June 19th, 2009
Reasons to Implement ERP During the Economic Downturn According to ERP and business consultant Eric Kimberling, the current economic downturn is the perfect time to re-evaluate current software systems and implement an ERP. Many have predicted a slump in IT spending for the next year, but Eric cites research carried out by the Panorama consulting Group that suggests a majority of organizations (as much as 53%) plan to overhaul their current enterprise systems in 2009. Below are the reasons he gives for why this is an ideal time to implement an ERP: Reduce total cost of ownership. ERP software vendors are pricing their offerings more aggressively than usual. This presents a unique opportunity for companies to procure software at a lower cost than possible during a more robust economic cycle.. Increase revenues. Many companies are facing flat or declining sales during this economic downturn. ERP functionality such as CRM and sales force automation can help companies sell more effectively to better confront these economic headwinds. Increase productivity. Many companies are laying off large numbers of employees and/or are on a hiring freeze. ERP enables companies to get more work done with less people, allowing them to maintain payroll costs both now and when the economy recovers. Improve business process efficiency. ERP provides companies with a unique opportunity to automate manual business processes and eliminate non-value-add activities. In addition, ERP allows companies to more efficiently match customer demand to inventory, resulting in reduced inventory and carrying costs. Scale for growth and economic recovery. Smart companies are implementing ERP now to better position themselves for business growth and scalability when the economy does recover. Leverage available resources. Although there is never a good time to implement ERP, a downturn is as good a time as any. There are often more internal and external resources available to help implement ERP effectively, which isn't always the case when the economy is booming and companies are busting at the seams. Prepare for mergers and acquisitions. Given the high levels of consolidation that often take place during economic slowdowns, many companies find that ERP software will help them standardize their business and prepare for either acquiring other companies or being acquired. Force management to focus on benefits realization. It's unfortunate, but ERP implementations are not always required to demonstrate measurable results when economic times are good. ERP implementations are now required more than ever to deliver results. Of course, we argue that this should be true in both good times and bad.
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