CFOs have more cross-departmental contact than anyone else in an organization. Consequently, they know better than anyone the chaos that can happen without a centralized operations system.
Sam Gupta is Principal Consultant at digital transformation consultancy ElevatIQ, host of WBSRocks podcast, and an enterprise resource planning (ERP) evangelist.
In this episode of Spend Culture Stories, Sam explains how to know when an ERP system is the right solution for your organization, how to make the implementation process easier, and why the more people you have on your side, the better.
Sam Gupta of ElevatIQ
💡 Key quote: “The more you involve your sales and marketing — the more you sell them on how a digital transformation is going to help them personally and make their life easier — the easier your pitch could be, because they end up selling for you.”
Listen to the episode
One major benefit of an ERP is the ability to standardize processes and metrics. For example, if your main business goal is to grow 20 percent while maintaining costs, you need some way to centrally track every expense.
“If you are a manufacturing organization, your cost is going to be all over the place,” Sam says. “And if you don’t have control of the cost, that could be significant. In an ERP, everything is going to be integrated.”
Although his own enthusiasm for ERPs knows no bounds, Sam understands that pushing such a big change on an organization is a tall order.
To that end, he recommends finding fellow digital transformation evangelists within your workplace to help convince other team members that these solutions really can make their jobs easier.
In particular, Sam advises looking at the marketing department. According to him, it’s often overlooked when it comes to conversations around ERPs. However, marketing often attracts innovative people who are open to digital tools and will benefit from using them.
“Companies should look for more marketing involvement in ERPs, because they can do a lot more things if they have access to ERP data,” Sam says.
Thanks to roughly 20 years of experience with ERPs, Sam explains why and how businesses of all sizes can benefit from these tools.
Top takeaways from this week’s conversation
Here’s how organizations can figure out whether they need an ERP 🎯
There are a couple of signs that indicate it’s time to implement an ERP. First, if your business is growing but your bottom line doesn’t reflect that growth, it’s because although sales have increased, so has the amount of admin needed to keep it running.
“You have silos and you are spending a lot of time replicating data across the systems,” Sam says. “That’s when you realize that your margins are being consumed in the admin effort.” An ERP streamlines data collection and distribution across the organization.
A second inflection point that might highlight the need for an ERP is a hiring burst in a particular department. “When you have just one person, they are going to be the driver of the processes. But once you add more people, you have to have some sort of standardized processes, so that you don’t end up defining individual processes in the spreadsheet,” Sam says.
Implementing an ERP is supposed to be hard! 😣
Anyone who tells you that they can make implementing an ERP completely painless probably doesn’t have much experience with them. “ERP implementations really suck to be honest,” Sam says. “They are meant to be hard; there is no easy way of implementing an ERP.”
The bright side is that bracing yourself and your team for a big undertaking will at least mean you’re not surprised by the inevitable challenge.
What can also help, according to Sam, is listening to your ERP consultant. “Listen to the people who have done ERP implementation, because they are the only ones who know what it really takes to make them successful. If they are saying that it’s going to take four months, it’s going to take four months.”
Find champions to fight for digital transformation 🥊
If you’re battling to get your organization to adopt digital approaches, look for champions in every department — especially, Sam says, in sales and marketing. Not only do people in these sectors tend to be more open to innovation, but they pitch for a living! “That’s what they do day in, day out. They are doing a lot of external pitching, and they can do internal pitching as well.”
But don’t stop there. Everyone in the organization can benefit from digital innovations, so the more people you can bring on board from the start, the more convincing your case. Plus, the roll-out process will be smoother.
Keep the conversation going even after implementation. “Make sure that when you form the core team, you involve them as much as possible. The more you involve them, the easier it’s going to be for them to be able to sell ideas across the organization,” Sam says.
Spend culture highlights
Finding the way to ERP 💡
[2:38] “By the time I graduated, I knew a lot about accounting, manufacturing, and distribution. Then I started on the non-traditional path, where I did a little bit of programming. I then finally switched to the ERP career.
I did a lot of consulting in the enterprise world and in 2012, I started exploring my own path. After that, I did a bit of independent consulting for a bunch of startups, and then finally ended up being at ElevatIQ. Our target market is manufacturing, distribution, and retail. We also have WBSRocks, which is a community initiative: trying to engage with the community as much as possible. Overall, I’ve spent roughly 20 years in the ERP space.”
The definition of an ERP system 💡
[5:34] “There are a lot of different definitions of an ERP. The way we like to define an ERP is an integrated solution where the majority of your departments — especially operations and finance — are going to sit on the same solution: an ERP solution. If they are not sitting there, that’s going to be a specialized solution.”
When to call in the specialists 💡
[6:02] “Organizations that need a specialized solution are either in the startup phase, when you are super small, or you are so big that your processes are so complex that you need a specialized solution.
But when you are in that mid stage — let’s say US$10 million to $500 million — that’s when you are going to be super stressed with respect to your budget and funding. And that’s when you really want to stick to out-of-the-box functionality as much as possible.”
Focus on matching metrics across the organization 💡
[11:03] “One of the challenges you are going to get if you don’t have the integrated ERP system is that your departments are not really integrated. Everybody’s going to have their own metrics, and those metrics don’t really talk to each other, so it’s going to be really hard to translate them.
Everybody is living in their own world. Consequently, it becomes harder to scale and to define the right metrics from the organizational perspective. And then how do you measure success? How do you keep track of the success from the KPI perspective?”
Trust the consultant when they say ERPs are hard 💡
[14:42] “When you work with the customers who have never implemented an ERP system, they just don’t believe it’s going to be so expensive and the change is going to be so hard. It’s almost like, ‘I can do business in a new country in two days, why can I not implement any ERP system in two days?’
That is very hard to communicate for an ERP consultant. And the only people who are going to understand are the people who have implemented an IT system or technology, because technology is hard. We have stories where people underestimate the amount of effort that it takes to implement an ERP. And if you do that, most likely the experience is going to be painful.”
Carrots are more effective than sticks 💡
[23:13] “How do you make sure that people are really using the system? There are two approaches to motivate people: You could give them a reward, or you could penalize them. If you try to penalize them, in our experience, that always backfires. So what can we do to incentivize them to use the system and really embrace it?
There are always going to be problems, glitches, technical issues, and change management is going to be hard. But what can you do to sell it to people who are willing to sell on your behalf? That’s the best approach.”
How to meet your ERP match 💡
[28:44] “When you’re buying an ERP system for the first time, you are looking at 1,000 different variables or factors that you need to evaluate. The closer you are to your micro industry, the easier it is going to get when you are looking at the other factors as well.
The best thing that you can do is to hire a consultant. If you cannot afford that, do a lot of research. The more you read, the better you will get at ERP selection. Finalize what requirements are going to be super critical for you.”
[16:15] “Understanding and embracing and appreciating the amount of effort it’s going to take to implement an ERP will ease the pain.”
[18:50] “Everybody has their own self-interest. Whatever priorities they are trying to accomplish, show how you can do that using this digital transformation initiative.”
[24:48] “Everybody in the organization wants to serve the customers. They might have different approaches, but when you position it from the customer’s perspective, it becomes easier to pitch.”
[25:35] “The biggest misconception I have heard in the community is that ERP vendors are not innovating. In fact, they are slower to innovate their systems. That is not true at all.”
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