Many CIO’s in the consumer packaged goods industry (CPG) are being faced with some big questions regarding how they support their business. One way of improving support is by moving away from often expensive and outdated ERP systems to a Software as a Service (SaaS) offering, which can deliver the functionality needed in a more specialised and complete way at a fraction of the cost. Matt Wills, founder and chief product officer of Acumen, a consulting firm specialised in the consumer goods sector, explains below.
The psychology of loss aversion tells us that human beings hugely overestimate the cost of what might be lost versus the benefit of what may be gained. So, just contemplating moving away from your large ERP platform that you've invested so much blood, sweat and tears in can feel extremely daunting.
However, when looking at it objectively it's clear that ‘do it all’ ERP platforms never truly delivered on the ‘all’ bit. Whilst they deliver a great core offering and are highly customisable, the reality is that a purpose-built system, designed to solve that specific task, often within your specific business vertical, will always provide you with a better solution compared to extending and customising your ERP.
SaaS providers provide solutions that integrate with traditional ERP in areas as diverse as expense management, master data management & trade promotions management. These are all developed by teams who are experts in their specialist area and will continue to grow and develop their offering aligned to emerging best practices.
The challenges of adopting SaaS
A new tool brings new user interfaces, terminology and language that can be hard to grapple with. Whilst this may seem like a downside, think about how many elements of your current ERP are actually used by your team – sticking with the familiar is of limited benefit.
The integration between these new systems and your ERP can seem a challenge. However, it’s far easier than it seems. Data exchange and event handling technologies have been around for a long time, and are now made even more accessible, robust and cost-effective with the cloud. The challenge is usually around customised functionality and behaviours that you’ve implemented in your ERP.
You’ll need to restructure your team to account for API technologies and approaches, system integration, master data management and cloud technologies. System administrators should act as system curators, taking responsibility for the maintenance and robustness of the whole interconnected solution. They won’t understand the inner workings of the various connected services but will need to take responsibility for the maintenance and robustness of the solution as a whole.
One other concern is that moving to smaller service providers means you may not get the ongoing platform development, and technology moves forward without you. In fact, the rapidly developing software market means that new providers continually develop the platform to stay competitive. In this new interconnected environment, the cost and complexity of movement is far less, and users are much more resilient to change – particularly if it's replacing and improving an existing tool.
How to get started?
The below isn’t an exhaustive list – but it’s the absolute fundamentals you should be implementing into your business for a successful migration to new software and services.
- Put together a plan to get you to ‘base camp’ and sort out some of the fundamental things that will help with any migration to new software and services. Good master data becomes paramount. Meticulously gather all the information you need and look at what your business is using day in and day out within spreadsheets and offline trackers.
- Ensure you've got great processes around the updating and maintenance of master data; make sure your master data is timely and responsive.
- Look at up-skilling your team in API technologies and associated tools. This will allow them to setup, monitor and maintain links and connections between your various disparate services.
- Finally, ensure you've got realistic testing environments in place. We frequently work with clients where their ERP DEV/QA environments are too sparsely populated with data to run effective integration tests, which leads to problems further down the line when you go live.
So, choose an area to work with a new SaaS-based tool, maybe somewhere you have no current tooling that is crying out for it, or a relatively simple area with few interconnections. Form a cross-functional team, set up an agile process to develop, test and deploy the work and get started. As with all implementations, it's crucial to work closely with the provider and be guided by them as much as possible. Try not to pull their tool too far out of shape to fit your current processes but work in synergy to find the best fit.
Process re-engineering and the resulting change management will be a key part of the team’s work. Think critically at what you are doing and why you are doing it, work out what you really need to achieve, and then design your process with all of that in mind.
Will it be worth it?
In short, yes. If you look at how long current ERP upgrades take and the user satisfaction they provide, moving towards a tool that is designed for specific needs will ultimately lead to happier users, lower costs and speedier implementations. It’s economies of scale – the more services and apps you integrate, the larger and better the structure required to monitor and maintain them. In effect, it creates a virtuous circle.
Matt Wills has 20+ years of experience within the consumer goods industry. At Acumen, he leads the design of the firm’s software applications and consulting offerings.