Is It Time To Replace Your ERP?

Posted: 2020-02-06 Edited: 2020-10-05

Top-notch companies trapped by inadequate ERP software make right change in a timely manner and rise to higher level.

Image by Gerd Altmann from Pixabay

Top-notch enterprises always know to turn crisis into opportunity.

Which enterprises should replace their ERP?

Enterprises, government departments, and schools with any of the following phenomena should replace their ERP software!

Enterprises are forced to upgrade ERP software within a limited time by ERP software vendors.

The so-called "upgrade" is in essence that ERP software customers are forced by ERP software vendor to take responsibility of increasing vendor's revenue while the customers are exposed to maximal financial and operational risks associated with the "upgrade" that requires re-writing large number of software applications.

Only one or two ERP software modules such as accounting and sales are actually in use by enterprises.

After pouring large sum of cash to purchase a full set of ERP software, the enterprise struggles for many years trying to use the software, but in the end, only 1 or 2 modules like accounting and sales are genuinely used. The remaining modules were either thrown into trash bin or set aside in dark corner without being noticed by all departments except IT. And the enterprise continues to pay the annual license fee for all modules to the software vendor.

Because those modules are unusable, they are hidden or thrown away. However, the information services needed by all business departments must still be met, so the IT department resorts to third-party software to build a so-called "hybrid ERP software environment", known as United Nations ERP software system, whose component ERP databases are out of synchronization among each other. As a result, ERP users in different department get different information from this "hybrid" ERP software combination.

The causes and consequences of the UN ERP software system:

  1. Because ERP software modules are unusable, IT staffs are forced to "research and develop" complex UN ERP software system.
  2. Because the UN ERP software system is complex, CIO begins to recruit large number of software talents and IT department bloats to 1000 staff.
  3. Because the IT department has a staggering size, IT department consumes a lot of cash from the enterprise.
  4. Because the cash flows out, enterprise's profit and loss financial statement looks bad.

The enterprises who run UN ERP software systems:

  • Enterprises with strong finance health actively help society create job opportunities for people looking for IT jobs.
  • Enterprises with weaker finance health suffer long-term losses or even closed down due to ERP software.
Companies that reduce IT spending can turn a profit.

A careful chief financial officer (CFO) will find: by reducing IT costs, the enterprise can turn a profit. And he or she perfectly knows that IT expenses can indeed be significantly reduced. He or she also knows that IT costs include:

  • IT personnel costs
  • ERP software license annual purchase costs
The number of accountants is big.
Image by Gerd Altmann from Pixabay

accounting army and 1000 IT firefighters of the world’s largest dedicated semiconductor foundry

Every time you see large number of accounting personnel in any larger enterprise, it is safe to assert that the enterprise is using an ERP software whose financial module is far from being seamless integrated with other business modules.

A high quality ERP software system always generates accounting journal from all other business modules and thus largely reduces the workload of accounting personnel. The fact that large number of accounting personnel struggling in an enterprise indicates only one possibility - its ERP software disconnects accounting module from other business ones and hence requires accounting army to manually do the following jobs that are supposed to be done by ERP software:

  • searching and collectiong the data entered by their colleagues in other departments and re-entering the missing ones in accounting module
  • comparing and matching data in accounting module against those entered in other business modules, and fix (known as "adjust") those contradicts
  • manually compiling financial reports such as cash flow statement and costing reports

Working on top-notch ERP, accounting personnel cull the data entered by colleagues in other departments and produce reports anytime with one keystroke. Every accountant is elite and thus the head count in accounting department is minimal. They close book in one day instead of 45 days.

Enterprises are not in the ICT industry, but the staffing of the IT department is huge.

IT personnel productivity is low because ERP software is monolithic, complicated, and unmanageable.

The staffing of the IT department is huge because IT personnel's productivity is low.

Such enterprises are like charities whose primary purpose of existence is creating jobs for the society rather than generating profits for stakeholders. They misallocate resources as a result of obscuring their main business objectives.

The company has been in a state of perpetual "immediate job openings for talents with ERP software modules" or "urgently hiring freelance digital transformation consultants".

The HR manager wonders: "Why are IT talents so difficult to find? Why did newly hired IT staff quit so soon?"

ERP software applications are buggy.
  • The ERP software is so complex and difficult to use that it takes 45 days to close monthly accounting book.
  • The ERP software applications have numerous obvious and hidden errors.
  • The functionalities for business operations that should have been provided by the ERP software applications many years ago are still not delivered yet.
  • The ERP server software responds like a turtle crawls slowly.
Staff in various business units have long been dissatisfied with the IT department.
  • Service requests submitted by staffs from various business depatments to IT department have not been fulfilled by the IT department for a long time.
  • The problems of ERP software reported by end users to IT departments have not been solved for a long time.
The IT department is in low productivity and morale.
  • IT staff is not respected by people in various business units.
  • IT personnel are in a state of fire emergency every day.
  • IT staff have a long backlog of information service requests submitted by staff in various business units, so they frequently say "Sorry!" to users.
  • IT staff face an endless list of software errors every day.
  • IT staff lacks sense of accomplishment and confidence.
  • IT personnel are allowed by their own time or managers to access only parts of the ERP software, and the space for skills growth is narrow.
  • ERP software is so complex, monolithic, and black-boxed, that IT personnel cannot fully understand, compreshensively improve, and master it.
Companies are not happy with vendors that provide ERP software or cloud services.
The service quality of software vendors or cloud service providers is poor.
  • Our phone calls to the service provider for helps were transferred around and eventually lost. Their standard response is: "We will have our engineer call back to you." and you receive no following up message from them.
  • Their engineers do not want to come. Even some did come, they left with the problems unsolved!
  • They refuse to answer your questions. Instead, they direct you to search their pile of documenation some of which outdate or contradict each others.
  • We are using orphan software: "We have stopped maintaining this ERP software used by your company."
  • ERP software cannot be upgraded: "This abc ERP software used by your company is suitable for small companies. We recommend that you re-purchase our xyz ERP for large enterprises."
  • The ERP software upgrade path breaks - new ERP software's architecture largely differs from old one's that enterprise customers are forced to spend cash again to re-write large number of software applications.
The costs of after sales service are high:
  • The annual ERP software license fee is expensive.
  • Software vendor's on-site service fee is expensive.

How To Replace Inferior ERP Software?

Please refer to article zero-failure ERP implementation strategy.

* images from Pixabay