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David Panitch: Why Replace Your ERP System?

You don’t need new technology — unless you want to survive!

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Most distributors delay the decision to replace their current Enterprise Resource Planning (ERP) business system as long as possible. It’s not that there isn’t a perceived or real need to improve the business through better technology. It’s not that distributors don’t have the money or think that it would be a poor use of those funds. Rather, what we most often find is that their memories of their last major technology implementation are NOT good memories.

Yes, implementing new ERP technology is difficult, but with proper planning and realistically managed expectations it can be made much less overwhelming. So if you are asking yourself, “Is it time to replace our ERP system?” these helpful tips should provide some guidance.

1. Create a technology plan that aligns with your business goals.

2. Educate yourself on what current ERP technology can do for your business (some to consider).

• Dashboards with Key Performance Indicators
• Auto sending of documents via fax or email
• Searches from anywhere within a field
• Paperless warehousing
• eCommerce for customers and new prospects
• Business alerts

3. Assemble a cross functional leadership team to evaluate your current technology.

4. Develop clear process and functional requirements for all aspects of your business.

5. Determine if your current technology can satisfy all of your requirements.

6. Develop your ERP enhancement implementation plan.

7. Execute your plan. If your ERP system cannot meet all of your requirements, move on to step 8.

8. Determine viable software solution providers to consider.

9. See exactly what the software can do for you specific distributorship.

10. Develop a budget for software, ongoing maintenance, implementation services, training services and hardware.

11. Analyze your choices and make a decision based on both quantitative and qualitative measures.

12. Negotiate fair and comprehensive agreements.

13. Assemble a cross functional implementation team (not necessarily the same as the selection team).

14. Assign or hire a strong project manager.

15. Develop a project plan (detailed timeline) that also takes into consideration your human resource constraints.

16. Carefully manage all aspects of your project plan.

17. Work with a sense of urgency, but not a frenetic pace.

18. Celebrate small successes with the entire organization.

We can’t cover all of these ideas in one article, so let’s begin with a discussion of the development of a technology plan. In future articles we will talk about how to evaluate your current ERP technology and how to select and implement a new ERP system.

Let’s start with the foundation; a technology plan. The most important aspect of your plan is to make sure it follows and does not lead your corporate strategies and goals.

That said, there may be some valued expertise with a particular operating system (Windows, Linux, iOS, etc.). If that is the case, your technology plan may need to include that constraint to enable faster implementation and support of new technology. The key elements of your plan should include:

• Corporate strategy and goals
• Technology strategy
• Purpose of the technology plan
• Business-focused technology initiatives
• Specific technology goals - short and long-term

Make your technology strategy support your corporate strategy
In your technology strategy you should be focused on where the business is headed and how technology can play a supporting role in the journey. The strategy should aim to solve business problems through technology. The one mistake we see distributors make is allowing the technology plan to take over the overall business plan. This can happen when one technology leads into another and another.

We saw this firsthand when a distributor was executing a portion of their plan focused on hardware. What began as a desktop obsolescence road map led to outside employee laptops and then to the recommendation that the entire company rapidly transition to tablet computers. Before they knew what was happening, proposals were flying in from hardware and peripheral device providers and mobile application development firms.

Everyone was very excited about this 21st century path, but little thought was being given to the actual business benefit and ROI that could be expected from all of these initiatives. There are times that a strong ROI cannot be achieved. That fact in and of itself may not be a reason to delay the selection and implementation of advanced technology. The new technology could be necessary to just keep pace with your competition or support other processes within your distributorship.

Have a purpose
If your plan has a written purpose, it will go a long way toward explaining what you are doing and why. This will help everyone in your organization better understand the technology improvement process. It will provide the framework for evaluating and prioritizing technology projects. Without a purpose, the organization will have a tendency to start projects simultaneously that could actually overload resources and result in failed projects throughout the business.

Clearly defined and planned-out initiatives will be the visible elements of your plan.
Your organization might forget your strategy and purpose, but they will surely see your initiatives. While it may be the job of the IT department to execute the initiatives, they will almost always have an effect on another department within the organization.

Your initiatives should always support key business requirements. One of our clients created an initiative to improve the remote connectivity of their disparate sales force. Their existing remote access technology was inefficient and buggy. They replaced it with one that could support more than 20 instances at any time, day or night. There was almost immediate payback in improved efficiency and access to their core business system by people throughout the organization.

Goals are also an IMPORTANT part of your plan.

Developing “SMART” goals will help you develop the appropriate initiatives through the life of your plan. The acronym SMART represents, Specific, Measurable, Actionable, Realistic and Time-based. When you include goals in your plan, you will add one more ingredient that will help you successfully execute it.

An example of a goal might be to migrate all users to a new operating system by the end of the year. The reason for this might be that the current operating system is no longer supported or that another soon-to-be-implemented software technology will not run on the current operating system. Whatever the reason, the goals should help you move forward with your specific initiatives.

As you embark on creating a technology plan, remember that there are certain key elements that need to be included. Stay focused on supporting the corporate strategy. Also, it is important that you concentrate on key business needs rather than get caught up in the latest and greatest new technology.

In the next issue, we will cover the ERP selection process. If you are considering embarking on the selection of a new system, we are here and happy to help guide you through the decision process.

If you have any specific questions, please feel free to contact David Panitch, your technology advisor at The Distributor Board. CS

David Panitch is a partner in The Distributor Board, which builds value for distribution companies through expertise in planning, sales, marketing, M&A, organizational development and related disciplines. Contact him at 847-868-2004; David@TheDistributorBoard.com; or at www.TheDistributorBoard.com.