Many businesses love their old software and do not want to change them.
They buy a cheap Accounting or an ERP software that meets their business requirements when they were making USD 1M. Now they want to use the same and make it run as the business has grown to US$10M. As their business need changes to meet Sales demands or CRM needs, they buy additional software and spend huge money to integrate the new technologies to their old Software. Because they are not able to see the future growth and do not purchase a FUTURE ready ERP software.
The challenge they do not understand is, they spend huge amount of money to run the old software, they keep IT personal to run and manage their hardware and server etc. This would lead to loss of business opportunity as the old solutions are not integrated together affecting customer services.
Recently as part of our cloud ERP software sales, we met a US$100 million manufacturing company in India. During our discussions with the company management, we were sure that they are interested to go for a Cloud ERP Solutions. But the challenge was “can we customize the product to suit their business practices and needs?”.
This means, management wanted to retain and follow their 30 year old practices where they manually check the data, numbers even after these are generated from their current stand alone ERP. They wanted controls and approval at every stage of documentations.
They were in dilemma, because their business had expanded and had operations in 3 large locations. But they wanted to continue with old practices as they are afraid that their “Old workforce” can’t manage the pressure. They don’t want to change the legacy of the company Founder too.
It gave us an opportunity to think what is happening here and our findings were as below.
1. Old practice: When the Founder started the business, he wanted to control every document movements and approved by him. It is OK as that time where the taxation rules were stringent, getting bank loan was difficult and Information / trade secret should be kept under wrapped. But as the business grown they added more people to do the manual document preparation and built “verification layers”, but didn’t automate the process and remove the old practices.
2. Fear of Unknown: Many senior employees worked as assistants to the Founder and gained his confidence and were promoted. The loyalty and “fear of unknown” didn’t allow them to change the old practices. They followed “Boss is always right” model.
3. Don’t fix anything unless it is broken: They didn’t make any attempt to know what is happening around the world and they didn’t trust anyone. This was the problem as they never sought after some of the best practices around the industry and made an attempt to practice and follow. They have an ISO9000 certificate, as it was essential to get the large company orders. They strongly believed that they follow a “World class practice”.
4. Resources Cost is cheap, but now it is affecting the organization as the current Workforce did not follow the level of commitment and loyalty that was exhibited by senior employees.
5. New generation is looking to change the current practice, but are overruled by their parents who are more “experienced”. So many young generations are forced to follow the old practices, as the senior workers never listen to them.
6. Data duplicity and entries were high as their current system is a combination of multiple solutions that are decentralised.
7. Founders and their family could not penalise the old workers even though they miss the deadlines or missing the compliance rules as they were loyal to business and had grown with the business.
After analysing the above, we suggested the following with justifications. Because it is essential to be empathic to customer needs and see how can we help them?
“We are happy to customize the ERP to suit your needs. But, before doing it, you should run our ERP “as it is” for 6 months. Post that we will take a decision on the next steps to follow”.
We justified this on why they should go for automation of an ERP and not to customize it to follow their old practice with below points.
1. A world class ERP solution brings some of the best practices used across the world. This could help them to improve the productivity, reduce wastage and improve inventory movements.
2. Cloud ERP brings in process automation, control and meets compliance needs as it is. No more last moment run and miss the compliance deadlines and pay a penalty.
3. It reduces the chaos and simplifies the process.
4. It brings in clarity to the process and Business Owners can see the right details at right time.
5. Competition is increasing day by day and Businesses need to be ready with right process to win the customers. Customers are the decision makers now as the information is freely available to everyone.
6. Government Rules and regulation have become stringent. Every county is co-operating with each other to find tax evaders. So it is not advisable to keep the Oral records or miss the bookkeeping.
7. Just because they are following a process for many years doesn’t mean it is correct now.
In summary, we won the deal being honest with this prospect and implemented our Cloud ERP Software as it is.
Before starting a Cloud ERP Solutions, I worked with software industry (Enterprise Resource Planning (ERP), Banking and Treasury Software products) for 20 years.
Personally I do not agree to the software product licensing concept where OUR product is licensed to a customer to use it and in turn we make him an “IT Expert” to manage OUR software, take OUR database backup on his HARDWARE rather than RUN his Business for which he bought OUR software. Irony is, he PAYS money to TEST and IDENTIFY Bugs in OUR software and we collect the money as “Annual Maintenance Contract”.
So we developed a cloud solution, AcTouch.com, where customer has an option to use the product while we manage all software upgrades, regular DB backups and make sure that he runs his business without any problems.
I normally write about MSMEs and their pain points that I encounter during my interaction.
Everyday I learn from MSME Business Owners.
I am an alumni of INSEAD Business School with a mechanical engineering background and this helps me to understand the business problems and their challenges.