OK or Not OK? How to Check the Health of Your ERP System
ERP system health comes up frequently as we work with clients to improve key business processes. And on many projects, it’s the key to determining whether to move forward with the existing software solution or replace it.
Why is it important to assess the health of your ERP system? Because the results reveal the capabilities and strength of the technology you lean on to manage your core processes and drive the performance of your business.
Performing a health check, and taking measure of your process maturity, provides your company with an evaluation of the value of and risks within your system, and an assessment of your ERP solution’s overall capabilities.
Manufacturers and distributors that rely on out-of-date, legacy ERP solutions may be exposing their companies to avoidable risks. It’s critical to have an accurate evaluation of ERP health to determine if it’s time to invest in a new solution. By taking the time to assess health, a company decision-maker will have a more informed perspective on the viability of their current ERP solution.
But where do you begin? And what factors must be measured?
A thorough examination that works through these five areas can determine if your company is being held back by an out-of-date legacy ERP system:
Five Areas of Focus
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?
Questions on risk tend to revolve around the potential for the system to go down or be unable to recover after a disaster. And, to be sure, questions of business continuity and catastrophic failure are important to address. But there are other risks that are far more damaging to a company, and that occur with far greater frequency:
- System and hardware deterioration
- Vendor support changes
- IT staff’s ability to support the system
- Security maintenance and gaps
- Changing government regulations
- Vendor stability and strength
3. Cost & Contracts
The health assessment must take into account the direct and indirect costs of an implementation. A new ERP system represents a major investment in capital expenses and staff resources, as well as other components like change management and training. Make the effort to get an apples-to-apples comparison of the cost of maintaining your existing system versus implementing a new solution.
6 Software Selection & Implementation Pain Points + Solutions
Software selection and implementation processes often present challenges of their own. To steer you around trouble and help you drive success, Ultra’s experts compiled a list of pain points and solutions to be aware of as you embark on this journey.
4. Technology and Platform Risk
Detailed questions should be asked about the underlying technology, such as the database structure and delivery model. And it's important to determine, for example, if the solution will enable future growth and support international business.
5. Implementation & Support Risk
The key questions here include: Will the implementation be managed directly by the vendor? Or will it be managed by a systems integration partner or consulting firm? Does the partner or consulting firm have expertise in your industry? What support will be provided by the vendor during and after implementation?
Ready to know more?
Ultra has helped hundreds of manufacturing and distribution companies evaluate their existing system using a structured, comprehensive approach. Contact us now to discuss a health check.
Jeff is the founder of Ultra Consultants, a well-known voice in the ERP consulting industry and an expert on ERP solutions for discrete and process manufacturers. Over the last 40-plus years, his companies have helped more than 2,000 organizations improve their business processes, select ERP software and implement advanced solutions.