On Thursday, April 17, 2025, the Sunrise Sip Club, hosted by Expandable Software and Mirador Software Group, was pleased to welcome Peter Adams, Vice President of Business Strategy for BACS Consulting Group, to discuss how to optimize and extract value from your existing ERP.
Why do companies implement an ERP?
When you are in the market for a toaster, is that because you want a toaster, or do you want toast? No one other than the software vendors, resellers and consultants really want an ERP. Business executives want effective and efficient processes, and they want better data to answer business questions and to predict business outcomes. To do that they turn to this thing we call ERP because as a tool it:
- Is the primary repository of business operations and transactional data
- It holds, promotes, optimizes, and enables the automation of process
- Enables effective reporting (historical) and data analytics (future/predictive)
Why do ERP systems get such a bad rap?
ERP is typically implemented in phases with core elements/functionality first followed sometime later by additional modules. In addition, businesses exemplify a dynamic environment. People, Customers, products, and markets are always changing. That change may require a change in process to best serve the new needs. Companies with rigid processes (embedded in a rigid ERP) are less adaptable to change; that makes change expensive. At the same time, you could argue that not adapting to market changes is a kiss of death – and that is very costly.
Market data shows the average utilization of ERP capabilities is only 31%. That leaves 69% unused.
Survey data also indicates that most ERP Investments have never yielded a measurable ROI. More than 50% of companies in the U.S. upgrade their ERP software every three years, which adds cost and prolongs the time to ROI. As long as the cycles are this short, the ERP cannot generate an ROI.
Furthermore, the same surveys say Executives site the lack of accurate data as the reason they are not benefiting from their ERP investments, with many on a never-ending mission to cleanse it.
This data says there is a significant amount of value that is left on the table. How can we uncover and realize that value?
- Identify the gaps between real world processes and ERP processes.
- Identify places where ERP processes are (must be) augmented by Excel usage to be useful.
- Identify any situation where a Customer is told “We can’t do that because our system won’t allow it.”
- Identify any situation where people ask for information that isn’t readily available.
- Do you trust the information you receive from your ERP system?
These situations will help you clearly see where your ERP is falling short of expectations.
What are some of the symptoms of ERP Issues?
Symptoms typically reveal inefficiencies. These can include
- Manual re-entry of data
- Data input by people far removed from the actual work
- Using .CSV file exchanges as an integration tool. This is only effective in low volume or simple integrations (e.g., export to Payroll Processor).
- Excel is being used to store transactional or static data (Excel is not a database).
- The same data differs in different systems — Name spelling, address, etc. Which application or function is the “Master”? What/where is “the single source of the truth”?
- You don’t know what it costs to make your own product.
- You don’t know what (or where) your inventory is.
- You can’t easily confirm what your Customer ordered before.
What Should We Do About It?
- Understand the business outcome you are after: This can be quite simple – Profitability and Growth, for example, or more complex – increasing Market Share, entering new Markets, achieving higher Efficiency or milking Profits from a “Lifestyle Maintenance” business.
- Make sure your internal team is aligned and committed: When the Team is not aligned, bad things happen, including application proliferation and “bolt-ons.”
- Know your requirements and impacts for every department/function: You need to make sure that an improvement in one area doesn’t adversely impact another. One example of this is when Manufacturing makes a design change to promote production efficiency but makes it impossible for the Service Team to repair it in the field.
- Engage your ERP provider and your Customers in exploring solutions: Most of the time, your ERP Vendor can give you options on how to use the system to get what you want; just be careful of custom programming or interface requirements – they’re expensive!! On the other side, your Customer can tell you what they like – and DON’T like – about working with your systems. Just remember, if you ask them, you have to listen and respond to them.
- Specify the cost of the current way of doing things vs the anticipated future cost – Process, Process, Process!Flowcharting any process will show you where the bottlenecks are, and the people in the process will validate that for you. Flowcharting may be “old school,” but it works.
Any ERP is only as good as its implementation (over time!!!). Your systems and processes need to evolve over time just as your business does.
How can we derive more value from existing systems?
- Eliminate Application Bloat: Search for multiple applications in different groups to address similar problems. Pick one and optimize it to support all functions, not just one. That may mean some losses in functionality in one area versus another, but you’ll get better data overall.
- Review your Inventory of applications and integrations: This must be comprehensive! You’ll be surprised at how many little aps and sub-routines you have floating around in your business.
- Don’t be wedded to tradition: “That’s the way we’ve always done it” may not be the best method.
Your Desired End State is to utilize as few integrated systems and solutions as needed to meet the business requirements.
How does AI fit into this?
All data analytics and AI rely on clean data. Companies can get overly excited about AI and buy expensive tools to integrate with their ERP systems only to find that the AI’s can only generate garbage because their data hygiene is poor. Cleaning up data is not fun or sexy, but it is imperative if you want to be able to effectively deploy many AI tools. Any new ERP implementation or optimization is a timely opportunity to enforce data hygiene.
The Bottom Line: How do you optimize your ERP?
- Understand what business outcome you are after/What problem you are trying to solve
- Address TRUE Business needs before selecting Technology solutions
- Don’t treat symptoms, treat root causes
- Specify the requirements for your future business, not the past or present
- Engage and build your team!
Thanks and credit to Peter Adams for his contributions and insight for the Sip Club.
Peter Adams has started and sold multiple Managed Services/Enterprise Business Systems companies and now provides help to executives that are stuck in the confluence of business and technology. Peter is an expert on building teams, selecting enterprise software, and deriving value from enterprise systems. https://www.linkedin.com/in/petercadams/
Jeff Osorio is a Consulting CFO with over 30 years of experience in operationally oriented companies ranging from pre-Revenue to $4B with over 40 ERP implementations in his portfolio. He is also an Adjunct Professor in the MBA program of the Leavey School of Business at Santa Clara University. https://www.linkedin.com/in/jeff-osorio-1412181/