Signs to upgrade or move to a new ERP platform

Is it time to upgrade or move to a new ERP?

Interesting question but why are you asking this question in the first place, there are several reasons, it can be business-related or technology challenges. Whatever the reason you don't need to make the decision alone. Here are some scenarios that businesses might encounter why they're thinking about upgrading or moving:

Business-related

• We've experienced rapid growth, we're opening new warehouses & distribution centers, we're hiring new people and doubled our headcount. This system can't grow as fast.
• We've been using this system since we started the company, it's been X years and this system is not doing what we want anymore.
• We've introduced new businesses and new channels. The system was upgraded with add-ons and work around but it's not working for us.
• We have compliance requirements; we need to change our processes, but this system is not flexible enough.

Technology challenges

• This version has reached its End of Life (EOL) and won't be supported by the vendor anymore, I think it's time to find another platform. 
• We've customized the heck out of this system. We have hired developers to maintain the system for years. The Total Cost of Ownership (TCO) is too high that it's better for us to upgrade to the latest version or find another system.
• We need to integrate our ERP with other systems so we don't need to duplicate our work, the ERP technology is so old that it's not possible.

Do any of this apply to your situation? Surprise, you're not alone. Most companies go through this situation every 5 to 10 years. Is there a quick answer to your question? The answer is No. 

Let's answer the who, why, what and how.

Who can help answer the question? This is a collective effort between your IT, your ERP partner & vendor if they're different and I highly recommend a 3rd-party consultant who doesn't have any vested interest to your vendor or partner. 

What's the best process to get the answer? There are several ways to do this, and it all depends on your time; how much do you want to spend and your resources. The best way is RFP or Request for Proposal. This will require more time but it's very detailed and will give you the best result. 

Why do we need resources & time? ERP is not just a system or application, ERP consist of different processes - Order to cash (OTC), Procure to pay (PTP) and others. You need to get the business requirements from each business process owners & Stakeholders. Once you complete this process then you consolidate this to your RFP. You send this to your ERP partner and maybe even other ERP vendors. 

How can we know from the process that we should upgrade or stay with our current system?

If you decide to do the RFP route then at the end of the process you will fill out a vendor scorecard and if your current vendor or current system comes out as the top scorer then you don't need to spend money upgrading. 

The most difficult part of this process is finding the right system and partner. RFP will help you find both if you do this process methodically. Don't rush the process, find a good partner to help you with this process because like I said, you don't do this every full moon.

Duke del Prado has over 25 year's experience helping businesses find the right systems and partners for different enterprise applications like ERP, CRM, eCommerce, POS, EDI and others.

Former Citi VP of Treasury Sentenced

In this age of compliance and tight security, how can one still manage to embezzlement more than $22 million?

Well Mr. Gary Foster did, the former vice president at Citigroup Inc.’s treasury finance department was sentenced to 97 months in prison for fraud related to his embezzlement. Foster embezzled funds from various Citigroup accounts by transferring money to Citigroup's cash account and then wiring it to his personal bank account.

Foster concealed his thefts with various false accounting entries, making the Citi cash account appear in balance and placing a fraudulent contract or deal number in the reference line of the wire transfer instructions.

Made me wonder, which accounting system were they using that nobody can even catch this kind of false transactions especially during month-end reconciliation. I guess if you work for a large multinational bank, it'll take a few cycle before you can confirm that there's fraud or breakage in the process. But mostly this can be remediated by constant communication between people who audit and reconciles cash.

Required apps for Cloud computing

You've done your research and know the differences in business model between the 3 areas of cloud computing:

• SaaS (software-as-a-service). WAN-enabled application services
• PaaS (platform-as-a-service). Foundational elements to develop new applications
• IaaS (infrastructure-as-a-service). Providing computational and storage infrastructure in a centralized, location-transparent service

So you decided to jumped on the bandwagon. Now you're planning the operations of the company and looking at the operational processes from the point of contact to revenue recognition. You start creating the flow and do an inventory of the applications required for each process. At a high-level this is what you had at the end:

CRM - This system will initialize the process. A simple CRM sales cycle include prospecting, proposal then Win. You can go for On-demand or On-premise solutions.

Contract Management -  The contract creation should be simple yet flexible. These days CMS softwares are flexible enough to create contracts in different languages which caters to different regions - EMEA, AsiaPac, etc. Flexibility is very important because contracts can have different data elements and the application should have this feature.
Billing - This is the heart of the whole system. When looking for this system, you should understand that this goes to details of your process so involve hands-on users as they know what's important to this process. Accurate billing is your main objective here. Invoice formats is likewise an important piece.
Collections - With companies going global, expect that customers will require you to cater to their needs. One common pitfall of this system is the ability to receive payments other than the customer's region currency. Your system should be flexible enough to accept payments in different currencies. You don't want to return a payment because it's on the wrong currency...Money is king!
Usage Metrics -  Every customer using your service expect to know their monthly usage. This system should be able to track where the customer is in terms of usage. If you're sending a monthly invoice to your customers then this is based on monthly usage. Some companies support real-time usage on their websites for customers to see.
Revenue Recognition - The accounting for Cloud computing is still on its infancy. New accounting rules will be define in the coming years and this will change how applications determine Revenue recognition. The juice of the discussion will focus on how to leverage this new way of doing business. Revenue calculations will neatly integrate with customers subscription contracts but there are other ways of doing business in the cloud which can define how the new rules will be laid out.
General Ledger -The last piece of the puzzle but not the least important as this can determine if your process is working or not. Other applications will feed this system, application or module. You have to know your integration points and GAAP rules that govern those systems. Don't take your reconciliation process for granted.
Others - Tax, reporting - financial and operational, templates,etc.