AMONG its ERP trend predictions for 2011, Forrester listed customers demanding better flexibility, cost transparency and mobility. This was echoed in a survey we have just completed with YouGov. The research questioned IT and finance managers in mid-size businesses and found that cost, inflexibility and underperformance remain top issues, with business management software or ERP products.
Business management software is essential for finance departments within any growing mid-size business. When a company is looking to replace its systems it should look for one that can replicate and enhance current business processes so the organisation can maintain its competitive edge. Similarly, should the business model change, the company will want the system to be flexible enough to adapt to the changing requirements as and when they happen, and not as part of a costly upgrade.
However, if you consider our findings in more detail, a picture emerges of customer frustration, disappointment and failure. Often, this is a result of both external and internal issues that need to be addressed as a matter of urgency if companies are to reap the full benefit of their investment. I believe finance directors are being dictated to by the large ERP market leaders and buying into solutions that are not fit for purpose. Here’s why:
Cost is critical
Just under a third of respondents complained their ERP system and business management software is costly to upgrade, with 22% saying it is costly to maintain. To ensure that the software is fit for purpose, 20% of respondents said they had to bring in expensive outside help to make modifications, and 12% said they had to buy expensive add-ons. This does not have to be the case as there are solutions that can easily handle the complexities of modern-day company procedures, whether the business is expanding, diversifying or keeping in line with regulations. Traditionally, this would have required expensive development or a complete upgrade, adding to ongoing costs.
ERP system rigidity
One-fifth of respondents said their ERP system is inflexible and cannot adapt to meet changing business needs. The same number explained their company holds separate databases for different departments, which means having to maintain multiple ERP/business management systems. According to 12%, their organisation had no choice but to change its business processes to fit the software. More than half of respondents said that ERP projects fail because the software fails to match their business processes. Business software should fit a business, not the other way around.
Underperformance undermines everything
Just under one-fifth (18%) of respondents said they were unable to extract all the information they needed from the system, with 7% commenting that the information they could extract was not accurate, and 12% saying it was impossible to get a single view of all their data. Over a third of respondents said the software is just not fit for purpose. Business intelligence (BI) extracted from an ERP system is key to providing historical, current and predictive views of the overall business operations. If this data does not have sufficient quality or granular enough information, then the BI implementation will simply fail.
Lack of trust
The blame cannot always be put solely on the vendors. Internal issues such as poor project management and a lack of staff training and acceptance frequently compound the lack of business compatibility delivered by many current ERP and business management software solutions. Over half (58 per cent) of respondents blame poor project management for a lack of project success, and a lack of training was given as a reason for failure by 44%.
There are business management software solutions out there that offer customers a rapid development framework that is cost effective, flexible, scalable and easy to implement and manage. This framework will also grow and evolve with the business without needing to be replaced or upgraded every few years. These solutions offer finance directors an example of what the next generation of business management software should look like: innovative tools that deliver enterprise applications with more flexibility, better user experiences and new deployment options.
It is inexcusable that finance directors are still fobbed off by so many suppliers with expensive solutions that are too complex, too rigid and plagued with customisation and upgrade headaches as a direct result of the software’s inability to meet real-world needs. Finance directors need to be bold, not be dictated to by vendors and not accept solutions that are not fit for purpose.
Paul Marry is CEO of Intact Software
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