An ERP health check and measurement of your system’s maturity is as necessary and regular as a check-up for the things that run us and our lives – our bodies, the car, the furnace, even the fridge. We need to be as honest about the systems that run our businesses as we need to be about the other things. Face it, they may be “getting up there” in age.
Your ERP system is at the core of your business. Taking measure of its maturity and performing an ERP health check can provide your company with an evaluation of the value of and risks within your system, and an assessment of your company’s overall performance. But how do you begin and what factors must be accounted for and measured to help you decide if it’s the right time to move forward with a new or upgraded system?
Say ‘Aaaaaa’: Start the ERP Health Check by Examining Value and Risk
The decision may already be made about your ERP system: You’re sticking with your current system, or you’re starting an ERP selection upgrade or replacement. Therefore, the necessity of a health check for either of these scenarios at first glance may look avoidable. However, a thorough examination of two critical factors – value and risk – can determine if your company is being held back by an out-of-date legacy ERP system, and what risk management steps your company needs to take to go beyond those that account for daily maintenance or disaster recovery:
- Value – In an ERP health check, your initial questions about your system must relate to value. Specifically:
- What is the value that our current ERP system is providing?
- What is the value of a new ERP system?
- Can our existing ERP system match the value of the new ERP?
- Is our business being held back by the lack of an ERP system or one that is up-to-date?
- Risk – Questions on risk regarding ERP are often led by the system “going down” or disaster recovery; questions of business continuity and catastrophic failure are important to address to be sure. However, there are five risks other than these that are far often more damaging to a company and occur with far greater frequency, therefore deserve equal if not greater questioning in an ERP health check:
- System and hardware health
- Vendor support
- IT staff’s ability to support the system
- Government regulations
Take a Deep Breath: Five Factors for Moving Forward
In addition to value and risk, a proper ERP health check will incorporate five additional factors if you are moving forward and considering a new or upgraded ERP system:
- Features and Functions – What are the products for your industry? What are some of the key features and functions needed to operate at peak efficiency and stay competitive? Companies are wise to align with an ERP vendor with proven success in a specific industry.
- Cost & Contracts – Considering direct and indirect costs, an ERP system represents a major investment in capital expenses and resources. What is the system cost and your company’s expenditure (time, resources, change management, training) in an apples-to-apples comparison?
- Company Risk – Who is the ERP vendor you are buying from? Will they make a good partner? How many years have they been in business, and how many years has the application been sold in the market?
- Technology & Platform Risk – A wealth of questions should be asked about the underlying technology, such as the database structure, as well as the delivery model, since a vendor’s current and future cloud offering is critical for the future of both domestic and international business.
- Implementation & Support Risk – Questions include: Will the implementation be led by a systems integration partner or directly by the vendor, and do they have experience in your industry? Also questions covering support during and after implementation are critical to ask.
Get Educated, Get Healthy: Get Your White Paper on ERP Maturity and Health
Performing an effective ERP health check is the topic of our latest white paper, “ERP Maturity and Health: Is Your Business at Risk with Your Legacy System?” The paper contains further details on the points presented above, plus:
- A calculation of approximate cost of a project
- Value and risk checklists to get you started
- Results of our survey on legacy ERP users in the wholesale distribution and various manufacturing industries, demonstrating that those with legacy ERP systems of 5 or more years in age can benefit from an ERP health check.
Ultra has helped several hundred manufacturing and distribution companies put in place a sound and comprehensive method of examining and preparing their enterprise systems and people for a major project.
Download this complementary white paper and start taking your first steps to a healthier ERP system for the life of your business.