Revenue and Receivables Management: Myths and Truths About ERP

Six myths about ERP debunked


MYTH 4: ERP has all of the reporting that I need.

Although ERP systems often contain the data required to populate any required reports, they focus on financial reporting versus activity-based reporting (such as cycle times, call out comes, in-depth risk analysis). As a result, ERP systems typically have a limited number of useful reports out of the box. To expand ERP reporting outside of the limited canned reports available with an ERP system, organizations must custom build the reports using IT resources or employ a third-party reporting tool.

Alternatively, BoB systems have flexible reporting capabilities that are designed specifically with credit and collections in mind. BoB employs built in report writers, ad-hoc searches, and other robust capabilities, and provides interfaces for business users to easily author their own ad hoc reports.

MYTH 5: ERP will grow with my business.

An ERP system will indeed grow with an organization if the company doesn't form or acquire additional business units, and all current units continue to function under the same business model. Deployments of ERP are often full of compromises with a narrowing of scope. Furthermore, ERP systems are difficult to customize and have difficulty supporting multiple business models. This is why there are often multiple instances of an ERP system within one organization.

Therefore, corporate acquisition usually requires massive system changes to leverage core ERP functionality for credit and collections — the opportunity costs of waiting for the acquisitions to be folded into ERP could pay for a BoB many times over.

Furthermore, should an organization move to a Shared Service model, any new acquisitions or additions of business units that use independent systems may require employees to use multiple transaction systems, which essentially minimizes the effectiveness of a Shared Service model. On the other hand, BoB solutions have built in flexibility to manage multiple systems, business models and organizational structures.

MYTH 6: ERP will enable a faster ROI.

Numerous factors influence return on investment, many of which are discussed above, including usability, cost of implementation, ease of support, resource requirements, flexibility and scalability.

Usability — One of the most influential drivers for user adoption is ease of use, and ERP systems are notorious for difficult user interfaces. For instance, ERP often presents information in a manner that requires users to access multiple screens to perform a common task, while a BoB solution — designed with the specific business process in mind — presents the information on one screen or dashboard. (See Myth 1.)

Implementation cost and ease of support — ERP implementations are tremendously complex and difficult to support, due in part to the intra-system dependencies inherent in the system. New modules and any customizations ultimately uncover unseen costs and schedule over-runs. (See Myths 2 and 3.)

Resource requirements — Even more so than with standard software implementations, ERP systems drive a high degree of reliance on overstretched IT resources — not only on initial implementation but with any change that might be required in a dynamic organization. (See Myths 2 and 4.)

Flexibility and scalability — As an organization grows and changes, companies must be able to rapidly configure the solution to interface with multiple transactional systems. As described in the section above, this is not an easy task with ERP systems. (See Myth 5.)

Conclusion

A 2005 issue of Supply Chain Digest reported that most chief information officers admit that BoB solutions are not more expensive to implement when compared to ERP modules. In this article, the CIO of a major consumer goods company was quoted as saying, "You're right, it really isn't integration (why CIOs generally prefer ERP)…that's just an excuse we know it's hard for anyone to argue with. The cost differences really aren't that great. It's more a matter of staying with a vendor and technologies we're the most comfortable with."

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