Tag Archives: ERP Cost

A beginner’s guide to choosing the wrong ERP software in 5 steps

#1 – Overlooking the “ERP readiness” signals

The first (and easiest) way to start your journey to a new ERP software solution with the wrong foot, is to delay your ERP implementation. Not implementing an ERP software when the time comes can be a costly exercise for the whole business.

In the article “6 ERP readiness signs growing businesses are likely to encounter”, we identify the main readiness signals as:

Your business has outgrown the current accounting software;
Your business is using too many manual workarounds;
The current solution is running too slow;
Your capabilities to expand a geographic expansion are limited;
You need new tools (eCommerce, EDI, AP Automation,…);
You need better reporting (“A single source of truth”).

When these six signals start showing themselves in your business, it’s time to start looking at a new ERP software solution.

#2 – Not defining your technical requirements (In details!)

ERP requirements should be defined prior to commencing any research and selection process. The requirements list should come from every department and area of the business including finance, warehouse, logistics, manufacturing and customer service to name a few.

The requirements list should define the purpose and goals of the new system and answer the question – “how does the perfect environment look for my various departments and for us as a business?”.

It is vitally important to structure the ERP selection process according to your requirements list to ensure success in the short, medium and long-term.

Businesses that don’t have a clear idea of what the new ERP system should possess are likely to encounter a number of challenges post-implementation.

Our advise is for you to take enough time to write a requirements checklist for the new system or to work with an experienced ERP provider to guide you through the process.

#3 – Not considering Cloud Vs On-Premise

Cloud ERP or On-Premise ERP? If you haven’t asked yourself this question, you probably should. ERP software solutions are rapidly shifting to a Cloud deployment model for several reasons – cost-effective implementation, fully managed and maintained, low OPEX, enterprise-grade security, and more. On the other side, an On-Premise ERP setup means that you have to implement and maintain the technology environment to host the software.

There is no right or wrong answer when choosing between the two. However, you should be aware of the advantages and disadvantages that these solutions present. Ultimately, you should look beyond the 5-year ROI to truly understand the benefits that one setup will give you over another.

#4 – Overlooking to capabilities of a modern ERP

Think about your new ERP software as an enabler, rather than a cost centre. New technologies available to businesses of all industries and sizes mean that you can unlock further efficiencies for your business.

Large high-tech companies are already pioneering disruptive technologies, so you don’t have to. Big Data, Artificial Intelligence, IoT, Customer Experience Platforms to name a few. When choosing a new ERP software, keep in mind these new technologies.

#5 – Not defining your budgetary requirements

How much should you spend on your ERP implementation? Have a rough idea of the budget available to the implementation of a new ERP for your business. This will help you narrow down your research and avoid wasting time researching the wrong solutions.

The budget is a critical part of any ERP implementation; it should be discussed internally and with your third-party provider upfront in order to set the right expectations.

Conclusion

At Leverage Technologies, we have implemented ERP software for more than 250 Australian businesses since 2005.

Over the years, we have developed a deep understanding of how different ERP solutions serve the needs of various businesses, from any industries and size.

For more information or to start your journey to a new ERP software solution, call us on 1300 045 046 for a no-obligation consultation or email [email protected].

Top 3 ERP Misconceptions & Myths Businesses Want To Believe

#1 ERP is only for large organisations

The top misconception about Enterprise Resource Planning is that only large organisations have the necessity for ERP solutions.

Our answer is that you don’t have to be big, but you need to have a growth mindset and the ambition to scale your organisation. In fact, ERP software gives you the ability to streamline your operations and increase productivity, no matter what the size of your business!

From Finance to Inventory, Manufacturing, Reporting and more. ERP gives you a “single source of truth” that is used across all the areas of your business to consolidate disparate systems and eliminate manual processes.

Although large organisations have a major appetite for ERP software solutions, small and midsize businesses can also go to market for a new ERP to step up their capabilities.

From our experience, businesses that are turning over $2M+ and are still using a basic accounting package, typically start seeing the “ERP readiness signals” that lead to the implementation of a new system.

#2 ERP is only for manufacturing companies

Manufacturing businesses have without a doubt a large degree of interest in adopting Enterprise Resource Planning solutions. It is no secret that industries such as food & beverage but also discrete manufacturing see ERP has key to success.

However, a common misconception is that unless your business has a manufacturing component to it, ERP has no reason to be adopted.

From our experience, this is certainly far from the truth as our 250+ ERP customers span across virtually every industry! From Wholesale Distribution to Professional Services, Construction, Healthcare and many more, we have seen ERP software work beautifully in a range of different situations.

To further disrupt this common ERP misconception, check the following case studies:

#3 ERP is too expensive

Budgeting for an ERP software is not an easy task and requires involvement from multiple parties. The good news is that there are multiple price points to choose from according to your business size, budget availability and desired outcomes.

“ERP is expensive” – Our response to this common ERP misconception is:

There are multiple tiers of ERP software solutions to accommodate the needs of businesses of multiple sizes. If you are a growing small business, look for “entry-level”, Tier 3 ERP software solutions to start with.
ERP shouldn’t be looked at merely as an expensive exercise! In fact, ERP systems are often implemented when your actual internal systems are limiting your business. By removing the limitations of your current system, you open up to a new way of moving your business forward to better operations, enhanced capabilities and growth. For more information, read our recent article about “the cost of not implementing an ERP solution”.
Modern technologies have transformed the way you use and pay for an ERP software. Long gone are the days of costly, ERP implementations. The advent of Cloud Computing technologies means that your ERP software is now delivered to your organisation “as a service” and the CapEx model is being disrupted by an OpEx alternative. The result? Learn all about Cloud-based ERP and what it means for your business in this article.

Conclusion

If you look at the common ERP misconceptions, it is clear how most companies might be missing out on a true opportunity for growth.

If you still think that ERP is only for large organisations or enterprises, likely in the manufacturing industry, that have access to massive implementation budgets, think again!

Today’s ERP is Cloud-based, adaptable and scalable, which means that any organisation with a growth mindset can step up to a whole new way of running their business.

Interpreting ERP Investment Proposals: Are You Comparing Apples With Apples?

Receiving the perfect ERP investment proposals: It all starts with your requirements

First of all, it is highly likely that you will be considering multiple different ERP solutions and possibly different providers, including resellers and implementation partners of the same solution. Analysing different solutions gives you the ability to compare what’s available on the market:

Cloud vs On-premise;
Different user interfaces, look and feel;
Generic vs best of breed solutions;
Different functional solutions;
Alternative implementation and support options;

Let’s explore the key reasons why you might get very different proposals, at very different price points from alternative ERP solution providers.

#1. Are you comparing similar ERP Solutions?

ERP Solutions vary greatly in complexity and functional “footprint”. The more functional the ERP solution the longer and more expensive (consultancy) will be to implement the solution. Greater “standard” functionality is a double-edged sword – more functionality to use and more to implement.

More functionality requiring implementation will stretch out the time to deliver and will cost more in consultancy dollars to get the job done. Generally speaking, ERP solutions are available in tier one, tier two and tier three markets. Make sure that the solutions you are comparing are fit for purpose (there is a strong functional footprint that aligns closely with your requirements).

If you are not comparing similar solutions you are likely to see a substantial difference in investment required. This is particularly true of implementation pricing which varies vastly between tier one (Enterprise Solutions for large multi-national organizations), tier two (Mid-market ERP) and tier three solutions aimed at smaller businesses. We are often contacted by companies comparing five different ERP solutions, two from the mid-market (tier two) space and three from the small end of the market. This is not comparing “apples with apples”. In summary – when comparing investment summaries make sure that you are comparing ERP Solutions from the same “tier”.

#2. Implementation methodologies vary greatly

Is the ERP implementation partner offering a fixed price or a “do and charge” implementation? These two different approaches will yield quite different investment requirements. A waterfall approach assumes a fixed scope / fixed price implementation. An agile methodology is a “fits like a glove” build and consult on an “open budget” basis. Two very different approaches that will yield two very different budgets and ERP investment proposals.

#3 Assumptions are being made

When providing a proposal for the implementation of ERP solutions, your implementation partner has to make certain assumptions which will affect the ERP investment proposal.

Some examples of such assumptions include:

Availability of internal IT resources;
Current data formats and the “state” of current data from legacy systems;
Internal (company) project management resource;
Technical experience of team members;
Functional requirements (even after a scope of works there can be some areas that are not 100% clear).

How do the assumptions that your implementation partner makes affect your ERP investment proposal? Let’s use data conversion as an example. Data will need to be exported from legacy systems into your new ERP solution. In theory, this is straightforward:

Extract data from legacy solutions;
Put the data into Excel or Excel type templates for “checking”;
Use technical data upload routines within the ERP application to upload data and run data integrity checks;
Reconcile the data for accuracy.

Sounds easy and it can be. But, data transfers can also be complicated and affect the pricing of your ERP project. Factors which can have an effect on the consultancy time needed to upload data from legacy systems include:

Number of data sources;
Availability of internal technical expertise;
Status of legacy data (how “clean” is the data);
Are internal resources available for data checking and reconciliation?
How well has data been maintained?
How well do staff members understand the data?
Data volumes;
Data transfer requirements – for legal reasons (for example warranty or traceability requirements).

The answers to each of these questions will have a substantial impact on ERP implementation pricing. If one provider of ERP makes the wrong assumptions, they might provide a very different proposal to someone that has done their homework correctly and understands exactly what is required to convert your data.

A good ERP provider takes into account all of these factors to ensure an accurate investment proposal.

#4. Has the scope of works been correctly reviewed?

Providing an accurate implementation proposal for ERP requires an accurate assessment of scope. Two different providers might have different views on the scope of the project and can provide two very different proposals for implementation.

Conclusion

Many companies have a hard time interpreting the variance in pricing from different ERP proposals. Your ERP investment proposal can vary due to factors such as the solution being scoped, the assumptions of your implementation partners, the methodology being adopted and more.

Correctly implemented ERP solutions provide improved cash flow, increased customer satisfaction and happier team members. Evaluate potential providers and their proposals carefully to ensure that you make the right decision for your business and also make sure that your providers understand your requirements and lay the right assumptions for scoping your project.

At Leverage Technologies, we help Australian businesses find and implement the right ERP solution to grow smart. For more information or to speak to a consultant call 1300 045 046 or email [email protected].

6 ERP Readiness Signs Growing Businesses Are Likely To Encounter

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If you are a small to medium-sized business you will no doubt have used an accounting type solution for your financials, invoicing, inventory and business reporting.

At some point in time, you will outgrow these entry-level accounting solutions and will be considering a move to a full Enterprise Resource Planning (ERP) or Business Management Solution.

In this article, we are going to reveal 6 signals that you are likely to encounter when your business is ready for an upgrade to a full ERP solution.

6 signs it’s time to upgrade to an ERP solution

Your reasons for moving to a new Business Management Solution will normally go something like this:

We have outgrown our current solution. Often a business will have purchased an entry level accounting system 5-10 years ago when the business was much smaller and when the functional requirements were straightforward. As the business grows so do the requirements and “pressure” on the accounting solution. Eventually, you will get to a point where your business has quite simply outgrown the solution – even if that solution did work well for you when your business was in start-up mode.
We are using too many manual workarounds and spreadsheets because of shortcomings within the existing software solutions. As you outgrow your current systems you will start to use more and more manual workarounds and Excel spreadsheets to get the job done. This will result in decreased productivity and manual data-entry errors.
Our current solution is running slow and becoming less reliable as we add more users and data. Entry-level solutions generally don’t offer a comprehensive database (underlying architecture). As the amount of data grows and the number of users increases these systems slow down and can become less reliable.
We want to expand geographically and need a software solution to support these growth plans. True ERP solutions are usually supported in multiple countries and offer multiple language sets. Expanding into new territories is as easy as setting up the localisation for that country.
We want new channels to market – eCommerce, EDI etc. Full ERP Solutions offer more out of the box and integrated solutions for eCommerce, EDI, AP automation and other functional requirements.
We want a single source of truth. The current systems in place have resulted in islands of information. As the business grows, so do the number of systems that you use internally, resulting in dispersed information across multiple departments and functional areas.

The challenge for most small to medium sized businesses is that the jump in investment and internal muscle to implement an ERP solution is a big leap. The next “step-up” from a basic accounting solution to an Enterprise Resource Planning solution can be daunting.

Is your business ready for an ERP software solution?

So, we have established that your business needs to upgrade to an ERP but how do you know if your business is financially and functionally ready for an ERP solution?

To know whether your business is ready to implement an ERP, you might want to answer the following three questions:

Will you get your Return on Investment (ROI)? There is no point implementing an ERP solution unless you are going to get business advantages such as improved cash flow, better customer service and shorter quote to cash timeframes. In summary, there must be a Return on Investment. Use one of the multiple mechanisms from our previous blog post to evaluate your ERP Return on Investment.
Do you have the required budget? Make sure that you have the budget allocated to effectively implement and support an ERP solution and remember – ERP solutions need budget allocated for implementation and on-going support. In one our latest blog article we assess how the “new era of Cloud-based solutions” has changed the way we pay for and utilise ERP.
Do you have the internal resource to implement ERP? Most likely the single biggest factor to consider for small businesses that have outgrown their accounting solutions. You will need to carefully evaluate your ability to implement and maintain an ERP solution. I know that you will be planning to use an ERP provider to do the implementation but remember that the ERP implementation partner will need a lot of your time to implement the solution. Your internal resource does not have to be full time allocated to the ERP implementation but does need to be available to assist with things like:
- Scope requirements;
- User training;
- Data conversion;
- User acceptance testing;
- Go live super-user support.

Conclusion

The move from entry-level accounting solutions to an ERP solution is a big step.

The rewards for those that make the successful transition to ERP are enormous. Plan correctly and your journey into ERP will be rewarding and will provide your business with the ability to grow without the growing pains.

Need help in choosing the right ERP software for your business? Our experts are here to help! Call us o 1300 045 046 or email [email protected] to get started today.