You’re convinced it’s time to invest in a modern ERP system. Now what?
As readers of my previous blogs on ERP 2.0 probably know, I like to use metaphors. So let me start by setting the stage talking about cars.
Whether you’re migrating from an on-premise system or starting from scratch, get ready for the best ride you’ve ever experienced, in a new car equipped with features and technology you not only need but couldn’t even imagine you wanted—for endless opportunity on the open road ahead.
Best of all, there’s a team of talented technicians and master mechanics silently riding along with you. They keep your car refueled (or recharged if electric) while continually optimizing your engine’s performance, along with all the other systems required for modern vehicles. You can focus on your journey; you just steer and adjust your speed to meet your goals. Nothing can stop you.
No matter what your starting line looks like, give some thought to what you will need to proceed without encountering roadblocks.
For new ERP users, such as start-ups that have outgrown old, ad hoc and disconnected processes, engaging with an expert who can help you plan your deployment and tune the system to your needs is an important key to a successful project. Something as simple as not being familiar with terminology can slow your adoption.
For example, a common term many new to ERP aren’t familiar with is chart of accounts. Chartered accountants—and those of us who’ve been around since the ERP 1.0 days—can rattle off such terms, but leaders at lots of successful companies that are driven by new ideas and new technologies don’t have similar experience. Someone with rich ERP experience can help you plan and manage your deployment, and set up (or migrate) that all-important chart of accounts, to meet your business needs.
For organizations with existing ERP, the biggest step in planning is comparing your current state to your ideal state to map out required data, data flows and process point connections. Here, too, outside expertise can be helpful for guiding change without disruption.
Regardless of the ERP or accounting system you’re coming from, take a hard, introspective look at what you’ve got today. Try to inventory the data you need as best you can, and then move forward in incremental but well-defined steps.
It’s important to be realistic about what data needs to be kept if you want to maintain simplicity. You shouldn’t need to move everything. Even government tax agencies don’t require tax records be kept forever. Once you understand what has to move over from your current state, start building a plan around your ideal state in small steps.
I’m a fan of the incremental approach because it can deliver quick wins and build momentum and credibility. If a project is too big and/or takes too long, users may get frustrated and wonder why they ever wanted to make a change. Instead, take a step approach: “I’m going to do financial, then I’m going to do procurement, and then I’m going to do project management.”
Have some clearly defined goals so you gauge your progress, make adjustments if necessary, and then, ultimately, document successful completion of your goals.
New-to-ERP organizations will need to go through roughly the same steps of mapping current state to ideal state, but they’ll have a much smoother experience over the life of the platform compared with legacy ERP users.
First, there are the seamless scalability and low-resource aspects of cloud delivery. The cloud doesn’t care if you’re a company that has 200 people today and plan to have 10,000 people in five years, or if you’ve got 200 people today and will have 500 people in five years. The cloud is elastic and adjusts without anybody having to mess around with it. In the past, a new ERP system would have required hiring new staff and buying new hardware—and then doing it again when needs increased.
Second, new-to-ERP users get to start with a clean slate, so from the beginning they can embed modern best practices that support their strategy and goals. Essentially, everything that’s been learned from four decades of ERP is available in the DNA of the cloud.
No matter the size of your company, with a modern ERP system, you’ll also have the same out-of-the-box capability as competitors, even if they are much larger. In this way, cloud delivery makes ERP a combination of an equalizer and multiplier at the same time; it fits any size company with the same performance levels, but it also reduces non-value-add resource commitments so those resources can be used for unique, value-adding work.
The cloud is no longer a novel concept. It’s been proven as a secure, lower-cost and higher-performance alternative to server-based delivery of business platforms. Yet, some companies are still hesitant to use cloud applications.
They shouldn’t be—not only because we’re past the proof-of-concept stage, but also because it has become the de facto value-delivery environment, internally and externally, used by thousands every day in every industry across the globe. Simply stated, today’s ERP conversations start and evolve with the cloud. Not keeping up with this historic change is risky. If the cloud is not selected to drive your organization, the rationale for something else is very difficult to document and probably a career-limiting move. Cloud advantages keep multiplying at a remarkable (if not dizzying) pace. As they do, the old ways of working are rapidly declining and will eventually disappear—especially as you engage employees who have grown up with the internet.
It’s the same disruption story we saw when cars began replacing horses and buggies. There was a lot of fear around “horseless carriages” in the early 20th century. A few generations later, we’re seeing the first versions of driverless cars on our streets. All products and technologies experience a life cycle and disruption. There is no exemption to these basic economic principles for on-premise software—and the marketplace is, once again, clearly proving this point.
Recently my 9-year-old son and I were at a car show looking at an old Volkswagen Beetle. He looked at the big black crank on the inside of the driver’s door and asked, “What does this thing do? Why is this big knob on the door?” I explained how it turned a big gear to open the window. His response was, “There’s no button?” (And this old Bug also had no fuel gauge—just a dashboard lever to release the last gallon of gasoline when the engine started to putter).
Like the crank window in a car with no modern technology, ERP 1.0 has come to the end of its meaningful product life. Fortunately, ERP 2.0 has emerged as a superior alternative. Not modernizing is like refusing to use a modern car because it has electric windows instead of cranks. Eventually, you’ll be stranded on the side of the road with working windows as countless modern cars pass by—giving you no choice but to wait for hard-to-find help and difficult-to-find, no-longer-made parts, despite a thick pile of receipts from payments to your mechanic.
To get started on the road to finance in the cloud, I invite you to download our handbook, "Your Complete Guide to Modern ERP."