“Although there were bumps in the road for Nestle USA’s ERP implementation, it certainly seems to be paying for itself. As of 2002, Nestle USA claimed they had already realized a savings of over $325 million [from] supply chain improvements, specifically demand forecasting.” -CIO.com
From Nestle to RM Foods to your county government, companies utilize Enterprise Resource Planning (ERP) systems such as NetSuite, Sage, and Microsoft Dynamics to streamline operations, enhance the customer experience, and drive growth. But just because ERP systems are referred to as the silver bullet in business does not mean an ERP system is the answer for your business.
Enter Doug Blumhardt, a 40-year veteran of business operations and enterprise systems across multiple environments—military; large-scale corporate; international non-profits, and more. Doug led a breakout session at MivaCon 2017, our annual ecommerce conference, answering business owners’ biggest questions to succeeding with large-scale enterprise integrations.
How do I know if I need an ERP?
An ERP is a system of business processes that tie the functions of technology, services, and human resources together. And though they may dramatically reduce cost, ERP systems also come at a high price: licensing fees; implementation woes; and personnel issues, to start. Asking the right questions upfront can help determine if an ERP is the best solution for you today.
“It’s a question of growth. I don’t think there’s an absolute that everybody needs an ERP, [but] with what stage you are at in your business.” -Doug Blumhardt, President and Managing Consultant of Business & Technology Consulting, LLC
Take, for instance, the case of a non-profit business incubator which approached Doug in search of an ERP. Drilling down into their processes and goals, Doug found the best solution not in an ERP, but a CRM. “Even though [my client] didn’t have a sales process, the CRM we chose is a great customer-centric model they could use to scale data and relationships while still offering enough support through its accounting, and other, systems.”
The following questions will help determine whether an ERP system is the next best step for your business:
- How complex is my backend? “If your business model hasn’t grown to the point of focusing on financial metrics, you might be better off with an order management [or other] system.”
- How much time and money am I willing to invest?
- Temporally: “Implementation requires a long-term view of how well you want to prepare your business to scale. If you think you’re going to sell in two years, don’t do it.”
- Financially: “If you don’t have the funds to do an ERP project don’t take it on; it’ll probably cost you more than you think.”
Which ERP system is right for me?
A quick Google search for “best ERP system” will serve up key contenders by keyword, but until this search engine can ask you questions, the answer lies within your process
“I don’t think you’d find any of the leading ERP platforms inferior, but it might mean buying a school bus when you’re an Uber driver.” -Doug Blumhardt
What worked for Company X might not work for you as several factors come into play: your business model; industry vertical; core competencies; the nature of your suppliers’ purchasing contracts; shipping methods, and so on. With over 200 ERP systems on the market, finding an experienced consultant will not only save you money in the long run, but will help determine the best system for your business.
“People often choose software and then look for a consultant to work with that software. No, select software at the end. The earlier you bring someone in, the better, because it informs all the decisions down the line.”
What skill set should I look for in an ERP consultant?
Many consultants prefer to start with the system they’re most comfortable in. But the best consultants seek to understand your business model and processes, first. And though cost may cause a pause to seek outside help, the right consultant will save you money in licensing fees, as well as through a more seamless process.
Look for the following qualifications in the best ERP consultants:
- They understand the difference, and relationships between, the proper systems: “They must understand the difference between ERP and ecommerce, electronic payments and EDI—all of these components.”
- They have experience implementing enterprise systems: “IT people most likely don’t have the product exposure, and as much as they don’t have the experience to select the right product, they also don’t have the experience to implement it.”
- Most importantly, they take the time to understand your business: “If they’re quoting you an implementation without having asked you a thousand questions about your business, they’re essentially telling you: ‘you buy the system, and we’ll figure out how to retrofit it into your business.’ They’re systems people thinking for business people.”
What other factors contribute to a successful ERP implementation?
1. The ultimate result is an inside job
As Doug advised at his MivaCon 2017 breakout session, no matter who you get from the outside, the ultimate result is an inside job. “The consultant’s job is to get you, and your team, ready to own and manage the process.”
Take the case of Nestle which had to halt their rollout without the right people in the room, showing that:
- Tapping the right team members to contribute to, and champion, the project from the start greatly affects success
- Continued training continues success—starting from system testing, to in-depth instructionals
2. Roll out the implementation in one sweep
Implementations require synchronization across several systems and interfaces to other suppliers which become more complex with scale. As daunting as it is to pick a date, phasing will cost even more money, time, and setbacks.
“ERP is not given to phasing very well,” said Doug, who compared the process to “doing a heart transplant on a guy who’s running a 10k while he’s running it.”
“The most cost-efficient way that any company can get onto a new ERP system is to do most of it at one time.” -Doug Blumhardt
3. Don’t forget to convert your data
Finally, Doug touched on one of the biggest challenges to implementation: remembering legacy data. “Don’t let anybody convert you to a new system without getting the data converted,” Doug advised. “Otherwise, you’re essentially starting your business from scratch in a new system. You won’t know who your customers are, and you won’t know your order history.”
Achieve Integrated Omnichannel Control with ERP and Ecommerce
Ecommerce is essential to every sales-focused business model. Download this whitepaper to see how Miva helps elite manufacturer brands like GHP Group, Inc. achieve integrated omnichannel control, then find more success stories here.