The cost of delaying an ERP software decision for public services
Posted by Henk Onstwedder
Research shows that public services organizations using the latest enterprise software reap a series of tangible benefits, while those that aren’t face “several costly challenges”.
Since the credit crunch, public service institutions have seen an increase in the demand for their services, but, at the same time, a decrease in their budgets. Not only this, the sector is beset on all sides with increased scrutiny from regulators, politicians and tax-paying citizens demanding greater efficiency. This blog outlines how technology can help the sector address these issues.
Relying on Excel and email during annual budget season can involve scores of people and weeks of repetitious data inputting; the result is literally hundreds of versions of spreadsheet files. Without even mentioning the security issues or the lack of workflow, seriously, this is not a good way to do business for a people-centric organization.
If you’re a finance director in local government, healthcare or emergency services, you know there is a better way to do things — one where all stakeholders use a single, joined-up system, the same budgeting tool and one data-entry form; a single workflow for follow up and collaboration, and a unified way of securing approvals.
This is all possible with an enterprise resource planning (ERP) system. But not all ERPs are created equal, and you will have barriers to buying, implementing and upgrading. You may even have already implemented an ERP but are not seeing the performance results.
Research by Aberdeen Group — The Cost of Doing Nothing: Why You Can’t Afford to Sit on an ERP Software Decision — spells out the reasons why organizations choose not to update their ERP and the challenges that brings; it illustrates the tangible benefits of keeping your ERP up-to-date, and puts forward a convincing argument for investing in one in the first place.
Why no ERP?
The top reason many organizations give for refraining from implementing ERP software, says the report, is that they consider themselves too small — half of the respondents (49 percent) say this. The report’s author, vice president and research group director (business planning and execution), Nick Castellina, makes the point that, while size may have been a barrier in the past, things are changing.
“While there is a stage in the growth of an organization where they can operate without an ERP implementation, that size is shrinking, as more ERP vendors provide ERP functionality for smaller businesses,” he says.
The “most troubling” two reasons businesses give for not implementing an ERP, says the report, is based on a “naïve” belief that they have been able to function effectively without one in the past (26 percent) and that they think they will be able to function effectively without one into the foreseeable future (23 percent).
Nick says: “These organizations either do not plan on growing in the coming years, or they are unaware of how their current technology environment is holding them back”.
The ‘no ERP’ challenges
The challenges these non-ERP-enabled business face, according to the survey, include redundant and inaccurate data which is difficult to share outside the organization, an inability for business systems to interact with one another and track business processes, and a lack of collaboration capabilities.
“Ultimately, these challenges derive from ineffective visibility,” says Nick. “Less robust applications are unable to provide information to decision-makers in real time, because of an inability to track processes and redundancies. Therefore, business leaders are making decisions that may not be properly informed, which can significantly harm a growing organization.”
Why replace it?
According to the 2017 report, businesses replace their ERP system because of its “obsolete” technology foundation or infrastructure (43 percent), its lack of features (41 percent) or the cost of maintenance and support (27 percent).
The fourth most popular reason (cited by one-fifth of the survey respondents) was an inability to tailor their existing ERP solution to integrate changes to the business.
That’s a real problem.
ERP’s should be designed for full scalability and rapid change. (That’s one of their main features, right?). Our advice is to ask about this when researching products and shopping for your next ERP partner.
Reasons for updating
Among those happy with their ERP, reasons for updating it include: wanting to take advantage of new functionality (55 percent), improvements in ease of use (29 percent), greater flexibility (27 percent) and support for emerging technologies (20 percent) such as mobile, social tools.
In some cases (22 percent), the reason for updating was that their vendor no longer supported the old version.
The bottom line
“There is tangible evidence that delaying the implementation, or upgrade, of a new solution can cause an organization to perform less effectively across a variety of metrics that will impact the bottom line,” says Nick.
The report finds that organizations on the latest version of ERP perform better than those on an older version (or those with no ERP altogether) in the following areas:
- daily sales outstanding (DSO)
- complete and on-time delivery
- internal schedule compliance
- inventory accuracy
- percentage of accurate financial reports
- percentage of time information is received during the ‘decision window’
- customer satisfaction
It shows that ‘average performance’ differences between those on the latest release compared with those that have made ‘no decision’ include: 10 days fewer DSO, a 10 percent longer period of time that information is received during the ‘decision window,’ 8 percent more accuracy on financial reports, 6 percent higher customer satisfaction levels, 6 percent better internal schedule compliance, 5 percent more accuracy on inventories and 5 percent more complete and on-time delivery.
Nick says: “Due to their ability to utilize new best practices and other innovations, employees get the information they need to make informed decisions and act more efficiently.”
Finally, the report adds that those on the latest version of ERP are more likely to have access to the system from mobile devices, as well as embedded business analytics, eCommerce support, and social business capabilities: “Those that are utilizing old technology, will not be able to take advantage of these types of emerging technologies and keep pace with competitors.”
A new World
Our own solution, Unit4 Business World (UBW), is an example of this new approach to ERP, with a focus on keeping costs low, improving efficiency and enabling public service organizations to maintain the system and make changes to it themselves without IT expertise, whenever it suits them. To learn more about UBW, download the brochure: Self-driving ERP.
To improve efficiency and accuracy during budget time, UBW keeps all stakeholders working in a single, joined-up system with one data-entry form to do it all, one workflow for follow up and collaboration, and one unified way of securing approvals.
You can also add the Unit4 prevero analytics solution to the capabilities of UBW. To see if your public services organization could immediately gain improved productivity and visibility with Unit4 prevero, download our brochure: Advanced Planning in Practice with Unit4 prevero.
Looking to the future
We understand skepticism around integrated, cloud-based planning and reporting systems, but use of these systems is now widespread. And we are convinced they are the answer to helping public services organizations meet greater demand for services at a time when budgets are tight.