Making Mid-Market ERP More Affordable

A typical refrain I hear from mid-market company executives goes something like this: “Our rapid growth in the past several years has outpaced the ability of our business systems to keep up with the workload, but we just don’t have the resources to invest in an ERP system right now.”

The need for a new ERP solution has been identified and specific software may have even been chosen, but a lack of available funding and competing priorities have pushed the ERP investment to the back-burner.

Executives may grapple with any or all of the following beliefs that manifest as obstacles to moving forward with long overdue ERP investments:

• Perceived high cost – ERP deployments require significant resources to initiate and sustain. Executives focus on required funding, availability of internal resources, and the potential business interruption.
• Perceived long and tedious process – Executives believe that ERP decisions are some of the most complex and require months of study and information gathering prior to initiation. Organizational culture may suggest that an extensive process to gain buy-in from all business stakeholders may ensue.
• Perceived impact of changing needs – Executives may get frustrated because of a belief that their business is evolving too fast to make an ERP implementation work. What if the key needs today are totally different by the time new software is deployed?
• Perceived rejection of change – People and organizations sometimes resist change with every fiber of their being. Even with a clear strategic and tactical reasons, and strong executive leadership, initiatives may fail if users react negatively to new systems or if tangible improvement isn’t felt immediately.

Often, the result is that executives wrestle with competing belief systems: the belief that a new ERP system will solve a lot of problems and create new opportunities, and a set of beliefs about the obstacles. They get stuck in a constant analysis loop and don’t move forward.

[Video] Here’s an example of how some companies treat an ERP solution like a bandaid  >> Watch A Tale of Two Efficiencies

The software industry has realized the inherent obstacles in buying software as a product and running it on local high-cost infrastructure. The buzz about the “cloud” is really just a marketing speak for the adaptation of licensing and deployment models to a services model. We are referring, of course, to Software as a Service (SaaS). Paul White speaks to the industry trend of operationalizing software in his recent article which highlights Microsoft’s move to cloud-based ERP deployments and subscription purchasing models.

This move to make ERP software more accessible to in the mid-market represents a groundswell shift to reduce some of the key barriers to entry for enterprise software deployment. However, it only breaks down one of the barriers – the high cost to purchase software as a product, versus licensing it as a service.

SaaS may make software more economically accessible but that leaves the perceived cost of implementation and the other barriers mentioned above to grapple with. ERP service providers need to come up with strategic ways for customers to access the whole ERP package, which includes both deployment and a robust support framework.

The limiting beliefs we discussed are rooted in experience, and that experience comes from an antiquated deployment model for mid-market ERP solutions. We launched our Lean Deployment and Proactive Support Framework for Microsoft Dynamics NAV specifically to address these obstacles. Making ERP solutions more accessible and creating more value from them (significantly more).

We strongly believe that by applying SaaS economics to a whole program of work — focusing on critical business outcomes rather than just implementing software — we will overcome the barriers that prevent organizations in need from performing at their best.  Our experiences with managed services engagements have allowed us to shift our thinking about successful ERP implementations and all of the activities that go into it. This has led us to an interesting implementation philosophy called Lean Deployment which is based on an idea of a “minimum viable solution.” In a nutshell, it means scaling the deployment focus down to the highest priority requirements, and evolving capabilities over time through embedded feedback loops and change management.

This way, you can begin with the minimum viable solution and iterate changes as needs emerge over time. Combined together, this framework breaks down the previously mentioned barriers and results in an easy on-ramp for your ERP program:

• Affordable entry cost: The framework reduces the initial software deployment investment and allocates resources to continuous improvement and support. These are bundled into a smaller monthly investment and focuses on the highest value needs.
• Shorter decision process: Instead of soliciting or gaining consensus on enterprise or organizational requirements, including speculation about future needs, the framework focuses on the highest priority requirements (minimum viable solution), often reducing the decision cycle.
• Evolving business requirements: Requirements can be re-prioritized as changes emerge based on a monthly work plan rather than a whole project plan, making the engagement more agile with a solid understanding of outcomes. This is working really well in our clients.
• Impact of change: While consistently working with your staff to support business improvement, the introduction of large and small changes are easier to adopt versus the big-bang project approach.

The following graph takes a look at a typical ERP or CRM solution investment and the resulting business productivity and benefit realization.

In contrast, the below graph demonstrates the impact of an ERP/CRM investment following a Lean Deployment and Managed Services framework.