Walk before you can run, lessons on choosing the right IT system

CHOOSING AN IT SYSTEM is one of the most strategic decisions for mid-market companies and key decision makers can face a significant dilemma. Should I choose a system for today, or for how the company may look in 5 to 10 years? Should I go for a full system or start small with a limited number of functions?

Should I try to cover 100% of the company’s needs or only aim for a fraction of them? Do I have to cover all requirements with one single system? Should I go for a comprehensive, full function system requiring a 12-18 month implementation, or for a simpler system with fewer functions that could be implemented in weeks? What balance will get us the best return on our investment?

I could go on and on with questions that are all relevant. But instead I would suggest reversing the thought process, so rather than trying to solve all my outstanding issues with a new system (usually it would replace something already used) thinking about how to improve what I already have. The principle behind this approach is that sometimes in terms of IT, in aiming for the best, we ignore the ‘better’ solution.

The value of an IT enterprise resource systems (ERP) system lies in its integration across a company and the data gathered when using it. ERP systems marry up all technology, such as sales ledgers, accounting and finance and other parts of the business into one system.

Not bigger but better

When upgrading your software why not start with a modern solution, well integrated and covering 80-85% of your needs? We all know the last mile is the most costly and problematic. So why look for perfection when 85% would help you make a giant step towards efficiency? Go with as standard a system as you can to start with. Implementation will be very significantly reduced, both in terms of cost (three to five times cheaper) and duration (up to 10 times faster).

This properly integrated system will immediately make your processes more fluid, improve cross- functional collaboration, reduce operating costs and most importantly, help you understand what you really need for the next step.

One of the biggest mistakes I often see is companies attempting to replicate existing processes within a new system. This implies significant tweaks in the system through customisation. On top of making your life miserable for future upgrades, this also changes the way your solution behaves and you won’t benefit from all the best practice that has led to the development of the built-in processes.

Performance can also be dramatically reduced and future evolutions will be more difficult to leverage. Implementing a new ERP system is a great opportunity to re-think your processes. We love to think we are different, and guess what, it’s true! But being different doesn’t mean we are totally unique. Step back and try to honestly define what makes you better than your competition (at the end of the day, this is what counts) and you will probably end up with two or perhaps three processes that are really distinctive.

So go for standard solutions and then, after a period of usage (say 9 to 12 months), make informed decisions on where to put your investment to differentiate yourself in the market. 

When that’s done, make sure you have as many people as possible using your system. ERP is not just for specialists or just for accountants or plant managers. Everyone, one way or another, should use the system starting with you. Why is this so important? Your ERP system will be your decision making tool and based on the collected data you will run reports, analysis, or even simulations.

These activities will bring value if the system truly represents your business. To get there you need to ensure everyone contributes to it, the experienced and the non-technical alike. Your customers, your partners, and your suppliers can also enrich your data set, which will help you make better decisions.

Start small with a standard solution across the business and progress quickly, in weeks, learning by experience instead of writing books, encouraging usage across and outside your organisation, and make informed decisions for additional investments that will make you more competitive.

At the end of April this year, I had the privilege of visiting the Marussia F1 Team and talked to their operations manager Kevin Lee. He often uses the expression, “you have to learn to walk before you can run”. This is the principle he applies to everything he does in improving the team’s competitiveness in Formula 1. So he enacted this principle when implementing his new ERP system and succeeded: implementation time – eight weeks, number of specific customisations – 0.

Christophe Letellier is CEO of Sage ERP X3