Like annual employee performance reviews, your ERP system needs one, too. And when it comes to ERP peformance, many enterprises think it is a one-and-done proposition to implement an ERP solution, especially given the time and resources devoted to its deployment.
However, if your ERP has fallen into the category of a “legacy” system, one that is outdated and/or has not been updated, it’s time for a performance review. Are users increasingly not using it to its fullest or finding manual ways to accomplish what the ERP is supposed to be doing? Are users enthusiastic about using it, especially younger staff members? How old is it? (If Bush ‘41 or Clinton was in the White House, it’s time for retirement.)
It’s crucial that you measure how well your ERP is currently performing to decide if a new ERP would better serve your enterprise or if you can continue to depend on it. A business process review will give you the answers you need.
In your ERP performance review, two overarching questions stand out:
- Is it time to begin the process of upgrading my company’s ERP?
- By staying put, is my company missing out on other benefits?
Here we spell out the major factors to consider as you decide if your ERP is giving you the best performance possible or if it’s time to update it. An ERP selection project is a major undertaking and one that deserves serious analysis of the value and risks associated with it.
Step One: Consider the Value of Your Current ERP
The best first step in an ERP performance review process is an unbiased assessment of the value of your current ERP. You want to determine if it is still keeping its promises in terms of value. Is it still performing as it did on Day One?
Think about these five areas of value:
- Does your ERP still support all current business features and functions?
- How well is your ERP integrated with all external systems, applications, customers and suppliers?
- How is the end-user technology operating?
- Look and feel: is it intuitive?
- Workflow: does it synchronize with our current process?
- Is it fully integrated with Windows?
- Does it provide the company with real-time information and business intelligence, with these must-haves:
- Data cubes
- Report publishing
- Culture: does the ERP fit with how we do business today?
Step Two: Examine Risk
Oftentimes, we only talk about risk when the business is in the middle of a melt-down following an unexpected development. However, it’s vital to look at risks that threaten the health of the system on a routine basis. Consider these questions about risk:
- How is the integrity and day-to-day performance of the hardware/software? Has it been updated on schedule? Are all modules working as initially designed?
- How well is your vendor supporting your system? Is that support in line with your initial contract? How expensive is it?
- How secure is your ERP? Cybercrimes are increasing every day; are you protected?
- Does your IT staff have too much to handle in the way of support and maintenance?
- How well has the system kept up with industry standards/government regulations and compliance issues?
Such an analysis identifies the information needed to develop new and improved business processes. Review the current state of operations, implement process improvements and deliver a confident business case that justifies the ERP decision.
Step Three: Analyze Business Processes
Here is where the heavy lifting really comes in: business process analysis. It’s an important step and one that many enterprises are unwilling or unable to take. It’s an assessment of areas of the business that might need transformation to become more efficient and cost conscious. Such an analysis forms the structure and identifies the information needed to develop new and improved business processes. Review the current state of operations, implement process improvements and deliver a confident business case that justifies the ERP decision.
Any business process analysis must look at:
- Key performance metrics
- Redundant processes, data, and data entry, a.k.a. “waste”
- Value of the process
- Problems with the process
- Areas for improvement
The result of this ERP performance analysis is true business process transformation. Transforming your business processes means creating a vision of the future state from your current state – and defining the business value for the project. Done properly, this foundation will establish alignment of expectations with management, improve the efficiency of your team, eliminate process waste, and reduce the time to benefit for your project.
- Ultra Consultants offers an on-demand webinar that focuses on the issues raised here. Check out ERP Health Check: Is Your Business At Risk With Your Legacy System?
- Read further about the risks of a legacy ERP system in the timely white paper: ERP Maturity and Health: Is Your Business At Risk With Your Legacy System?