Every quarter, every year, and every month, financial organizations work hard to close their books and prepare financial statements in accordance with countless rules and regulations. And when their ERP systems, designed at great expense and some point in the distant past, can’t keep up with their ever changing needs, they resort to creative workarounds, relying on spreadsheets, diagrams, or other documents jut to get through another reporting period.
As time passes, documenting the period-end process becomes more complex, and maintaining the process documents takes more and more time. But the collective memory of the finance team hasn’t forgotten what it was like to get through that first ERP implementation project – not to mention its enormous expense – and any hopes of improving the situation are abandoned as soon as someone says, “What about the ROI?”
Finance teams would have a better chance of responding to the ROI question if they banded together with their colleagues in purchasing, HR, product management, manufacturing, sales, marketing, and IT as they struggle with the same legacy ERP systems. Ask around and you’ll find that all of them have created their own sets of creative workarounds just to get through another day.
It’s happening everywhere.
HR professionals, for example, have all sorts of ongoing ERP-related headaches to deal with. Employees leave or join the company or move from one business unit to another, possibly in another country. As a result, compensation, bonuses, benefits, commission policies, and structures are a moving target. Layoffs and furloughs have taken their toll, and divestitures and acquisitions mean company reorganizations are seemingly endless. How likely is it that the once elegant workflow designed around an ERP system implemented 5 or 10 years ago hasn’t needed to change?
And with businesses struggling to keep their heads above water during this recession, RIFs and budget cuts only exacerbate the problem. It’s like having your business broadcast on a hi-def TV. Suddenly every innocuous work around looks more like a big ugly wart.
And it’s happening in virtually every business unit and functional area.
Purchasers in recent quarters have been working hard to reduce inventories by renegotiating contracts and payment terms. Manufacturers looking to reduce costs have outsourced, in some cases insourced, and in many cases adopted lean production practices. Product managers have been reducing product lines to those that are most profitable, and IT teams have been investigating cloud computing and other virtualization initiatives to drive out costs. Sales teams have seen dramatic changes in their territories, pipelines, and orders. And marketing teams have been redirecting funds to less costly online venues thanks to Twitter, Facebook, and LinkedIn.
In other words, everyone has been on the same bandwagon for months, driving out costs and looking for efficiencies while hoping to hang on until the economy turns around. And one day it will.
The Next Great Companies
The question is how easily will your organization be able to adapt to a new business environment? Is a hopelessly inefficient ERP system going to cut it? Will you briefly consider doing something about it but abandon any lofty plans because of that killjoy acronym, ROI? How will your organizations respond to an uptick in the economy, effectively and efficiently? Nimbly? Like the contortionists executives want everyone to be?
As if issuing a wake-up call to the business community, Gartner has proposed that organizations should now seek changing patterns in their business environments and formulate strategic plans to address those changes. IT systems will be a key component of this highly competitive new organization, aggregating and analyzing data, synthesizing information, and ultimately discovering patterns that uncover new opportunities or threats.
If Gartner’s vision for the future holds true, organizations that aspire to be market leaders won’t hesitate to update outdated ERP systems and abandon off-line workarounds.
Those who don’t will muddle along. They’ll be the good companies, but never the great ones.
