ERP tech has come a long way – but people hold it back

Gerrit Olivier, founder and CEO of About IT.

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Thirty years ago, there were some poor ERP solutions on the market. They may not have been properly tested, they couldn’t do the necessary invoicing, some only provided a cash book, for example. But that’s changed. Nine out of 10 systems today are really good and more than up to the job.

Many people, on the other hand, have neglected to advance their knowledge and skills. The problem is that they misunderstand what ERP will do for them, they resist updating the way they work, preferring instead their antiquated processes, and they don’t trust modern cloud-based systems to protect their sensitive IP.

The result is always the same. Costly, time-consuming ERP projects fail.

Many people think ERP will help them generate more or new revenues. It won’t. That’s up to the other business processes such as design, manufacturing, production, marketing and sales.

Sometimes people think ERP is there to help them handle more transaction volumes. It won’t do that either. The databases that sit behind the ERP system are there to handle the volumes. A good ERP system can be ruined by poor database technology so it’s worth creating a happy union of the two technologies. Many people run into this problem when they attempt to migrate their legacy system to the cloud.

The real benefit of ERP is that it helps people to be more efficient at controlling and monitoring costs. It also helps the financial people be more efficient in their daily tasks, which means organisations don’t need so many people to manage vendors and debt collection, for example. And that means you can instead move those people into costing analysis, which is far more beneficial to the business.

Many people neglect this function. Organisations routinely source suppliers in a hurry, then neglect to re-evaluate the decision to ensure they meet quality and price requirements.

When financial personnel haven’t updated their knowledge of the technical systems and how they work, any ERP project is bound to fail. Lockdown ushered in a new era of digitalisation, pushing many organisations to update their ERP systems and adopt cloud-based solutions. But many that failed did so because financial employees have a love affair with lever arch files and paperwork.

Working from home makes that difficult because I’ve witnessed many people who prefer to risk exposure to COVID by going to the office rather than print and store at home the volumes of paperwork involved in their jobs.

That’s a business process challenge that requires business interventions such as defining new processes and training people to be able to work differently from the way they were accustomed to.

Another major challenge is security. People don’t trust the cloud and they don’t trust all their business data being online where it is exposed to cyber security risks. But there are ways to deal with that if the businesspeople are willing to explore the options. For example, one company we worked with stores their formulas digitally, but they use a key. Their formulas are literally stored as: “Formula A, B, C, D, E,” with physical formulas at their office. They also use different companies to supply their materials so nobody outside the business can figure out their product compositions. Other organisations do store sensitive data such as formulas, but they ring-fence them and create multiple layers of advanced security to ensure their safety from prying eyes.

These are old challenges. Other organisations have run into them and dealt with them. Even the banks use solutions that run on cloud services such as Azure and Amazon Web Services (AWS). If it’s good enough for them then it’s good enough for other organisations. The key to progress today is bringing the people up to speed.