5 Steps to Fix Your Broken ERP System

Before Aaron Eckhart stole hearts as Harvey Dent in ‘The Dark Knight,’ he played Nick Naylor, a lobbyist for cigarette companies in the brilliant film ‘Thank You for Smoking.’ The film’s premise is that if you’re persuasive enough, you can spin any problem or addiction to be a positive thing. It’s a cautionary tale about “merchants of death”—lobbyists for the tobacco, alcohol, and firearms industry. I love this movie, so I added the IMDB link for the film here.

As I often do, I see parallels between this movie and my real-life job as an ERP software and digital transformation consultant. Unfortunately, this dark comedy plays out all too often with my enterprise software clients—particularly those manufacturing ERP software.

(Click here for the whole “prequel” post, Dark Secrets of an ERP Software Consultant: Thank You for Smoking.)

If you’re a CIO or CFO at a company with an on-premise ERP system over ten years old, you know exactly what the problem is. You’re just in denial, my friend. You’re ADDICTED to ERP software customizations and consultants—and you don’t see any way out!

It’s easy to see how your addiction to customizations and outside consultants began. Your company probably started with your ERP implementation project(s) in the 1990s (horrors) or early 2000s when on-premise ERP software packages were missing lots of critical functionality. So, you had to customize to fill the gaps. It was like substituting cigarettes for food. You thought, at least we don’t have to go on a diet!

Typically, these customizations and added functionality were done by system integrators (SI’s) using the ERP’s old-school, proprietary development tools, making them extremely expensive and prone to breaking. Here are some examples of mistakes that can lead to dependency on outside consulting as well as broken processes:

• Building customized reports to supplement basic reports which can’t be easily exported to Excel or rewritten when the system is upgraded.
• Creating “bolt-on” functionality in the ERP system which is better left to other tools, such as business intelligence (BI) or financial reporting packages such as Microsoft Power BI.
• “Personalizing” the user interface or user experience (UI/UX) using proprietary development tools such as SAP ABAP.
• Modifying “source code” is the quickest way to break your system, even in the old version of the ERP software, and cripple you if you want to upgrade to the latest version.
• Trying to build new or enhanced modules in the ERP, such as customer relationship management (CRM) software, rather than use a “best of breed” solution with standard APIs to hook them together. An example would be keeping Salesforce or Microsoft Dynamics 365 CRM to bring in sales leads and opportunities seamlessly to whatever flavor/brand of ERP you have.

The problem is that when you make these mistakes, you put yourself on a slippery slope that—like smoking—can lead to “health problems” (i.e., a broken system). Once broken, your ERP software becomes costly to “patch” in the short term and devastatingly expensive if you become locked into an ancient version of an on-premise system.

Of course, like good enablers, SI’s are typically perfectly content to feed you more nicotine to keep your addiction going because they have a vested interest in retrofitting and rewriting existing code rather than letting you take advantage of the latest ERP software technology. And, they don’t want you to go to the cloud because that is a prime opportunity to break the vice grip of your addictions.

To coin (and spin) a phrase: “If it ain’t broke, don’t fix it. Just keep it broken!”. Ha!

The Road to Recovery

Fast forward to today. The first step to recovery is admitting that you have a problem. So, let’s clarify where you are in your “addiction cycle.” This is an intervention, my friend.

OK, you’ve admitted you have a problem, and you’re thinking seriously about kicking your bad habits and replacing your current ERP software because it struggles to keep up with your business needs. What should you do?

Unfortunately, you’re in a quandary. You’ve incurred “sunk costs” by investing large (ungodly?) amounts in the existing system. Consequently, you don’t believe you have the budget to maintain your many customizations. However, you also fear the cost and headaches of a “reimplementation.” You want to eliminate expensive consultants but worry that your internal IT staff can’t handle what they would leave behind.

So, do you continue to patch and coddle the old, customized system? Do you try to go “cold turkey” and do without all customizations, which means trying to fit your business into a rigid ERP software model? No, no….NO!

Fear not, brave young IT manager. You can fix your broken and/or highly customized ERP system by implementing my patented “Five-step program.” And I promise; the withdrawal won’t kill you, whereas staying addicted actually could. Really…no BS.

Step 1: Upgrade Your ERP System.

Take it from someone you probably trust more than me at this stage. Industry research firm Aberdeen Group reports that 58 percent of “best in class” organizations have the latest version of their ERP software. In other words, to ensure that you stay competitive, you should take advantage of new functionality, updated technology, and business process automation that new software offers in the latest versions.

Typically, in my experience, you’re much better off upgrading than doing a “rip and replace” implementation of software from another vendor. Good ERP software implemented properly and upgraded safely can dramatically improve companies’ key performance indicators (KPIs).

In fact, this may be an opportunity to move to the cloud with a “lift and shift.” Or at least you can upgrade your old on-premise version to the current one.

Here is an example of one of my clients, Flex (formerly Flextronics), who was upgrading old Baan software with a new cloud version from the same ERP software company. Flex rightly chose a “lift and shift” of their on-premise system to the cloud on Amazon Web Services (AWS).

ERP customizations can be dramatically reduced by upgrading. For instance, with the upgrade of the ERP software at Flex, we eliminated almost 70 percent of the customized sessions in the Finance module of the ERP when we helped them upgrade their Baan system to the latest cloud version.

Flex is an approximately $26 billion annual revenue company, so imagine how much green they saved!

Like quitting smoking, ERP upgrades can permanently eliminate huge recurring costs for in-house developers and outside consultants. Plus, if you can stay “clean,” then you prepare yourself for a much easier and less costly upgrade next time a new release rolls out.

Step 2: Use an Incremental “Bolt-On” Approach.

Rarely can companies go cold turkey (aka, “big bang”) all at once. In fact, I’ve seen people DIE when they try this. A gradual approach is much better. If you must customize, do so without changing standard functionality. Build separate applications, sessions, and “web parts.” Use workflow and middleware technology to build automation logic outside of the ERP.

This incremental approach reduces the time for testing, development costs, and the risk that the core applications will fail when you retrofit customizations. Use “user exits” features to add bells and whistles without changing the source code. It’s like using the nicotine patch while working to full health.

Instead of customizing, consider extending your ERP system with add-on software products that will bring quicker ROI than waiting for a whole new system. An example is adding a manufacturing execution system (MES) like FORCAM to your ERP system. This can dramatically improve the efficiency of manufacturing operations (i.e., the shop floor) by hooking to ERP systems like SAP or Infor.

Step 3: Provide Self-Service Options to Cut Dependence on IT.

A great way to reduce reliance on customizations is to provide tools that end-users can harness without IT assistance. Building views and extracts using business intelligence (BI) software is an excellent way to wean even your most addicted users off customized reports.

Everyone loves Microsoft Excel, so I suggest delivering your reports in an easy-to-use spreadsheet format with Microsoft Office Integration. There’s no better way to get that report-hungry CFO off your back!

BEWARE: If that ERP system you are considering doesn’t have easy-to-use Microsoft Excel integration, don’t buy it. Your CFO probably won’t sign off anyway!

Use BI to combine related data from ERP and other systems like HR, such as paid hours from payroll vs. earned hours from the ERP. Empower users to access reports from within Excel that can cross multiple ERP systems. Honestly, who needs a cigarette when you’ve got Excel pivot tables?

Instead of having them sift through reams of paper or scroll through displays in the ERP system, push “alerts” and “task lists” to them on their mobile devices. In other words, give those users a stick of nicotine gum to chew on when they’re out of the office!

Step 4: Buy, Don’t Reinvent.

Trust me; you do NOT want to be in the software development business. Today’s ERP systems have enough functionality to give you most of what you need to run your business. You may want to leverage additional workflow capability, mobile device connectivity, and a good financial report writer like Microsoft Power BI or SAP Business Objects. If the products are seamlessly integrated with the ERP system and simple to use, why build your own?

A great option is to buy an integrated cloud ERP system that has the ERP software, BI software, social collaboration, supply chain management, pre-configured analytics (KPIs), and industry-specific business process management (BPM) built in.

Step 5: Streamline Business Processes.

This rehab works well in combination with step #1. A good exercise is to devise a list of customizations, prioritize, and question them in the context of a business process review. Could a business process be made more efficient, automated, or even eliminated with newer functionality?

When doing this review with clients, we often find that many customizations can be quickly crossed off the list. It’s also an eye-opener for users and business analysts going back and looking at the old stuff created to address some past pain. More than half the time, the user that requested the modification is either no longer there or no one’s using it.

Believe me; breaking your ERP system customization addiction is easier than you think. You just need to kill the triggers that took you down that nasty customization path in the first place!

Unfortunately, even with all this heartfelt advice given for free, there are still those of you poor souls that still think you don’t have a problem. Those customers we help to evaluate ERP system vendors sometimes tell us that their ERP is customized the way people like it; in other words, “if it ain’t broke, don’t fix it.”

This is not a problem that will catch up with you 20 years down the road or just happen to the “other guy,” either. Your database, operating system, hardware, support, etc., could be retired unexpectedly. The developers that customized your system could leave, taking their tribal knowledge with them.

So, is your ERP broken, or are you experiencing the symptoms of a customization addiction? If so, what are you doing to kick the habit? It doesn’t matter what ERP system you use. A little rehab always helps—and I’m not talking celebrity rehab, either!