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Episode 1: Someone said ERP renewal - was that for real?

This six part series about ERP projects has been written to highlight - with some humour - the lifespan of an ERP project from the first idea all the way to it going live and thereafter. The internet is full of excellent material that has a lot of detail on each of these steps, but a general overview of the most common steps with a “what to remember” emphasis has so far eluded me. I have kept the text light, used quite a lot of humor (that is funny because it is true) and attempted to highlight some of my experiences over the last 15 years working with ERPs. I hope you enjoy this series and would love to hear your thoughts about the topics.

The reasons why someone might say ERP renewal are numerous. It might be that the systems you are currently running are near the end of their lifecycle, the business has changed and a new system to support that change is need, or someone is just either a bit bored or wants more excitement in their life. But the most important thing to determine immediately is whether a new ERP system is really needed or this is just a false alarm.

I say that because quite a high percentage of ERP projects are done for the wrong reasons. I have met clients who have already purchased and implemented a perfectly good ERP but never put it properly into use. In one case, I challenged the client about not really wanting what they were asking for and suggesting that they would be better off getting a couple of consultants to finish the badly executed implementation. The client did not see it that way and spent a hefty sum of euros only to end up with the same problems they had with the previous system.

Checklist for this phase:

1. Write down what you mean by ERP in the current scope. In some cases, someone’s ERP is someone’s CRM or a mix of different kinds of applications. 

2. Think through, why you need a new ERP. Don't just think that an ERP project will fix the problems in your processes. Instead of fixing them, the project will bring them up front and center.

3. At this point, don't think in too much detail about the technology, even though the temptation may be high. What matters are the key personnel and the processes you will be implementing. An ERP is also a large animal and looking at just one specific area will not be fruitful, which is usually the case if you run straight to the technical side of things. 

What you should know when discussing ERP projects is that they are usually complex, require a lot of external personnel and put a heavy strain on a company’s own key personnel. The upside is that when an ERP project is done correctly, it supports the business in an amazingly effective way. However, I often notice that the efficiency improvement estimates focus heavily on the cost side. As nowadays there are often systems in place already, the level of new automation will not go through the roof. Therefore, don't just think about running costs, but also take into account the other possible benefits (realistic positives). 

Make sure that:

  1.  You don’t listen too much to the CxO who just did an ERP project with supplier X and Software Y and says that it was excellent and provided super dooper results. Every company is different and looking at how an ERP was done previously so some other company might not be quite as useful as you would think. 

  2. You already have a common understanding of the term ERP. You can discuss, for example, what processes the system should support in the company. Quite often, you might find that you are talking about a combination of CRM, ERP and MES systems. Although one ERP could cover all the above, most likely it will not be best of breed in all areas. 

  3. If you are running multiple different businesses, think about whether the project will involve all of these businesses or just some of them. Also, discuss possible future developments in the company to find out not just the current but also future needs.

The result of this phase can be either:

  1. They came to their senses and did not mention an ERP  renewal again. You make the most out of your current systems and continue improving them. 

  2. No, they really meant it. What happens in this case will be covered in the next chapter.

About the author:

Erkki has worked with ERPs beginning from 2006 both on the client and the vendor side. This work has been mostly around Dynamics AX / D365, but he is also familiar with other systems. Erkki has had a front row seat to how the ERP world changed from on-premises servers to the cloud.

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