As with any technology, there will come a time when you must replace your existing ERP system. Maybe your legacy software is no longer supported or has become too costly to maintain. Maybe your users are struggling with some of its functionalities, or your company has simply outgrown its capabilities. 

Before you risk overspending or enduring a needlessly frustrating implementation process, take advantage of the best practices we’ve gathered from helping our clients fine-tune policies and procedures to optimize their current system or helping them select and/or implement the best ERP for their needs.  

Step 1: Make Certain You Truly Need a New ERP System

If your legacy system is no longer adequately supported, requires excessive costs to maintain and upgrade, or requires workaround processes, it might be time to consider a new system. But if you’re considering a new ERP platform because you’re seeing limits in its functionalities or increasing frustration among users, don’t assume a new system is the answer.

When we’re called in to help our manufacturing clients select a new ERP system or assess their existing system, we often find that the pain points they’re experiencing result from one of two things: a failure to update the software as recommended, or — more commonly — because they haven’t also tweaked procedures and tasks to be more efficient (i.e., less repetitive and less redundant) following an update or technology upgrade. A good rule of thumb: Expect to change many processes any time you update or upgrade your ERP. Regardless of whether you need new processes or a new ERP, the next step is the same. 

Step 2: Evaluate Your Current Processes

Documenting and reviewing your current system is critical to optimizing an existing system or selecting a new ERP. Both processes enable you to gain the workflow efficiencies, improved effectiveness, and/or reporting capabilities updates provide, but just as importantly, they help you identify where the system or user processes are weak.

That said, do you have an updated procedures manual? If not, you might be unaware of inefficiencies that exist, the number of systems currently used, or the lack of integration within your current tech stack — all factors critical to determining if your current system can be improved or better customized to suit your needs or — this is key — pinpointing your specific wants and needs before you begin looking for a new system. 

To evaluate your current system, have a manufacturing industry expert (specifically a CPA with excellent accounting knowledge) document your policies and procedures and/or prepare an efficiency analysis. Such an analysis will identify not only weaknesses in your current system but also areas of potential improvement, revealing where technology can be leveraged to replace manual or complex tasks and processes — a significantly easier and less costly solution than transitioning to a new ERP.

Step 3: Don’t Just Develop a Checklist; Develop a Demo Agenda

If, after fully documenting and evaluating your current system, you’ve concluded that a new ERP system is the better option, great — you’ve got a head start. You’ve already revisited your processes, refined your workflows, and updated your procedures manual accordingly, so you have solid documentation of your current system and any weaknesses that couldn’t be remedied. With those in hand, you can more easily develop a checklist of wants and needs for a new system and convert that checklist into a demo agenda.

A demo agenda is critical to keeping any ERP software vendors you meet with on track and making the systems more comparable during demos. Also critical: involve the accounting and operation department staff that will be using the system! Time and again, we find that soliciting input on the front end of the selection process paves the way for the crucial buy-in from internal teams during the implementation and training phases that follow, making transition periods that can be stressful for staff significantly less so. Consider, too, involving IT staff and whether the system should be maintained on-premise or hosted elsewhere, or a SaaS product. 

Step 4: Call in the VARs; Not the Software Reps

When choosing software systems to evaluate and demo, look to vendors or VARs (value-added resellers) with experience and expertise in a variety of ERP systems; they’re far more likely to be advocates for your company and its specific needs rather than advocates for a particular ERP system. If they also have experience with ERP systems in manufacturing environments, they’ll have a broader, deeper understanding of manufacturing operations and finance, whereas a software company or single-ERP vendor might act more as an IT company facilitating — but not optimizing — your selection process and later implementation.     

Before selecting any vendor, investigate their track record, reputation, customer reviews, and how much experience they have working with ERP systems and manufacturers of your size and complexity. The right expertise and experience can prove highly useful in negotiating pricing, limiting modules to only those that are necessary, and providing hands-on implementation and training. 

Step 5: Streamline the Selection Process

After the demos, you’ll save considerable time and agony — and have a far better chance of determining the best fit — if you narrow down your ERP choices to two, then do the following with each system: 

• Conduct a deep dive (beyond your checklist). Consider, too, things like scalability, ease of integration, industry-specific features, regulatory compliance, user-friendliness, data protection, etc. 
• Ask for a comprehensive and detailed implementation plan. Some vendors, typically for smaller ERP systems, will rely more heavily on the company’s internal team to do some of the implementation work and training. Others offer a significant amount of handholding and guidance. In the end, your ERP system will only be as good as the implementation plan, support, and training provided.
• Negotiate pricing. Make certain you understand the total cost of ownership, including initial setup costs, licensing, maintenance, upgrades, potential hidden costs, and both short-term and long-term expenses.  Relying on an industry/ERP expert or internal team to do this makes the most sense, as the VARs will be competing with each other, likely resulting in better pricing and features for you.   
• Perform a thorough cost-benefit analysis.

Step 6: Confidently Select Your New System

Selecting a new ERP platform can consume a significant amount of time and effort, but no part of the process should be painful or fraught with doubt. To make sure you’re making the best choice for your company — in updating and evaluating your existing processes and ERP or selecting anew — use the steps employed by the countless successful manufacturers that have found themselves in your position.

Want an extra hand? Here at Rehmann, we have experts available to guide you and your ERP stakeholders through every step (or just some) in the process outlined above — as well as through implementation, training, and more. If you’re not satisfied with your current ERP system, contact us. We’ll help you figure out what you need and what you don’t.

About the Authors

Rehmann is an MMA Premium Associate Member and has been an MMA member company since July 2006. Visit online: rehmann.com.