Since January 1991 we have been listening to the challenges of the middle market community; a growing number of companies whose needs have advanced beyond the well-known, well-loved software that most of their team members have used for years and years; because they now need more functionality and their needs have become more complex.
Many told us they had four, five or more diverse programs, and that most of these programs were un-integrated. During this time, many of my blogs have been written to address the needs of the Microsoft and Dynamics communities, in an effort to convey information in a straight forward style.
If your company’s needs are more complex, please feel free to reach out to our team to address those needs. But if you are among the many who need to transition to a more robust ERP package and need to get a sense of how others have evaluated their ERP needs and accomplished that journey, please read on.
1. The first Paradigm shift our clients tell us about was deciding to upgrade their CRM system.
Most of our clients had software in place, but when they took the time to review their systems and methodologies; on average they found over three new ways for each sales person to increase their sales by working more effectively than before.
Without exception clients told us that their most productive ideas came right from their sales people, and by automating their repetitious tasks, the sales people were able to close more business.
Clients tell us that it appears that reviewing their current sales methodologies revealed challenges that company owners didn’t know their sales people had.
2. Entry level ERP industry specific systems and general systems exist at many price points, and that’s a very good thing.
Statistically 85% of all businesses nationwide are the perfect size for an entry level system, and many companies are perfectly happy there.
They send out invoices to their customers, collect payments, pay their vendors and all is well.More than 80% of these companies have an Income Statement, the remainder have a bookkeeper or their CPA processing their data; most often that’s done quarterly. Interestingly, less than 70% have set up their Balance Sheet, and less than 50% have a budget in place.
It was once said that ‘you can’t hit a target you don’t have’ and the number two Paradigm shift our clients tell us about is creating a budget for both income and expense. So if your company is in the 50% that’s not budgeting, you are missing two opportunities: to a) increase sales, and to b) reduce expenses.
Both income and expense are equally important because on average, every dollar saved equates to five top line sales dollars. It’s not necessary to look at every line item on your Income Statement, you can start by looking at your top three expenses.
Examples: If Cost of Goods was their biggest expense, they looked at the number of vendors that they bought from and considered negotiating annual contracts if they bought the same products from five vendors, they cut back to two or three and negotiate better pricing.
They also considered paying on a company credit card and getting cash back for other purchases. If Salaries were their biggest expense, they identified where their company had been adding team members. If the most hires were administrative, they took a closer look at the work being done.
Most often processes can be automated, freeing up team members from repetitious tasks was good for employee morale and software is a one time purchase vs. an annual salary plus 30% fringe. Even if their salaries were related to the products and services their company provides, it’s still important to know how those dollars are being spent.
Too much overtime? Then operations needs to make more hires or consider seasonal or part time help. Clients told us that almost half of all smaller companies don’t have or use budgets to get the best utilization of their workers. Many of our clients tell us that they reward their managers when they control costs.
Remember that budget we discussed earlier? Clients told us that using their budgets and incentivizing managers and department heads to meet goals produced an amazing result, but it didn’t happen until the managers and department heads had a plan, aka their budget.
3. The third paradigm shift we hear from our clients is regarding un-integrated software.
Over time every company adds peripheral software to support additional functionality. The thing we hear most often is that initially, the focus was more about getting the functionality and less about whether or not it would integrate to their accounting system.
We heard that over time, duplicate data entry and keeping the data consistent between databases became more and more of an issue. While there are a number of ways to integrate different software programs, by the time most companies decided to do that, they needed to clean up and often restructure the data first.
Without exception, clients tell us they wish they had focused on products that integrated with the accounting systems that were already in place.
4. The fourth paradigm we hear from our clients is having the Reports they need at their finger tips.
Let’s face it, we all use spreadsheets to analyze data; and when that’s a once in a while report, it’s certainly the right choice.
What our clients tell us is that once certain ‘cut & paste’ reports become well accepted, the accounting department is assigned the task of turning them out. Often, those reports are needed during monthly and quarterly closings, and often with a really quick turn around.
As great as it is to have that data, cut & paste methodology has been known to produce errors, especially when it’s already crunch time.
All clients tell us how cumbersome it is to maintain their ‘cut & paste’ reports. And although they are needed, all too often they have to be created during crunch time which unfortunately increases everyone’s workload and stress levels.
5. The fifth paradigm shift we wear is that clients were surprised that even after looking at 7-10 different systems not one of their ERP systems was a 100% fit.
This seemed odd to them, but statistically, that number will be plus or minus 95%. Clients told us that while they considered adding an integrating app in order to get to 100%, in many cases the Return on Investment (ROI) wasn’t there, so they opted to modify how they handled their lesser, once in awhile needs.
Most clients also said they would consider adding additional integrating app(s) in the future, if the need became greater.
6. The sixth paradigm shift we hear from clients is around the timing in changing to a new ERP system, and the training/ retraining needs for their team on the new system.
We hear that although most clients plan to be on a new ERP system at the beginning of their year, afterwards they realize that the beginning of their year is often too busy a time to take on all the extra work of moving to a new system, and training all their team members on the new system.
Many clients find that they need to re-train their key people on the new system for this reason.
This happens so often that systems consultants regularly record their client’s training sessions so that clients can go back and review the training, or have new team members watch the training as part of their onboarding process.
Clients tell us after the fact that there probably isn’t a good time to begin a cut over to a new system, and that the beginning of their year may have been the hardest time for their team.
7. The seventh paradigm shift our clients tell us about is quantifying the components of the system they deploy based on ROI.
Certainly ROI isn’t cast in stone, and companies do choose to add components that don’t fall into the classical twelve months’ ROI window.
Clients tell us that ROI should always be tested on every software package, but when management decides to improve sales, control expenses or ramp up the company in any other way; it’s really difficult to accomplish those goals if they don’t have the right tools in place to report on results.
Thanks for taking the time to review ‘The 7 Paradigm Shifts About ERP We Hear Most Often From Our Clients’.
If there are additional questions you need to address, please let me know; I’m here to help you Move Your Company Forward