9 reasons to retire your homegrown erp software...

An Epicor® White Paper

9 Reasons to Retire Your “Homegrown” ERP Software Solution Before it’s Too Late


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Table of ContentsIntroduction ..............................................................................................1

Reason 1 ...................................................................................................2

Vulnerability and Isolation of Knowledge

Reason 2 ...................................................................................................2

Immediacy and Breadth of Data

Reason 3 ...................................................................................................3

Data Duplication and Discrepancies

Reason 4 ...................................................................................................3

Lack of Testing

Reason 5 ...................................................................................................4

Lack of Vision/New Advances

Reason 6 ...................................................................................................5

Shortcomings in Systems Architecture

Reason 7 ...................................................................................................5

Costlier Than You Think

Reason 8 ...................................................................................................6

No Built-in Learning Management System

Reason 9 ...................................................................................................7

Lack of Ability to Easily Integrate

Conclusion ................................................................................................7

About Epicor .............................................................................................7


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IntroductionIn today’s complex business environment, it can be very challenging for in-house IT professionals

to keep up with the pace of change necessary to sustain a competitive advantage.

Whether the homegrown IT system you have seems “fine” for now, or your company has

developed strong loyalty to a custom-built solution, these options cannot offer you the level of

protection and security of an outside enterprise resource planning (ERP) solution.

ERP system installation is often thought of as the most risky, expensive, and disruptive investment

a distributor can make in their business. However, you must also consider the inherent risks of a

homegrown solution. When you argue against a potential system switch with costs, pain, and

efficiency concerns, you should take a look at them as they exist in your current system.

Compared to a robust ERP system built by a well-established software provider, homegrown tends

to be fragile and lacking in-depth support. And while a custom-built system may seem to offer

control and flexibility, it may actually lock you into a sub-optimal solution. Some basic questions to

consider include:

XX Is software development really your core competency?

XX Can you spare the programming resources?

XX Do you have the years and the capital to develop, test, and finetune your application?

XX What happens if you lose the precious few resources that can support and maintain your

older technology?

XX What is your visibility into emerging technologies and industry best practices that other

distributors are using?

XX Is your system truly integrating information and processes from all functional divisions of

your organization, or do you have disparate data sources “running” your business?

Cost-effective ERP solutions meet distribution organizations’ demands by leveraging existing

applications and technologies, while taking the burden off your internal development resources.

For all of these reasons, it is in your best interest to partner with a leading ERP provider, in order to

advance your operations to the next level of efficiency.

To help answer the above questions and explain the realities of an ERP system, we have compiled

the top nine reasons to weigh the advantages of an outside ERP over your homegrown system.


Reason 1Vulnerability and isolation of knowledgeUsing a homegrown solution can raise numerous challenges. For example, what happens if your

IT director is no longer with the company? Or the programmers who developed the original

application move on to other projects, other jobs, or retirement? You may be coding in yesterday’s

technology, and will find it hard to replace resources who are familiar with and competent in

those environments.

Who will take over development of the current system, and how will they get up to speed on the

application? With only a limited staff of custom programmers, it’s unlikely that you are taking full

advantage of the ideas and innovations of other leading distributors or industry consultants. You

may never be able to develop capabilities at the rate of the rest of the industry, and competitors in

your market will pass you.

Items to considerWhat are you planning to do about areas of the system that were coded by people who left the

company years ago? Typically, there are certain areas that everyone is afraid to touch because they

are not readily understandable and not coded to standards. If you try to remodel those, will they

ever really work the right way?

Reason 2Immediacy and breadth of dataEven if you were to successfully reface your homegrown system to a modern graphical user

interface and port to a relational database, you will still be technically challenged by the core

foundation of a custom system’s millions of lines of business code. Moreover, a homegrown

solution is unlikely to include some of the advanced data capabilities of modern ERP systems:

XX Batch System vs. Real-Time—older custom systems are usually updated via batches

(daily or monthly), and it is extremely difficult to rewrite all the logic into a 100 percent

real-time system. Batch systems also typically have lengthy day-end, month-end, and year-

end processes.

XX Limited History—homegrown systems often have limited transactional history, as

the data is purged every few months. This forces you to refer back to paper reports or

information that is stored in a separate document imaging system.

XX Limited or No Drill-Downs—older systems have limited drill-down capabilities where

you can view summary information including paid A/R invoices, POs, A/P invoices, and GL

entries.

XX User-Friendly Interface—homegrown systems typically lack the ability for end users

to customize the interface and information to their specific business needs, make them

more efficient, and view data that is most relevant to their job function.

Items to considerLack of rapid access to required information also may require extra hands to manually track down

the data, causing you to overstaff your customer service department.

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Reason 3Data duplication and discrepanciesIt can be quite challenging for company employees to get the data they need directly from a

homegrown solution. If you plan to port data on a nightly basis to a data warehouse on an open

database like Microsoft® SQL Server® for reporting, there may be data discrepancies between your

legacy system and the data warehouse.

You should ask yourself, if your reporting is going to be done off a SQL database, why not have

a core business system that runs off SQL, so there doesn’t have to be a translation layer between

two separate data structures?

Refaced custom systems usually have areas of the system that don’t fully integrate with other

areas, creating inefficiencies by doing duplicate work and creating disparate (and possibly

conflicting) data sources. These areas can include such important functions as direct billing and

A/R cash receipts.

Items to considerWhere will the data reside after a remodel? If not in a SQL-based database, you may always have

compatibility problems with off-the-shelf packages such as Office®, MapPoint®, BI, CRM, etc. If

you have to struggle to pull data ad hoc, your decision-making may be hampered by a lack of

information.

Reason 4Lack of testingHomegrown systems clearly are not receiving the benefits of other leading distributors’

knowledge and experiences. On the other hand, an ERP software company has to sell its solution

to thousands of customers and end users. This means there are many more end users involved in

the beta testing and ensuring the software does what it needs to do before it is released.

What better way to instill confidence in your system than to have a dedicated QA team and

hundreds of other users testing it to make sure it’s “rock solid”? How many people test your

internally developed applications, how much industry experience do they have, and how many

meaningful scenarios can they come up with?

Items to considerThe wide-ranging testing in real-life scenarios by leading ERP companies helps bring best practices

to bear. You may have coded a process into your system because that was the way it had always

been done at your business, but there may be a better process that you are missing (and others

are using, giving them an advantage). Considering the interdependencies of an ERP solution and

the global nature of many businesses today, who is best prepared to ensure that the forecasting

logic is correct, for example, or that European accounting rules are followed?

If you have to struggle to pull data ad hoc, your decision-making may be hampered by a lack of information.

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Reason 5Lack of vision/new advancesUp until the year 2000, it was fairly common for distributors to write their own business systems,

as it was believed this provided a competitive edge. Now, however, technology is evolving at an

exponential pace, making it nearly impossible for small IT shops to keep up with the changes in

solutions that a business needs to remain competitive. A distributor with an in-house IT staff for

its custom system is actually at a competitive disadvantage today.

Best-selling author Geoffrey Moore’s book, Dealing with Darwin, outlines a blueprint for

sustaining a competitive advantage. The key principle is to focus on what is core to your business

and provides differentiation, and outsource context to someone who is better at that than you.

The key question is, “Should we be in the software development business when our core

competency is as a wholesale distributor?”

Items to considerXX The critical problem is vision. Effective systems development requires a single vision

translated into architecture. But instead of beginning with a vision, custom IT shops often

begin with bullet points or a list of different goals and expectations.

XX No matter what your IT department tells you, they are not a software company

and cannot possibly operate like a best-in-class one. There just aren’t enough great

programmers to meet the demands within the distribution industry.

XX Software companies are in the business of not only developing their software, but also

making sure their customers are happy, and staying on top of new trends and advances

that can benefit them.

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Reason 6Shortcomings in systems architecture that lead to workarounds and patches based on “tribal knowledge”In most cases, distribution employees want systems to meet their immediate needs, and they

want delivery “yesterday, at the latest.” When IT doesn’t deliver, employees are apt to create

various workarounds, causing the company to lose the economies of scale that can be achieved

by having everyone adopt standard operating procedures.

A major concern with a homegrown solution is that custom IT shops don’t understand systems

architecture—the ideas that front, middle, and back offices have different functions and different

requirements. A custom IT system, for example, might have good front-office analytics running in

real time, but may not be able to perform credit risk management because the middle and back

offices use batch processing.

After all, risk management requires linking current order entry inputs with data from legacy back-

office systems to provide up-to-date exposure information. Fixing these shortcomings inevitably

leads to patches, add-ons, and workarounds.

Equally disastrous is asking each employee what they want from a system without having a

method to cut the project down to the essentials. “Companies fall into the ‘toy store syndrome,’”

explains a consultant. “Everyone wants something, so they decide to write specs.”

XX TD Bank Group reportedly spent $4–5 million by first asking everyone for a wish list. It

quickly had a massive list, and three years later, there was still no software to show for its

ambitious plans.

Reason 7Maintaining your homegrown solution may be costlier than you thinkWhile on the surface, remaining on a homegrown system may appear to be the least risky

choice, there are many underlying challenges and trade-offs associated with your current custom

system environment—and there is often a price tag attached.

In-house development can be much more costly than it appears—far more so than partnering

with a leading distribution management system. Add up the salaries of your development team,

the downtime in user departments during all phases of development, and the opportunity cost

of not putting developers on other worthy projects that would propel your business forward.

The time it requires to extract meaningful data for executive analysis out of your database must

also be included as a cost consideration.

The maintenance of custom applications is time-intensive, slow, and fraught with

undocumented functions—and that’s just for normal operations. Don’t forget the cost of

downtime when outages occur. The complexity of today’s computing environments only

magnifies the difficulties and expense of implementing and maintaining these custom systems.

The complexity of today’s computing environments only magnifies the difficulties and expense of implementing and maintaining these custom systems.

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Reason 8No built-in learning management system to maximize employee adoption and utilizationThe average end user’s utilization of an in-house system is typically lower than on a standardized

ERP, due to most of the inner workings of the system being “tribal knowledge,” as noted above.

Distributors typically don’t hire professional documentarians, so they have limited online help

screens. They also rarely have comprehensive user manuals or documentation for end users to

easily understand how the programs and forecasting logic work. When people don’t understand

the system, they don’t use it as frequently or efficiently.

Items to considerThe focus of homegrown solutions is often on the features and not on best business process

flows, so they usually don’t have standard operating procedures. Your old system may be familiar

to your longterm employees, but it is likely to be quite foreign to new hires raised on Microsoft

Windows® and the Internet. How will you be able to recruit good talent if potential employees

don’t want to work in a customer built environment, but would rather access industry-leading

tools and technology that will enable them to perform their jobs better?

Homegrown systems typically don’t have robust learning management systems to coordinate

employees’ learning; e.g., by setting up training agendas with due dates, recording web-based

training classes to be taken on demand, or setting up tests to certify employees’ understanding of

various areas of the system. All of these can maximize employee adoption and utilization of

the IT system.

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About EpicorEpicor Software Corporation drives business growth. We provide flexible, industry-specific software that is designed around the needs

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unique business processes and operational requirements is built into every solution—in the cloud, hosted, or on premises. With a

deep understanding of your industry, Epicor solutions spur growth while managing complexity. The result is powerful solutions that

free your resources so you can grow your business. For more information, connect with Epicor or visit www.epicor.com.

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Reason 9Lack of ability to easily integrate with other leading technology solutionsYour homegrown solution may not “play well with others.” In particular, if it cannot integrate

with an eCommerce storefront, you may be unable to offer customer-specific pricing and pull

other ERP data into your online store without a lot of duplicate data entry or custom development

work. Web storefront adoption is projected to explode in distribution, as 98 percent of retailers

have a strong eCommerce presence, versus just 18 percent of distributors. Leading distributors

are investing heavily in eCommerce, as the younger generation expects to be able to conduct all

business in the same way they do Internet banking and shopping online.

ConclusionWhile your homegrown system may seem comfortable and familiar, chances are you are missing

out on advanced functionality that could greatly improve your business operations, employee

productivity, and bottom-line profitability. A leading ERP solution that is focused on distribution

will provide a modern technology environment now, while also offering forward-looking business

applications such as integrated eCommerce, business intelligence, and a comprehensive inventory

forecasting module. You owe it to your business to investigate options beyond the status quo.

You owe it to your business to investigate options beyond the status quo.

9 reasons to retire your homegrown erp software...

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