I’ve been in the software industry since 1984. I’ve seen many changes. Lately, some of the changes I’ve seen really concern me. Concern me in the sense that I’ve seen more and more businesses with fragmented systems and low productivity. Yet they don’t seem to know what to do about it. In many cases, the system IS the problem, but the business doesn’t realize it.
How can a system problem be invisible?
It may seem a bit difficult for some to believe that a system problem can both produce productivity issues and be invisible. In this case, I’m going to short circuit my normal writing style and jump straight to the point. The key problem in many of these businesses is that they have the wrong system in the first place. Once the system is in place, the business begins the process of trying to optimize a system that wasn’t an optimal system from the beginning. In short, they picked the wrong system. There are some clear signs.
Signs that you have the wrong system
Here are just a few of the signs I see almost every week from one or another business:
- Excel as a tool for core business functions that in the ERP systems include. Examples included schedules for technicians kept in Excel, documents to control ordering and billing, and reminders for various things. One business keeps an Excel spreadsheet of every work order assigned by technician, and monitors the spreadsheet to make sure paperwork is turned in. Another lists parts ordered for jobs and uses the spreadsheet to make sure they are charged to the right customer. Both of these businesses have a sinking feeling that they’re missing something, but they can’t put their finger on it.
- Key features that just aren’t in the system. These are things like maintenance tracking in an equipment rental business. In order to remove equipment from service when it is costing too much to support, this is a must.
- Accounting transactions can be processed, but key operational needs are missing. A system that does a great job of billing, but doesn’t track customer warranty information is the wrong system for a business that needs to track warranties.
- You did software searches in the past, and selected new software. The software purchase gets killed because it’s too expensive or not in the budget.
- Paper systems as a basis for key processes.
Signs that you’re not using what you have
There is another common malady in businesses today: not using the systems they have. In many cases, this is a lack of training. But training is almost never as expensive as the productivity hit from doing things manually. Here are some examples of what I’ve seen recently:
- Excel used to create financial statements even though the system seems to have a financial statement feature. Usually this indicates that the controller, CFO, or accountant is more comfortable in Excel than the financial software.
- ACCESS used to create reports or extract data.
- Excel as a tool for bank reconciliation even though the system has bank reconciliation. There can actually be good reasons for this, but I think they account for about 1 in 3 cases. In most cases, the software would be the more efficient choice.
- The software hasn’t been updated in 5 or more years. The reality is that if you’re holding on to software that is 5 years old (and that’s an eternity in the current environment), you’re not getting all the benefits from it.
What should you do if you see yourself?
If you see your business in any of these bullet points, you should evaluate where you are in terms of your ERP software. We will cover some of the best practices beginning with the next post.