The No Nonsense Guide to Replacing Your ERP

Introduction 

Are you an ambitious UK based professional services or distribution business? 

and 

Do you employ between 100 and 1,000 people? 

And 

Are you currently using one of the following solutions – SunSystems, Pegasus Opera, Sage Line 50, Sage line 100, Sage Line 200, Xero, Agresso, SAP Business One? 

If so, over the next three years you will likely consider replacing that existing system – either because you have outgrown it – or because the software vendor is no longer investing in the solution. 

Before you start thinking about the selection process – here’s a brief read that I hope will make you very much wiser. 

Which Product? 

Thirty years ago, there might have been 300 finance/ERP solutions for you to choose from. The industry has consolidated. This reflects the transition from on premise to cloud – and the cost of software development. There might now be (at a stretch) 30 solutions on the market – but in reality, 90% of businesses in your sectors and of your size will pick one from a list of just three. These are (in no particular order): 

Sage Intacct. Intacct started life in the US – as an independent business – before being acquired by Sage in 2017 to fill a gap in their SaaS product line up. 

NetSuite. NetSuite started life in the US – as an independent business – before being acquired by Oracle in 2016 to fill a gap in their SaaS product line up and give them an SMB proposition. 

Business Central. Business Central started life in Denmark as Navision. Microsoft acquired the business in 2002 to get into business applications. Microsoft has subsequently reengineered the product to make it a SaaS solution. 

Intacct, NetSuite, and Business Central are the three proper SaaS solutions that have momentum in the UK market. They are all capable of doing good job – but have relative strengths and weaknesses. These are: 

Whilst Sage, Oracle and Microsoft would have you believe different - the secret to the success of your project will not be which product you choose. The truth is that if you are a services business – both Intacct and NetSuite will do the job – out of the box. If you are a distribution business – both Business Central and NetSuite will do the job out of the box. So rather than spend lots of time trying to assess differences between products that are very similar – invest in determining which Partner you want to work with – and collaborate with them in determining what you need to spend. 

Which Partner? 

Picking the right Partner to implement your new solution is business critical. The impact of that decision can be binary – determine success or failure. 

There might be 100 Partners who implement Sage Intacct, NetSuite, or Business Central in the UK. I’d only consider 15 of them to do so. Why so? 

1. Depth. The success of your project will depend on the quality of the people that your Partner employs. To attract and retain good people a Partner needs to have a degree of organisational scale. Don’t deal with anyone who has less than 50 people. 

1. Breadth. Implementing these products – and making the most of them by integrating them across your business – requires more than just finance, business process and specific product knowledge. You will need access to a much wider range of IT skills. You’ll want to get these from the same Partner – to have one throat to choke. 

1. History. Lots of IT Resellers are seeking to transform themselves into IT Services businesses. Many have chosen to get into Business Applications. They have hired a few people and secured a few vendor accreditations – but have yet to accumulate the 100’s of many years of experience that success in implementing ERP requires. They don’t yet have the wounds or the wisdom that are key to the success of your project. 

The list: 

How might you choose between these different organisations ? 

I’d encourage you to look at three things: 

1. People. Meet as many people as you can – not just the salesperson and their pre-sales support. You and your team need to meet a broader group – the project manager, the lead consultant, a support person. Do they feel connected as a team – are you comfortable in each other’s company. If not – look elsewhere. 

1. Process. There are two ways to implement a new ERP system. 

• The traditional approach is to have someone specify everything endlessly and only then start a system build. The challenge here is that your people will typically define your requirements on the basis of what they already know. What they already know is the existing system and processes that you are wanting to upgrade/replace. This is self-defeating. 

• The other approach sees your team get hands on with the new product really early. Together with your Partner you will work to confirm that the processes within the standard application will meet your business needs. You then subject any call for customisation – to meet a particular idiosyncrasy – to a high bar in terms of ROI. It is this approach that will minimise up front implementation costs and lifetime maintenance costs. It is the only way to go. If a Partner proposes something different – look elsewhere. 

1. Customer Satisfaction. If you are not familiar - NPS is an industry standard means by which organisations measure customer satisfaction. They ask a simple question – on a scale of 1 to 10 “would you recommend us?”. You take the number of customers who give you a 9 or 10 (very likely to recommend) and deduct the number that scored you 1 through 6 (not likely). The net number is your NPS score. A poor score will be between -20 and +20. A good score between +20 and +40. A great score is >40. If the Partner, you are talking to does not measure NPS or doesn’t have a score >40 – look elsewhere. 

What Should You Spend?  

Many customers approach their project with a number that they first thought of – before they have spent any time engaged with a Partner. That’s a mistake. 

Upfront Costs 

The upfront costs associated with building any new system are defined by: 

1. The complexity of your business 

1. The willingness of your team to adopt the processes that come out of the box as standard. 

1. The extent of the customisations that you approve as being essential 

On the back of that information your Partner will be able to suggest what number of man hours/days they will need to commit at what day rate. Inevitably Partners will seek to maximise the day rate they enjoy. Be aware that squeezing the Partner too hard is self-defeating – they’ll put their best people on other higher paying projects. Pay for their best people, insist that you get them and ensure they deliver. 

On the back of that same information the Partner will also be able to explain what will be required of your team. This piece is critical. If your team don’t deliver on their commitments – the Partner won’t be able to do what they need to do – and project momentum will be lost. Utilisation is the key driver of Partner profitability. They can’t afford to have people hanging around waiting for your team. They will assign them elsewhere. Put your best person on the project – not just someone who can be made available. 

Run Costs 

The costs associated with running your new system will have a number of components: 

Software Subscription 

• Your licence costs will be a function of the number of users that need to have access to the system. Work with your Partner to make sure you are making best use of whatever “lite” or “limited” licences are available – these enable certain job roles (sales, service engineers) to do what they need to do – without paying for a full licence. Some of this may only become apparent when you are well into the build phase of your project. 

• As the market has consolidated, vendors have become less flexible in their pricing. They play hardball. You should do the same. Ask your Partner to be transparent about the margins they are making – and then work together with them to get the best deal from the software vendor. My suggestion? Buy licences at the Vendors H1 or H2 period end. 

Professional Services 

• Every 6 or 12 months you will be required to accept an update to your system – it’s the nature of SaaS. You’ll want your Partner to explain the changes to you, explore where new features might be of benefit, test existing customisations to check that they will still work and implement any changes required as a result. Make sure you have a contingency to accommodate these costs. 

Training 

• Over three to five years many of the people involved with the initial project will move on – both within the Partner and your own team. They will take with them their understanding of how the system works and why it was implemented that way. When this knowledge is not handed on/replaced, user satisfaction declines and calls to replace it will begin to emerge. To avoid this, you need to evolve the solution – often around the upgrade process described above. User training is another big part of the answer. Training is never “one and done.” Skills erode. Training needs to be done and redone – so bake this into your budget and make sure you spend it. 

Support 

• The quality of the support that your people receive is key to the ROI you will secure on the initial cash investment and all the hassle associated with any system replacement. If your people don’t get quick, helpful answers to their questions – your business will start to go slow. If a decision about which Partner, you work with comes down to one issue – optimise for this. 

Conclusion 

A well-executed ERP implementation project will be transformational for your business – it will liberate your people from byzantine processes and equip them with great data with which they can do a better job for your customers and shareholders. 

A poorly executed ERP project will sap bank balances, professional credibility, and staff morale. 

The difference between the two is found in the decision about which Partner you work with – and the quality of collaboration you establish with them. 

How Can TSG Help? 

Our NPS score is 90. Come meet our people. Make up your own mind.