“Any CIO that undergoes an ERP transformation is a CIO looking for another job.” ~ Ancient ERP proverb.
This sentiment has been a long-held one throughout many different industries, and quite justifiably. An ERP transformation can potentially be a gigantic, top-to-bottom overhaul of a business’s procedures and operations. ERP Today sat down with Jon Gill, VP of Sales, EMEA at Spinnaker Support, to enquire about the type of risks organizations face when deliberating over a business transformation.
Spinnaker Support specializes in providing third-party ERP support, while also offering alternative solutions that don’t require a full digital transformation. According to Gill, the first step in understanding the risks involved in integrating the latest and greatest ERP is for a business to master its IT systems.
“For me, it’s two things; architectural freedom and commercial freedom,” said Gill. “It’s taking control of your own system, your own roadmap. What does that really mean? The cost involved in a move to [a new ERP system], the complexity involved and the change in business processes aren’t insignificant. They [clients] can’t really identify the value a new system could bring to their business.”
Understanding the value a new ERP system can bring a business is wasted if the capabilities of the new tech are incomprehensible to decision-makers. Gill emphasized how decades-old contracts could be restricting the freedoms of clients:
“Everything was written as an on-premise contract. With the prevalence of cloud technology, new customers and new companies in the market, these contracts don’t work anymore. And they’re restricting your ability to say ‘I want to go and transform on my time frame to my desired system.’”
Some businesses, through outside interference or some other unpredictable circumstance, won’t be in an ideal position to undergo a major tech overhaul that’s demanded through an end-of-service announcement. Gill was quick to reinforce the benefits that come when leadership has a full understanding of business processes and IT systems.
“It’s that architectural freedom to say ‘If I want Workday, I’m going to go to Workday. If I want to go to RISE with SAP, I want to do it in my time frame. I’ll do it when it suits me and my business.’ That’s what we mean when we talk about mastering IT systems.”
The lack of awareness of solutions beyond a full ERP transformation is a pitfall, according to Gill. “What CIOs are now thinking is: ‘I’m here to drive digital transformation, but I’m being told I must move my entire ERP before the end of 2027 to [a new platform]’.
“I’ve spoken to several CIOs who all said the same thing: ‘I will do one ERP implementation in my career, and it will be my last one.’”
Alongside not understanding the true value of a new ERP system, and if it will actually be effective for a firm’s business goals, one of the other biggest pitfalls in new ERP implementations is having a lack of understanding of the costs needed for implementation.
“There’s an example we have with one of the major [Australian] Banks,” Gill said, on the topic of how much a digital transformation can cost. “Simply to stay on the latest version of [its systems] and therefore maintain their security; you’re looking at $40m every time they need to upgrade.”
Gill is quick to point out that the above costs only apply to the upkeep of databases, with no additional functionality. The money saved on the upkeep of the latest database “allows [clients] to go and spend that on customer-facing platforms that are going to drive competitive advantage and drive business value.”
When asked to share one final piece of advice for any organization looking to undergo an ERP transformation, Gill was very clear with his guidance: “Understand all your options”.
“I will be the first person to hold my hands up and say third-party support is not the right option for every single customer. But I do think third-party support is the right option for a lot of customers who don’t know about it.”
“So before you make what is going to be a huge commitment in terms of time and effort, fully understand what your options are, talk to somebody like us and see if we can help. If we can’t help, you’ve probably wasted half an hour. If we can help, you could have saved a lot more than that.”
Ultimately, optimal and effective decision-making can be achieved when a firm’s leadership has a deeper understanding of the nuts and bolts of the business. Rather than feeling obliged to upgrade an ERP system at the first opportunity, unexpected benefits could be gained by exploring what other options might be available.
