There are various schools of thought on when is the most opportune time to change over to a new software package. These can relate to the beginning of a new financial year, budget and quiet periods in the business year. In this article I would like to discuss the merits and debunk the myths associated with each philosophy.
Start of a new financial year
This is the most common scenario I come across when meeting with potential clients. They feel that having the system go-live at the start of a new financial year is a must have and if they are informed that this might not be possible, they will just go with a software provider who says they can or maybe even wait until the following year. The logic behind this is that you have a clean cut over point for accounting purposes to a new system which of course makes perfect sense in theory. But is this really the best time to implement?
If you have the resources available at this time, then yes, it can be quite smooth. However when you think about it, coming to the end of the financial year is when people tend to be at their busiest, especially the finance team. So does it make sense to be putting people under the additional pressure to implement and learn a new system when they have such tasks as end of year reports to prepare? If you are working with a competent implementer then data, even at a transactional level, can be migrated from the old system to the new system at any stage during the year, therefore negating the necessity for the new year rush to go-live. Remember, the greatest risk to an implementation is a lack of proper resourcing.
Money, money, money, it makes the world go round and sometimes stops it as we saw with the GFC (well, parts of the world). When it comes to implementing an ERP system and timing, budget can be quite important. Some clients want to spend the money before the end of the financial year while others want to budget for it for the next financial year. Of course, this is a preference and it boils down to the financial constraints within each organisation. If you decide that the new system is required from a functionality standpoint and that the pricing is within range, then there are certain tools to help overcome short-term budget constraints.
Firstly as an ERP system is implemented over a number of months – anywhere from 2 to 6 – then you will more than likely be able to avail of a progress payments structure, therefore spreading payments over the timeframe of the implementation. Secondly there are finance companies which will now bundle software, hardware and implementation costs into a single loan up to a maximum of 5 years. And finally, there is always the option of reducing the implementation investment upfront by implementing the core of the ERP system initially and then developing upon this as the needs arise.
Earlier I touched on the self-inflicted risk, for a company implementing an ERP solution, of not having the required resources available. I believe this to be the defining area to concentrate on to get a positive outcome from an implementation. In most cases, your implementation partner will be able to allocate resources from their end as this is their day to day business. However for most companies, it is their first time implementing an ERP solution and therefore it is, in effect, additional time/resources that are required.
Bearing this in mind, a quieter period in your business year can often be the best time to change your focus to an implementation, thereby harnessing the knowledge within your employees of your business processes and how these processes need to change. Occasionally we come across companies who say they don’t ever have free time. This can be because they are always fighting fires and their processes are not up to scratch or they genuinely are busy throughout the year. This can be overcome by utilising additional resources such as an external business consultant, project manager or temporary CFO. Your implementation partner should be able to point you in the right direction here.
I hope the above has given you an insight into how differing factors can affect the correct timing for an ERP implementation and go-live and making assumptions about each can be to your detriment however each obstacle can be overcome through proper planning.