Is Your Company Suffering From ERP Erosion?
Learn more about ERP erosion and how your organization can mitigate the risks.
How much value are you getting out of your ERP solution? Is your organization leveraging the full potential of its ERP system?
If you've noticed that your ERP solution is not meeting your business needs like it once used to, that is likely a result of ERP erosion. ERP erosion (also known as application erosion) is when there's a noticeable reduction in the use of functionality over time of your software. Essentially, it's when the value of your ERP solution erodes over time.
Why Does ERP Erosion Occur?
Why does this happen? According to David Doyle, Director of Sales & Marketing at Kwixand Solutions, the most common reason is that businesses change over time.
Consider this: A typical company keeps their ERP software for a decade, while some organizations keep theirs for much longer. And even though the company diligently performs all the recommended updates to keep their systems up to date, the fact remains that over 10-15 years, business processes will inevitably change.
"Either the core business processes will have changed, or the services and products, their market, customers, suppliers, or equipment," explains David. "The bottom line is businesses change over time. And you find yourself struggling with an ERP system that was implemented to support how your business worked 10 to 15 years ago."
Another common reason ERP erosion occurs within organizations is the lack of ERP user training. "During an implementation, you typically have internal champions or power users who are trained up well and know how to use the ERP system to support their business processes," explains David. "As primary users, they understand the system as a whole extremely well." As new employees are hired over the years, or as those primary users move on to other roles, conceptual knowledge often gets lost."
In many cases, new hires are not deeply trained on the ERP system and often get trained on how to do specific steps only through 'over the shoulder' training. Many new hires may not get formal training at all and may have to learn how to navigate the company's ERP solution on their own.
This loss of knowledge leads to ERP erosion as employees cannot use the system as it should or start relying on Excel spreadsheets to do their jobs. This, in turn, leads to data silos – one issue that ERP solutions are supposed to solve in the first place.
"At the end of the day, people are going to find a way to do their jobs, and if that means opening up an Excel spreadsheet because they don't know how or there's no way to capture certain days in the ERP system, they are going to do just that," says David.
What Are the Common Signs of ERP Erosion?
If you're wondering how to tell whether your company is facing ERP erosion, ask yourself these questions.
Has your company's business model or business processes significantly changed since you implemented your ERP system?
Do you have a formal ERP training or onboarding program for new hires?
Are your employees relying on Excel spreadsheets or third-party tools to analyze data or perform business processes?
Are decision-makers and employees of the mindset that your ERP solution is incapable of handling certain operations or reporting requirements?
Are you operating on an extremely old version of the software?
Is your current system facing the end of mainstream support?
If you've answered yes to one or more of these questions, you've got your answer. Your company is suffering from ERP erosion.
How to Mitigate the Risks of ERP Erosion?
According to David, the easiest way to mitigate the risk of ERP erosion is frequently updating your internal processes and training documentation. "This way, your employees know how to use your system in whatever version that you have to support your business requirements," he explains. You should also keep your ERP solution up to date in the latest version when recommended.
It is also important to assess how your solution is used today compared to its first implementation. Conduct an analysis of how employees are using the system compared to the system's functionality and whether your current ERP system will be able to support your current and projected business processes.
In some cases, you might need a re-implementation of your ERP solution, where the software is configured to your business processes and model as it stands today.
Has Your ERP Software Kept Up with Your Business?
An ERP solution is typically the backbone of an organization and supports core processes and operations. If you are not leveraging the full potential of your ERP solution, it could be holding your business back.
If you are experiencing ERP erosion, the team at Kwixand Solutions can help. We are ERP consultants and Microsoft Dynamics 365 Partners, based in Vancouver, Canada. We help businesses get the most value out of their systems and set them up for long-term success. Get in touch with us today to learn how we can help your company. Book a consultation today or get in touch directly at firstname.lastname@example.org