Most companies start to understand that they may need to implement a new Enterprise Resource Planning (ERP) system slowly, over the course of many months (and, in some cases, years). At some point, the realization that a change is necessary accelerates, as it becomes clear that they are unable to adequately, let alone easily, meet the requirements of their customers.
This is usually when companies start to more closely examine what exactly is wrong with their current system, if one is currently in place, or what they would need from a completely new system if there isn’t already an ERP to replace. In other words, they start to perform an informal ERP system needs analysis.
What is a needs analysis?
An ERP system needs analysis is a comprehensive, objective examination of a company’s ERP requirements. If a system is already in place, it will also include a review and evaluation of current ERP functionality, what services are lacking, and what software components are considered essential for any newly implemented system.
What should be included in an ERP needs analysis?
It’s important to formally document the needs analysis process in order to build a clear statement of how a new ERP would perform, and what it needs to accomplish. The analysis should look at both short- and long-term business needs, and account for expected growth.
It should also include a cost-benefit analysis that weighs the potential positive impact on the business vs the near-term financial investment involved when implementing a new system. This is when it often makes sense to start researching ERP vendors to get a better idea of what is available in terms of both functionality, and overall cost to implement.
ERP system needs analyses: what can go wrong?
In all honesty, a lot more can go wrong than one might think. One common mistake is not getting feedback and buy-in from all departments and individuals that will need to use the new ERP system. This all but ensures issues down the road, when the functionality that one department most needed has been completely overlooked. Another is not formalizing a committee to drive the ERP implementation process from the very beginning. However…
The number one mistake companies make when conducting an ERP needs analysis is the failure to set reasonable expectations for the new or replacement ERP system in the first place.
What does this mean?
It means that it’s very easy for companies to get distracted by the bright and shiny potential of a new ERP, rather than the less exciting, but more important, day-to-day functionality that started the replacement conversation back at the very beginning of the process. In other words, rather than focusing on replacing what they already have with a more modern, user-friendly, automated system first (one that does what they actually need it to do), they end up caught up in the bells and whistles of what the new ERP couldpotentially do, thereby creating unrealistic expectations.
ERP Needs Analysis: Getting Back to Basics
At MIE Solutions, we firmly believe that the best needs analyses focus on the basics; the true requirements of the system. This means prioritizing the replacement of components that form the building blocks of the system — the aspects that address critical business needs — thus supporting the departments actually using the ERP so that they are then better able to meet customer expectations.
Once the basics of the new system are up and running smoothly, there is always an opportunity for added functionality (a good ERP is flexible and offers customization, after all), but what’s most important is that the core system works as intended and those fundamental needs are met.
