ERP Evaluation Process Blog Series: Identify Need for Change – Series 1 of 4

My relationship with a CFO or head of finance usually begins with some form of the phrase “We need a new ERP system.”  The backstories, the reasons, the justifications (both for and against) typically focus on inefficiencies and constraints to growth.  All very compelling. What will follow in my posts in the coming weeks will be my observations from working with companies through each step in the evaluation and decision process. These observations are heavily weighted towards those companies that were successful, some wildly successful, with their business systems improvement projects.  What I will cover in the subsequent posts is the following:

  1. Identify Need for Change: “We need a new system”
  2. Formalizing the Need:  Budgetary approval and documentation
  3. Identifying Partners/Vendors/Solutions: To RFP or Not
  4. What You Need to Know That No One Will Tell You

Let’s jump into #1 right now.

Identify Need for Change

I have worked with hundreds of SMB companies and most of my interactions with them have been related to the “need” to replace their existing accounting system.  Oh, there have been many discussions on how to improve processes, integrate other systems or add customizations to get more out of their existing system, but in all cases a decision needed to be made to spend or not to spend.  I would love to replace “spend” with “invest”, but for many companies this reframing is difficult to buy into.  For those that do see business systems spend as an investment you will be an example for success that will be used in the series of posts on this topic.

As I cover some of the more prevalent issues that I help companies resolve I will attempt to avoid the exception cases that often cloud where companies should be focusing in order to make sound decisions on investing in new business systems.  On nearly every occasion the focus initially is on identifying the “needs” for a new system.  The initial needs are usually easy and can be found in a simple topic – better reporting.  Broken down, this means more accurate data, faster access to that data, and data delivered in a way that decisions can be made.  The symptoms of being deficient in these areas are fairly common – manual re-entry of data from one system to another, slow month-end closings, individual(s) on your team spends an inordinate amount of time manually producing something like an inventory reconciliation, revenue recognition and deferred revenue schedule, producing an accurate revenue forecast, or the inability to generate a timely and accurate cash flow statement.

I look forward to sharing in my next post how successful companies Formalize the Need.

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