When Father Doesn't Know Best. When is the Right Time to Transform the Business?
It was a well-established, family-owned business, with the father ready to retire and his son prepared to take over the reins. The business, with $200 million in revenue, had been using a home-grown system and doing very well. But the son was campaigning for the purchase of an Enterprise Resource Planning (ERP) system that would cost $2 million. The father said it was a waste of money. Who was right? Well, that all depends.
In our experience, companies invest in enterprise solutions in order to accomplish one of three objectives:
Run the Business
Grow the Business
Transform the Business
It’s important to understand which objective you’re after in order to determine what kind of investment you should make in systems planning.
Transforming a company from paper-based manual procedures to a fully paper-less environment sounds cool - but is it right for every company?
That’s what we’re here to talk about.
Some companies are very happy to Run the Business. They already have software in place that handles their accounting and orders, and it works well for their needs. They expect some growth, and for that, they may end up buying add-on solutions for trade promotion and expense reimbursement. These improvements may be limited to the needs of one department rather than the company as a whole. In this situation, the business probably doesn’t want or need to invest in an ERP system. (Dad is right.)
Other companies are on track to Grow the Business. Perhaps they want to expand from brick-and-mortar retail to eCommerce. They might be adding a warehouse with more employees. Under these circumstances, the purchase and implementation of an ERP system could help tremendously in forward-motioning the company to achieve their goals and support the ongoing operations of the expanded business. In fact, it might be a big mistake not to implement ERP. (The son has a very good point.)
Then there is the company with plans to Transform the Business. The organization may want to achieve greater control over their products and expand activities from distribution to manufacturing as well. They may intend to acquire a related business. The company may be experiencing more customers in the global market, with the associated complications of different currencies and language. Here, a more dramatic approach to systems is necessary. The company needs a robust ERP with the variety of features that will support growth. (The son is most certainly correct.)
Clearly, the status and plans of any company are important in determining when, how much, and what kind of ERP system should be in use.
Rubenstein / Justman Management Consultants (RJMC) works with companies who are making these decisions to help develop a Technology Roadmap and to evaluate the right system to enable company growth. Contact us today!