How to get an ERP right
Are you saving money or just limiting business growth by putting off investing in an ERP? Brought to you by Liberate I.T.
How do you make sure that enterprise resource planning (ERP) software does what you need it to do?
Liberate I.T. sells, implements and supports Oracle’s NetSuite software, which is built for growing businesses. Its business development manager Katie Grant recently sat down with Elisha Nuttall, a senior manager in the Operational Advisory team at Grant Thornton in New Zealand, to discuss ERP and transitioning to the cloud.
Picture: Katie Grant, business development manager, Liberate I.T.
KATIE GRANT: Liberate I.T. and Grant Thornton recently worked together on an ERP implementation for one of your clients. Can you tell us how Grant Thornton works with businesses looking to invest in systems such as an ERP?
ELISHA NUTTALL: We first look at business processes and improve them, or set out the future state so that their processes can be more efficient and clients can focus on getting better at what they do.
Quite often, there’s an element of technology enabling processes; you can’t really look at the two independently. So we help the clients choose the technology that’s going to help them move forward successfully. That might be migrating from a small system to a bigger one or a more appropriate one, or one that will set them up to run efficiently and potentially grow in the future.
GRANT: Do you see many businesses still using on-premise technology?
NUTTALL: Many of our projects involve moving clients from on-premise to a cloud suite. In New Zealand, medium-sized businesses are making that transition now. Many are pressured by application support running out, or end-of-life of servers. As the servers come to their end of life, it becomes clear that that it’s not a viable option to just replace them, and so the company needs to transition current on-premise toolsets to cloud options.
At that point, it makes sense to have a look at the wider business context. You might have six different tools that don’t talk to each other. One tool in the cloud might be better, or you might need an integrated cloud environment.
GRANT: COVID-19 had a massive impact on companies that relied on on-premise technology. I had a number of businesses come to me over the initial lockdown because they were running on-premise solutions and they needed to quickly adapt to a cloud-based system. What they were not expecting is the investment required to go from on-premise to a cloud-based system. How do you reassure clients that the investment is worthwhile?
NUTTALL: A cloud technology solution is definitely a different cost profile. One exercise we often do is to look at the total cost of different solution sets.
There may be less obviously identifiable costs of having on-premise software, such as the server cost, which has to be upgraded every few years. There’s probably maintenance on the server, too, and internal upkeep – you have an IT provider or an employee in-house doing upgrades and security patches.
In addition, you’re having to manage an on-premise solution yourself. That’s a fair bit of cost and risk. It’s also worth considering the lost productivity from lack of access to applications off site.
In general, New Zealand companies substitute technology and systems with people. If they don’t have the ideal suite of systems and technology, a human is used as a stopgap to make the whole thing work.
Often, key staff have to do manual activity that takes them away from strategic and growth activity. There’s an opportunity cost, even if you can’t point to someone and say you’ve hired them to do what a system would do.
You see the cost more explicitly when you go to cloud because you have a monthly fee, but there are a lot fewer periodic costs and lost efficiencies. With the full picture, the cost of cloud solutions stacks up.
GRANT: Another issue is data accuracy. People often make a low investment in software and it does affect the long game. What are some of the issues you see with clients who haven’t invested in the right systems and good data management?
NUTTALL: It could be a limitation for them scaling. I was visiting a client recently and they weren’t able to transition clients across because their system literally couldn’t handle the extra volume. When it gets to that point, businesses sit up and they really know they need to fix things – but it’s usually a year too late.
Another area is auditing, tax and month-end or year-end processes. You waste a lot of staff time and run the risk of human error if these processes are done in spreadsheets – if you haven’t invested in your data and system-enabled processes.
Instead of CFOs focusing on strategic direction, they are having to validate your financials because the data is in three different spreadsheets, which you then have to put back into the small system you currently use. There are better things they could be doing.
GRANT: What key areas do you look at with a client to help them find the right software solution?
NUTTALL: Sometimes a company has an existing tool they know they need to replace, or they’ve seen a tool and they think they need something like it.
We work through what the solution needs to do in the context of the business’s processes and direction. The solution can end up being quite different from what the client initially thought. We try to avoid just jumping on a bit of software that fixes a current pain point but will need replacing in a year’s time.
Picture: Elisha Nuttall, senior manager, Operational Advisory, Grant Thornton.
“We work through what the solution needs to do in the context of the business’s processes and direction.”
Often there are two very different types of solutions – one that’s a nice, tidy ‘all-in-one’ solution, and one where you piece together cloud applications – a ‘best-of-suite’ approach. For smaller organisations, the second option might be the more affordable path, and they have to accept that they may need to revisit parts of their environment if they scale beyond the capability of an application.
GRANT: We’ve certainly come across that. In some ways it’s easier to get a fast-growing business on an ERP system at an earlier stage. Coming in when they’re at a high-growth stage can cause a fair bit of disruption.
NUTTALL: With an ERP system you have to get a lot of stakeholders on board – it’s more than just finance that needs to buy in – so you’ve got to think about your landscape of who needs to be involved to make this successful. Which processes are you going to want to do in the one system? What operational system should it integrate with? What operational decisions can it help inform? That’s the way to get the most out of an ERP tool.
Find out more
Go to www.liberateit.com/caanz to learn more about business transformations through software investment.