Knowing When to Optimize vs. Upgrade

Before considering a new ERP, always evaluate whether you really need to change. Analyze your organization first to see if your pain points stem from core software issues or people and processes. 

You should explore the possibility of optimizing and leveraging what you currently have in place first, before undergoing an unnecessary (and painful) ERP upgrade. Speak with your vendor or implementation partner to determine if there are modules or capabilities you have yet to turn on for AI, automation, and more. Often, you have only scratched the surface of what your current system can do. 

Alternatively, if you are on a legacy or outdated solution that has reached its capacity for growth, then you should start considering different solutions available on the market.

ERP Optimization Approaches

ERP Optimization should be a key component in your technology roadmap to achieve maximum value and drive growth. There are two ways to approach ERP optimization, depending on your system’s maturity. 

Optimizing a Newer System
If you have implemented your ERP within the last year, there is a 99% chance you have yet to implement everything your organization needs. But this is a good thing! Going live with the minimum viable product (MVP) puts you into the stabilization phase and allows you to see all the areas for additional functionality and automation that you couldn’t before go-live. An incremental approach to implementation means you can leverage functionality as you need it, instead of purchasing modules upfront that prove to be unnecessary.

Optimizing an Existing System
The optimization approach changes when your organization has been operating with the same ERP for a couple of years or more. With an established system in place, more opportunities are on the table for optimizing processes, and there are often benefits you may not even know existed within your current offerings. Always start by evaluating your business’s needs to determine how you can reconfigure your system and “flip the switch” on existing capabilities before exploring an upgrade or third-party solutions.

Best Practices for Developing a Phased Optimization Approach

To create an effective phased optimization plan, investigate your current system’s functionality, business needs, and which new functions will have the most impact and provide the most value. 

1. Compare your system’s functionality with needs for each area of your business.

    

2. Prioritize solutions that will provide the highest ROI by measuring positive impact against resources required.

    

3. Formulate realistic goals to address each functional area.

    

4. Create a realistic timeline with phases instead of trying to fix everything at once. 

Balance People, Process, and Technology
Throughout the optimization process, do not underestimate the needs of your people. Inevitably, changes to the software will change how your people work exponentially, and it is important to anticipate their reactions to balance it with the right technology and change management strategies. Failing to cater to your people could result in failed optimization efforts.

Key Considerations

Just because you have the right framework in place for your optimization does not mean your people or data are ready. Ultimately, the question is: Can your business afford the disruption?

We have helped clients adjust their optimization timeline for realistic outcomes with these key considerations:

1. Licensing and Cost Issues: Clients will often realize that their software’s current pricing structure does not suit their team’s size and process the same way it did at go-live. Work with your software vendor to see how you can configure your system’s structure and licensing before considering a full-on switch. Sometimes, they may throw in additional modules!

    

2. Minimizing Risk: Look at your organization’s strategy holistically. You might be saving hundreds of thousands of dollars in one area, but what is the cost of risk this poses to other areas of the business?

    

3. Maintaining Historical Data: Data is your most powerful asset, and historical information can help drive your business’s growth when harnessed correctly. When examining potential changes for your system, find ways to keep essential structures and the information they hold. This will be crucial when you begin to leverage AI. 

Resist the Urge to Seek Additional Functionality Right Away

You may feel pressure from your team to solve all their problems with technology right away. But any time you optimize or add bolt-ons, you are also adding more cost and process changes to your plate. Most of the time, organizations are only using 60% of their system’s functionality, so communicate with your software vendor to explore what your ERP is really capable of. Incremental, well-thought-out change will be more effective and successful.

Address Obstacles Outside of Software

People
Getting the most out of your ERP isn’t always about the system’s capabilities. A lot of obstacles can surround your users, their willingness to utilize the system, and how they are being trained. You may just need to align on best practices or re-map your current processes for efficiency to properly empower your users.

Processes
Look at how each department within your organization is operating alongside your technology. Your issues may stem from a lack of alignment on standard operating procedures or not having the right knowledge to fully utilize your ERP. 

Lean Into Your Technology Partners

At the end of the day, a large part of maximizing the value of your ERP is about interpersonal relationships and communication. When you purchase software, you’re really buying the people and the team behind the solution.
Your software vendor and implementation partner are the experts, and they are there to help you. Lean on them as your guides for future success and communicate with them to align your goals with the solutions already available to you. 

Effective Communication

Pay attention to how your vendors and partners communicate. When you ask them a question, don’t just listen for their answer. Watch how they respond, and that’s how you’ll really know what they’re thinking. If you can spot these communication patterns early on, you will set yourself up for success in the future. Use your relationship to identify what advancements can really be made in your system.

Leveraging AI

Be Realistic
AI is NOT a stand-alone solution. It is an optimization tool to enhance what you already have in place. It can only help you if you know exactly what you need. Start by targeting the specific issues you are trying to solve. Then, research solution types that align with your ERP before zeroing in on the exact solutions and finding an expert in that area of specialization. That data will help you conduct a “mini selection” to choose the right solution.

Set Yourself Up for Success
Build a solid foundation within your core ERP with clean, accurate data. Then, layer your business process automations and integrations on top before exploring AI. If you skip over the foundational layers, you will be trying to solve the wrong problems. Data is invaluable to the proper application of AI, so make sure it is cleansed and prioritized in any ERP efforts.

Explore Your ERP Vendor’s AI Capabilities
Almost every software company has AI-based solutions, so rely on your ERP vendor to keep you informed on their AI strategy and innovations. There will always be a lot of noise around the latest and greatest solutions being released, but if you choose the right vendor with a forward-looking strategy, you’ll have access to ever-expanding functionality in addition to a partner for growth.

Pace Yourself

You can’t get everything you want all at once with your ERP. But if you pace your optimizations appropriately, you can realistically accomplish your goals. Find a starting point and go from there. If you need help, schedule a free consultation with one of our ERP experts today!