In today’s challenging business reality with the large Online Retailers dominating the market, businesses need to have modern ERP Software that will enable them to make new acquisitions or have an e-commerce that will help them compete with the large Online Retailers. Another tool they must have is Analytic Information Software that will provide them with comprehensive information of their company’s various activities.
Unforeseen Circumstances when the Business Environment Changes
- • Companies who engage in e-commerce often experience unexpectedly high volumes of sales’ transactions that their current ERP Software cannot handle efficiently. It results in having additional inventory and increased operating costs.
- • Frequently, the current software that cannot provide the desired analytical information results in downloading large amounts of data to spread sheets and causes complex data manipulation to get the needed information.
- • When mergers and acquisitions take place, the number of users and the transaction volume substantially increase. It can result in the current ERP Software not being able to handle this sudden change.
- • The acquired company might not have the same business practices as the company that took over. This can result in multiple software platforms being used creating additional complexities and higher operating costs.
The Steps that Should be Taken to Ensure Smooth Business Growth
- • When acquiring a new company, the software evaluations should be performed the same way as financials.
- • When evaluating the current ERP Software functions, the focus should not be on how well the software meets today’s business needs, but can it handle tomorrow’s business growth when the company moves to the “next level.”
- • In today’s challenging business reality lack of planning can result in severe losses.
- • Nobody likes changes, but not facing the fact that a company’s current ERP Software will not meet future growth will result in business disruptions and expenses down the road.
- • The question that should always be asked: “if today’s business reality drastically changed resulting from unexpectedly large numbers of new users or data transactions’ volume, would the current ERP Software be able to handle it?”
Case Study of Not Having the Proper ERP Software
A few years ago I met the CEO of a large electronics distributor and we discussed purchasing ERP Software from the company I represent. The CEO told me that he was not ready to purchase new ERP Software because by end of the year he planned to grow his business from 300 to 500 million dollars by acquiring the competitors with whom he was negotiating.
When I asked him how he planned to integrate his company’s ERP Software with the acquired companies’ data, his response was: © Copyright 2011 Dan Kaplan – 2 –
“You hit the nail on its head. The software we are using cannot support our future acquisition plans. We will have to let the companies we plan to acquire used their current ERP Software until we find software that can meet our new needs. I know not having the right ERP Software will result in a substantial increase of our operating costs. The unfortunate part is that we did not have the foresight to think ahead that our current ERP Software would not be able to support our acquisition plans. Nobody expected that we would grow at this rate and now we have to pay the price.”
When I heard this, I told him that my website has a case study about how my company helped SFI grow from a 6 to 35 million dollar company in 7 years and the case study was published in 3X/400 Information Management Magazine” http://www.smcdata.com/pdf/SMC-3X400-Case-Study.pdf and that the company I represent can convert his acquired companies’ data to his host computer. The CEO’s response was” I don’t think it’s the right time for us to upgrade our ERP Software while we acquire companies.”
Three years later the CEO called and asked me to meet him. At the meeting he told me that hindsight it was a mistake not buying the ERP Software of the company I represent and have them convert the acquired companies’ data to his host computer because some of the companies he acquired had outdated ERP software causing the following issues:
- • The acquired companies with outdated ERP software had inventory issues.
- • Data transmission from the acquired companies to his company computer to update the host data base took place at night resulting in additional efforts.
- • His company did not have real time information of the acquired companies’ activities.
The Results Achieved by Using the New ERP Software.
• The acquired companies’ data was converted to the CEO’s company host computer and the users were trained.
• 99% inventory accuracy was achieved at the acquired companies’ warehouses reducing errors on orders shipped by 99.95%
• The CEO and his management team had real time analytic information about all of his acquired companies’ activities.
Facing today’s challenging business reality is an important factor business needs to face in order to avoid unforeseen business disruptions when a new direction is taken.
About SMC & Dani Kaplan
Since 1980, Dani Kaplan has worked with Manufacturers, Distributors, Food Distributors and Food Processors, as the trusted advisor helping them lower their operating costs, streamline their operation and control the inventory.
Dani can be reached via SMC – http://www.smcdata.com/contact
The original article was published in: CEO Online Magazine, Sideroad.com, and eMarketingAssociation.com