6 Reasons Why an ERP is Not the Solution to all Your Procurement Problems
Most of the time when CFOs are shopping for business-management software, they gravitate towards ERP solutions, or enterprise resource planning software.
ERPs can be attractive with the depth and all-in-one package they market to organizations. Because of this, ERPs have been the talk of the industry and the must have for businesses, until the reality of the associated costs, project implementation length, and the software limitations start to sink in.
Often ERPs have to be pieced together in an ad-hoc fashion in order to provide organizations with the services they really need. In doing so, procurement is the area that suffers the most.
So I don’t recommend relying on your consultant or your ERP to fulfill your procurement needs. Here are six of the most common problems you are bound to encounter:
- Cost: First and foremost, traditional ERPs are costly, and that doesn’t even factor in the extra expenses associated with time to get up and running.
- Time to Implement: ERPs are very slow to implement. An example from a recent Gartner report illustrates this: “One client reported that it had decided to run two pilots and compare an ERP vendor’s on-premises module to a cloud-based specialist solution. Before the company had even configured the ERP module, it had already finished the entire pilot of the specialist solution.”
- Poor User Experience: With so many ERPs having to be supplemented with ad hoc solutions, users experience frustrations and confusion when they are forced to move between different user interfaces.
- Extreme Complexity: Society and end users have been conditioned and expect a certain experience when using technology. Traditional ERPs are too complex and the add-ons must follow the broader ERP suite in terms of functionality.
- Inflexibility: With an all-in-one mentality, end users are being forced into solutions that offer limited flexibility in order to fit the broader ERP spectrum.
- Narrowly Focused on Finance Functions: Many times procurement capabilities are dragged along with ERPs when procurement and financial functionality are assumed to be sourced from the same vendor.
There is a better way to address these headaches by looking beyond your ERP and considering an eProcurement solution instead. By integrating a cloud-based procurement solution you can drive more value, be more strategic and increase savings. Start by implementing a procure-to-pay solution. Or be even more strategic by leveraging a source-to-pay platform, which provides a single source of truth and visibility into a solution suite including spend analytics, sourcing, contract lifecycle management, supplier management, eProcurement and accounts payable.
These cloud-based solutions are easy to implement and provide a quick return on investment. As opposed to ERPs, eProcurement systems are implemented within months instead of years. The return on investment is almost immediate
, with the initial cost of an eProcurement system just a fraction of the cost of an ERP. Also, an eProcurement solution provides tangible spend savings through strategic sourcing, spend reduction and identifying cost saving opportunities. Now you tell me which CFO and/or CPO would not be satisfied with that?
Check out some of the solutions JAGGAER has to offer, and see how we can help you think outside the ERP and find the best procurement solution to fit your business needs.
Raj Aggarwal is JAGGAER’s Director of Product Marketing.
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