In the early 90’s, a large construction company implemented a new ERP system built by two budding entrepreneurs. The new ERP system was great at the time: simple, functional, and aligned with the company’s processes. Unfortunately, the ERP company never grew beyond two employees. Over the years, the construction company grew quickly. Last year, the ERP system crashed and the company’s IT team couldn’t figure out why. The IT team reached out to the software company, but inevitably, the two employees were on a three-week vacation in the Bahamas. How can companies mitigate the risk of this happening to them?
Small and mid-sized companies often utilize systems that are custom built in house or purchased from a small mom-and-pop ERP software company. The specialized ERP system companies typically operate out of their garage with a couple employees, but not in the cool Steve Jobs way.
The small systems are great at bridging an organizational gap—for example, providing basic automation to the internal invoice approval workflow process or solving enterprise needs. The systems are implemented as a short-term solution during a time of change or transition. For example, an out-of-the-box inexpensive production-gathering system is perfect for a quick implementation.
Unfortunately, companies get comfortable with their system and are hesitant to replace, justifying their resistance by saying, “That’s how we’ve always done it,” or “If it ain’t broke, don’t fix it.” Although sometimes this is true, there are three telltale signs it’s time to consider replacing the legacy systems.
Companies typically require an intimate in-house understanding of boutique custom systems since the knowledge base lives within one or a few individuals’ minds. There isn’t much formal system documentation available and external/contractor support is hard to come by.
Additionally, the company is always waiting for assistance and is at the mercy of the system owners. This is especially frustrating when an emergency arises but no resources are available to assist. Large system providers have formal support desks, trained third-party providers, and often have 24-hour assistance for emergencies.
Mom-and-pop systems are especially dangerous for publicly traded companies trying to pass their SOX audit. Custom applications are created to resolve a specific gap or satisfy a piece of a larger process. Therefore, not a lot time or resources were put in to setting tight user permissions or security measures.
With so many data hacks and leaks today, security is a critical topic. Both publicly traded and private companies should strive to have a safe and secure systems environment. Small and custom solutions are built on less secure databases, leading to a weak link in the integrity of the company’s infrastructure. On the other hand, large systems are auditable, configurable, and have high security standards.
Due to the limited resources supporting small systems, updates to the software are few and far between. This resource constraint can cause compatibility issues. For example, a company attempts to change their processes and the small system can’t support even the simplest change. Companies are then forced to manually maintain their process outside of the system to accommodate the change, leading to longer processing times and increased overhead.
Additionally, technology is changing all around us every day, which may cause issues with smaller system’s compatibility. For example, Microsoft may release a major system update, which causes compatibility issues with the outdated version of the legacy system. Smaller systems are not as flexible and adaptable to the changing technology, while large systems continuously listen to customer feedback and release updates more often.
If any or all of these signs exist in your company, it's likely time to replace your old system. Custom solutions and small companies are right for some companies, but it's important for organizations to recognize when they've outgrown the mom-and-pop shop and should consider implementing a better-fit solution.
Sometimes the small solution is the right answer if a company is lean and simple, and other times a company requires a more robust option. For many companies, cost is the only factor keeping them from making the leap to a new system. Surprisingly, with the advent of cloud software and growth of middle market ERP solutions, a new ERP system may be less expensive than expected.
Trenegy helps companies find the best fit-for-purpose ERP solution to align with their organization. Find out more about Trenegy’s expertise: info@trenegy.com.
