Before the millennium, all-in-one ERP softwares were commonplace in fast-growing organizations. Teams could perform all back office functions from one place, without having to learn and transition to new tools.
The one system bias
We call this the ‘one system bias’. This bias stems all the way back from the 70’s and 80’s. It dates back to a time when decision makers had to contemplate large purchases and consider long-term software buy-in. As a consequence, information silos formed and systems were built using different code bases and architecture.
It was expensive to employ teams of coders and consultants to link these systems together. ERP vendors, sensing market opportunity, began building suite products with additional modules that would perform all key functions in an organization beyond just accounting. This included supply chain, inventory, procurement, sales orders, HR etc.
And it’s easy to sell CFOs (who are typically conservative in nature and focused on bottom line) on the idea. From their perspective, it’s better to stick to one stable vendor with one product rather than find the best product for each specific function.
But, for CFOs, selecting NetSuite or Microsoft Dynamics to perform key core accounting and reporting functions is detrimental. In short, CFOs and often upsold by these vendors and believe that ERP systems can also handle procurement, inventory, and even sales functions. like customer relationship management. As a result, finance teams make critical decisions.
Why ERP systems are painful
According to a report from Panorama Consulting Solutions, the average ERP project in 2013 cost $2.8 million and lasted 16 months, with 54% of projects exceeding budget. There are many other considerations and factors that go into these statistics.
Our take: As vendors try to build the single perfect product that can do everything across all industries and across all conceivable and custom workflows, ERP system implementations increasingly fail and other departments are increasingly not satisfied with the system decisions coming from finance.
You will rarely find an operations manager or an IT purchaser who is happy and satisfied using an ERP tool. This is especially true for software solutions from finance teams and executives. The single biggest threat to successful ERP implementation is lack of buy in from everyone affected by the new system.
A better way to think about systems
The good news is we are in the era of cloud and mobile software. In a nutshell, solutions like Procurify have the architecture and design to directly integrate and talk to many ERP systems rapidly. All with fairly minimal effort.
Thus, teams can use the best tool for their business processes across all devices without concern for duplicate data entry. There’s also no risk of information silos that always seem to hound and concern finance.
Even the more modern ERP vendors like NetSuite, and accounting software providers like Xero and Intacct, have recognized this. Instead, these organizations are building integrated third-party solutions for functions.
At Procurify, many customers come to us with disgruntled views about their ERP systems that fail to make their jobs easier and efficient. It’s time for CFO’s, controllers and financial decision makers to realize that the bias to pick one single system to do everything no longer makes sense. In fact, this approach is actually a danger to your organization and will skyrocket costs and lost time.
In today’s world, the possibility exists to take a holistic view and pick a few best systems that all have the capabilities to integrate and talk to each other. So I encourage all my fellow colleagues to have an open mind when it comes to picking software.
Editor's note Original publish date: 29 Oct 2014 We've since updated and republished this blog post with new content.