10 Reasons for Implementing ERP Systems

Panorama Consulting publishes a lot of great information about selecting and implementing ERP systems. They recently published a new report that looks at reasons for implementing ERP as cited by business users:

Why are Businesses Implementing ERP Systems?

View Chart

Panorama Consulting Solutions developed the 2017 ERP Report to investigate ERP software selection, implementation and satisfaction trends across industries, company sizes and geographic locations. You can download the entire 2017 ERP Report from Panorama Consulting Solutions’ web site here. The report summarizes Panorama’s independent research into the experiences of ERP customers with regards to enterprise software, vendors, consultants and implementations overall.

The report identifies ten reasons why organizations decide to implement a new ERP system. The chart to the right shows how these reasons for implementing ERP break down by numbers.
Reasons for Implementing ERP Systems

To improve business performance – An ERP system is a business tool and needs to be viewed as a tool to conduct and execute business processes and transactions. It has no intrinsic value; only the value it creates by delivering benefits to the business organization.

To make employee jobs easier – Employee productivity increases. The benefits here can be real, make sure your new system will deliver these types of benefits if you’re counting on them.

To ensure reporting / regulatory compliance – This can certainly be a good benefit, but make sure the ROI is there and that you can actually realize the return on your investment.

To better integrate systems across multiple locations – This is a big benefit if you now have disparate systems or systems that aren’t or can’t be integrated.

To replace an old ERP or legacy system – This is often given as a reason to implement a new system, but make sure the benefits are there for a new system and the the expected ROI is valid and acceptable. Don’t just transfer old ways of working into a new system. The technology alone, won’t save you; unless you are straddled with onerous maintenance contracts, failing hardware, and/or scarce consulting/maintenance resources to keep the old system running.

To position a company for growth – It’s almost always less painful to implement a new ERP system when your organization is smaller, than when you’re in a huge growth spurt. If growth is predictably in your near future, take the plunge now and implement a new system. The training and familiarity you get with the system now, will pay off handsomely in the future.

To better serve customers – Nothing else to say. Do it.

To standardize global business operations – This can be a huge benefit! Make sure the system you select has language sets and localizations that fit your current operations and future plans.

Parent Organization or Stakeholder Requirements – When an organization receives funding or is acquired by another company, those key stakeholders may way require specific accounting tools such as ERP in order to standardize reporting, improve transparency and more.

To reduce working capital – This is a basic benefit if the new system is used properly.

Bonus Reason: Because other companies have ERP – This is not a good reason and is probably a predictor for ERP implementation failure.

Review: Reasons for Implementing ERP Sytems

Improve business performance
Make employee jobs easier
Ensure reporting/regulatory compliance
Better integrate systems across locations
Replace an old ERP or legacy system
Position the company for growth
Better serve customers
Standardize global business operations
Appease the parent company/stakeholders
Reduce working capital
Other companies have ERP

This post was updated from a previous version written by Steve Chapman in 2013. Updates include revised data from the 2017 Panorama Consulting report. See the original.