Industries studies show that approximately 50% to 60% of mid-market companies have outdated information systems. This means that nearly half of management teams in the mid-market are asking themselves the question “why ERP”?!
Ultra talks to many manufacturing executives every year that represent the 50% to 60% that are evaluating that question. Is it time to replace an aged legacy system? This becomes a major decision for the management team and often can require detail evaluation.
Often Ultra is asked to help develop an ERP assessment on the current ERP legacy system. During this process the management team assesses the pros and cons of an ERP software replacement. Here is what we see.
Arguments for a New ERP System
Most of the arguments for a new ERP system focus on the benefit of a new system:
- Improve productivity of the ERP system users
- Eliminate waste in business processes
- Improve access to information to make better decisions
- Increase customer satisfaction
- Increase the speed of communication
- Improve supply chain management of supply chain
Arguments Against a New ERP System
Most of the arguments against a new ERP system focus on reasons why an ERP project could be a bad idea:
- The transformation to a new system is a major project and the company does not have the resources available to be successful in the coming year
- The current system works, why change?
- ERP projects are risky and often fail to meet expectations
- ERP projects cost too much money
- We need to improve our processes first
All of the above points are valid. You can make an argument for a new system and you can make an argument against a new system. It is up to the company’s management to thoroughly understand these points and decide what is right for the company at that point in time.
At Ultra, we believe the key to this management process is education. Management needs to get educated on benefits of a new system, risks of an ERP project, options, and costs of an ERP project.
It is also important for management to understand that the question “why ERP” will not go away. Technology is progressing faster every year. Old ERP eventually will become outdated and will need to be replaced.