To Re-engineer or Replace ERP software, that is the Question – Start by THINKING About IT.
After 20 years in the business management systems industry (sometimes called ERP), I have observed some trends and behavioural patterns that lead to great results or outcomes. Conversely, I have watched some that lead to disastrous consequences for companies, organisations and their people.
Often a business faces various challenges, has growing needs and, by progress, is faced with having to take new directions and unlock opportunities. Growth and change in a business context bring challenges and require changes.
Change starts with a mindset that needs to be deliberately focused on what is required. So often, I notice that our initial instinct is to think we must change the system, change the people, or both. I believe this is a knee-jerk reaction to the challenge brought about by anxiety and the need to do something urgently.
When we try to rationalise that thinking, we start thinking that a newer, more extensive, shinier system will solve all the challenges and problems we face. It sometimes can, but at what cost and what are the risks? More often, it does not solve the business challenge or concern but exacerbates it.
When a decision to change a company’s business management software, systems or people is based on the above scenario, the results are often catastrophic. On the other hand, it may also turn out that the result is a minimal gain for astronomical costs.
Several case studies and examples I have observed and seen playing out before my eyes support these statements and perspectives.
So, how do we solve business problems, challenges, needs and requirements about business management systems?
Firstly, let’s agree that Information Technology is meant to be an enabler for businesses and to give businesses an advantage. So it should be the ‘special tool’ we use to solve the business need.
When we “decide, ” this must result from thinking first. We believe this starts with applying design thinking principles before deciding the possible solution scenarios.
In making a decision based on a design thinking process, we often end up with a pathway to a less risky solution that is more likely to succeed and positively impact the business. This is agile thinking, and decisions are not based on perception, which can often be the trap when looking at shinier objects.
Before throwing the baby out with the bathwater, stop to think about whether the technology you already have could not be re-imagined, re-purposed, augmented or upgraded to meet the needs of the business.
Don’t do it by inviting the “gunslingers” in the industry to help you decide; their objectives are very different to yours. This often leads to overpriced, complex and overly disruptive solutions that are not sustainable for the business.
Why do this when you could have taken on the next version or edition up from what you have and added a few extra features for your needs?
You could adopt a new system, but it should be the right size and a natural next step up, not one based on perception or the “gunslingers” spin on what you need. You may have many “upsize” options to the existing system.
So our advice is…….Think about IT.
At ADINGA we have learned to apply design thinking to a “problem statement” or a “need statement” before prescribing solutions.
Take a look at the process of design thinking in the graphic below:
This often leads to one of the following solution scenarios:
- Decide whether to re-implement what you already have with some add-ons that make it do much more than what you currently get.
- Re-design or optimise the processes you currently have in place and adapt the system to those.
- Upgrading to a product that is a natural “step-up” that is proven to deliver on your needs sustainably – i.e. your people can be trained to manage it, and it won’t break your business, your people or the bank.
Adding valuable enhancements to the solution in addition to the above, like:
- Business Process Management (BPM) layer – lets you control who is doing what and when.
- Business Intelligence (BI) layer – lets you experience and explore your business data and helps you make decisions.
When faced with this, your business processes require optimisation or reengineering. Here are some key pointers to deciding what approach to take.
Use Business Process Optimisation when:
- The existing process is already mapped/documented.
- The current process fundamentally works but not well enough, with some areas needing improvement.
- Your focus is on the process – not on implementing an overarching business strategy.
Use Business Process Re-engineering when:
- The existing process is redundant or needs a rethink and significant improvements.
- The process fundamentally no longer works, and a major overhaul is required. Everyone agrees that the current approach is useless and needs to be changed.
- Your focus is on the overall strategy and not a particular task.
Which ERP Should I Choose – To re-engineer or Replace your Business Software?
Many companies are facing the dilemma between business process reengineering their existing ERP system and replacing, redesigning and upgrading their current system.
The ERP reengineering method often involves more effort, time, and costs than the ERP replacement and upgrade and more action on software maintenance.
Two sets of metrics are typically used for measuring the success – or failure – of ERP reengineering. The first set of metrics is financial, such as cost savings or ROI. The second is the schedule metrics: speed of implementation, quality of performance, and errors.
Reengineering of ERP is an emerging research area. There is no clear end to the reengineering approach. Still, companies are facing issues in choosing between reengineering and replacement or upgrade.
How to Compare 2 ERPs for Replacing One With Another?
How to compare 2 ERPs for replacing one with another?
Before getting into details of how to compare two ERPs, let us first understand what ERP stands for. ERP stands for Enterprise Resource Planning, which is a system that is designed and deployed for handling and overseeing all organisational resources, both human and material, for manufacturing, sales, marketing, finance, etc.
When an organisation decides to upgrade their existing ERP system with another, they generally have two options:
Reengineer ERP – This is an upgrade to the existing ERP with newer technologies and features. However, the ERP software in this model remains the same.
Replace ERP – The ERP software is wholly replaced in the Replace ERP model. In this model, organisations either adopt new ERP software or choose an ERP vendor for a completely customised solution, depending upon their organisational requirement and business processes.
The model selection also depends on how many modules of the existing ERP software need to be upgraded, replaced, or implemented in the new software.
To Reengineer ERP or Replace ERP, upgrade or re-implementation, replace versus reengineering depends on several factors.
Some of the factors include:
Business Requirements – The business objectives/requirements are essential in deciding whether to Reengineer ERP or replace ERP.
Usage of the ERP – The usage of the ERP software is also an important consideration. If the ERP sees high usage, it should be Reengineered ERP.
Cost of the ERP – The prices of ERP software also matter, especially in cases where organisations choose to go with completely customised solutions from an ERP vendor.
After comparing the above factors, an organisation can decide which model to use: replace ERP or reengineer ERP.
How to Compare 2 ERPs to Reengineer One?
It’s no secret that ERPs (enterprise resource planning) have required a makeover for some time now. As businesses grow, their ERP systems become more and more bloated and difficult to manage.
Fortunately, several ways exist to upgrade or replace an ERP system without completely reengineering it. Some of the most common ways to approach this are replacement, expansion, or a combination of both.
Business needs are the most important things to consider when replacing an ERP system. If the current system is no longer meeting the needs of the business, it’s time to make a change.
When upgrading an ERP system, it’s vital to assess the current system’s capabilities and see where potential improvements can be made. This will help you decide if a total replacement is necessary or if upgrading the system is sufficient.
When it comes to re-implementing an ERP system, this is the riskiest option. This approach involves starting from scratch and building an ERP system from the ground up. This can be costly and time-consuming and often not feasible for small businesses.
Ultimately, it’s essential to consider each business’s needs when reengineering or replacing its ERP system. Doing so can avoid making unnecessary mistakes and achieve the best possible outcome for your business.
Re-engineer or Replace ERP Software – What are the factors to consider?
Businesses must periodically evaluate their ERP solution to determine whether to reengineer or re-implement their ERP or upgrade it. This evaluation should consider the business’s current ERP solution, its needs, its current environment, and the requirements that a company may need in the future.
The factors that should be considered when evaluating ERP replacement are:
* Current ERP solution: Businesses should evaluate their current ERP solution, whether it has been implemented recently or is older, to determine whether it can deliver the business’ current and future needs and requirements. Businesses should ask whether the ERP solution will meet their current business requirements, whether it can provide support for future growth, and whether the current solution can deliver functionality that the business needs in the future.
* The current environment: Businesses should examine the business environment in which they operate, including the existing technology infrastructure and system infrastructure the business uses. Companies should ask whether the ERP solution can support the current business environment, whether any weaknesses in the current climate must be addressed, and whether the current environment meets the requirements needed for future growth. Businesses should identify areas of improvement in the current environment and areas that may need to be addressed in the future.
* The requirements for the future: Businesses should examine the criteria for future growth, both now and in the future. Businesses should ask whether the ERP solution will meet these requirements, whether it will support the conditions in the future, and whether the current ERP solution can address the needs for the business’s future growth. In addition, companies should examine whether the ERP solution requires an upgrade to support the business’s current and future requirements.
* The benefit: Businesses should ask whether the ERP solution delivers the expected benefits, whether it can support the business’s current and future goals, and whether an upgrade can address these benefits to the existing ERP solution.
What are the Benefits of ERP To Reengineer or Replace?
An organisation would want to modify, upgrade or re-implement an ERP system for several reasons. Sometimes, the organisations may decide to keep the present ERP system but upgrade certain features, which is also called re-implementation or known as the reengineering efforts in the IT department.
There are many benefits of ERP to reengineer or replace, including:
- Increased Efficiency and Productivity – ERP systems can help organisations increase efficiency and productivity by automating tasks and processes. This can free up employees’ time to focus on more critical’1 tasks.
- Improved Customer Service – ERP systems can also help improve customer service by providing employees with quick and easy access to customer information. This can help them resolve issues more quickly and efficiently.
- Enhanced Decision-Making – ERP systems can provide managers with real-time data and analytics that can be used to make informed decisions about the business. This information can help managers improve operations and make better strategic decisions.
- Reduced Costs – ERP systems can help organisations reduce costs by automating tasks and processes. This can help eliminate manual labour, saving the organisation money.
Which approach is better?
It depends on the circumstances facing the business. While organisational measures should guide process improvement efforts, it is essential to put these approaches in context to determine which is suitable. In all solution scenarios, one cannot forget the PEOPLE at the centre of human interactions in the business landscape.
Solutions are successfully built and delivered around the three Ps:
PEOPLE | PROCESS | & PROGRAM (The Technology bit)
At ADINGA we strive to help solve your problem and address your needs as a business.
We encourage our clients to review their systems yearly to see if they are keeping up with the business demands and needs.
If not, then we assist in optimising or reengineering. We are strong advocates for people’s power and support constant skills transfer and evaluation of the skills people need to be effective in their roles in the business systems.
We have developed a body of knowledge and are practised at doing this with meaningful outcomes.
We craft technology solutions using our skilled people and the technologies found in the following products:
We craft technology solutions using our skilled people and the technologies found in the following products:
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