is why management leadership is key for all ERP system changes.
Running the Business
ERP is software that shapes how you run the business, and as such, is a project that should be led by the business, and not IT. IT will play a critical role, of course, but each functional area needs to take ownership of their processes and realize that they’re going to have to learn an uncomfortable new system and adapt to it if they want to be successful; the business needs to adapt to the software instead of trying to make the software adapt to the business. Customization drives up cost, timelines, complexity, and makes things a lot harder down the road when you’re looking to implement patches or updates to the system.
Every ERP system is different and often specialized in a certain industry. During your selection process, I highly recommend providing the candidates with sanitized versions of your own data and give them examples of the functionality you want to see so they can show you real-world examples of how that package would work in that scenario. Every, single, vendor, will tell you they can meet all your requirements—make them prove it.
The implementation partner you choose can make or break the project. Be sure to vet customer references and make sure you get a good solid legal review of the contract. While they will hopefully bring a lot of expertise to the table, you still need to make sure you’re driving the project. The right partner will fight hard to ensure that your project is a success: switch things up if you’re with the wrong one. That could be a really costly thing to have to do, but it’s better than a failed project.
For What it’s Worth
Some ERP implementations can be very costly—but I can’t recommend them enough. Make sure the business goes through a very thorough budgeting process, however, in order to ensure that there are no surprises. Understand that you’re probably going to exceed that number, but not incorporating an ERP could be much more costly than whatever you’ve budgeted. When I started my small business (a personal training company, and eventually a physical gym location), I made contacts with several other small business owners. I sadly have to report that I’m also aware that some of those companies are no longer with us. I can’t confidently say that they went under simply because they didn’t do enough digitally to optimize their performance with customers, but certainly, a few failed ERP implementations did not help.
When you partner up with your software provider, prepare to “wash” that bad data right out of your hair. You must thoroughly cleanse your data. As the old saying goes, “garbage in will equal garbage out.” Make sure what’s going in is clean and accurate and make sure that there are strong business processes in place to ensure data integrity as the business uses the system. The best ERP software in the world can’t stop people from making bad decisions about how to use it.