How Distributors Can Make A Smooth ERP Transition To The Cloud

When transitioning to a cloud-based ERP system, the implementation process can either set a distributor up for success, or lead the company down a long, winding road of challenges. Here, Mike Kean outlines how to ensure the former.

While the benefits of a cloud-based ERP system are clear to many distributors, making the transition isn’t as easy as flipping a switch. When transitioning to a cloud-based system, the implementation process can either set a distributor up for success, or lead the company down a long, winding road of challenges.

Implementing a new ERP system means converting data, retraining employees and customizing the solution to the specific needs of the organization. It is a time-consuming process that can sometimes take up to six months or longer. It can also interrupt normal business and severely disrupt a distributor’s operations

Fortunately, there’s a more effective way. If a distributor is willing to team up with an experienced partner, utilize existing industry best practices and work to make the most of the system over the long-term, it can ease the transition to the cloud, cut the time spent on implementation in half, and realize the operational benefits from the system on day one -- and for years to come. In effect, instead of having to execute a long drive, it can start at the opponents’ 10-yard line and clear a path to the end zone.

Focus on the fundamentals

Distributors typically switch to a cloud-based system to boost efficiency, improve use of data, and eliminate costs associated with maintaining hardware. However, operational improvements are not guaranteed with a new system. If a distributor simply places a new interface on existing business processes, little will change. However, if a distributor takes stock of all functionality of the ERP system and works to incorporate industry best practices during the implementation, it can realize significant benefits.

Distributors should look for ERP systems that incorporate configurations for the distribution industry -- and work with partners with experience in the distribution space to take advantage of these configurations. This allows distributors to capitalize on proven industry best practices instead of starting from scratch. Opting for an industry-specific solution can also speed up the implementation by simplifying the customization process. Distributors can work with their partners to make minor tweaks and changes to preset dashboards and core functionality instead of building a customized system from the ground up.

Following industry best practices also enables a distributor to take advantage of the integration capabilities of the cloud. By opening up sections of the ERP system to suppliers, carriers and customers, the distributor can more effectively track orders, manage data and optimize shipping. This can lead to reduced costs, more accurate inventory and better tracking of customer leads.

Draft a winning team

One of the best ways for distributors to realize the full potential of a cloud-based ERP system is to find an implementation partner that is steeped in the industry. These partners will be able to draw on extensive distribution industry experience to challenge a distributor’s current business model when necessary. They will also be able to provide innovative ideas for improvement, and tailor the ERP system specifically to the operational needs of the distributor.

Additionally, distributors should also look for a partner that can be a long-term teammate. If distributors change partners with each technology update, they are forced to spend time repeatedly educating new partners on their business. A long-term partner can provide ongoing training, updates and support without having to familiarize itself with a company’s needs and processes with each project.

Distributors should also consider the size of the vendor behind the ERP system they select. While a smaller company may engage in more personalized service, a larger vendor will likely be able to offer self-service features and online training. This may be crucial for a growing distributor that plans to hire new talent and therefore requires access to online training.

Build a dynasty                           

When transitioning to the cloud, distributors must keep their long-term goals front and center and seek to optimize their investment in the system over time. This means adding features and functionality as needs dictate instead of viewing the implementation as a one-and-done process.

For example, during implementation, a distributor may not want to add a vendor portal. However, they may reassess their needs after a year and decide to add it then. This commitment to constant improvement is crucial to maximizing the benefits from a cloud-based ERP system.

Distributors should also proactively stay current on new technology and industry trends and take part in regular trainings and check-ins with their implementation partner. This is especially important during system updates, so distributors can ensure they take full advantage of any new features.

The distributors that embrace industry best practices, find an implementation partner with deep industry expertise, and work to improve the ERP system over time in line with their long-term goals will enjoy an easier and quicker transition to the cloud. And beyond the initial implementation, they will realize the full potential of the system in their day-to-day operations with improved efficiency, analytics and collaboration. So, while the competition is toiling at midfield, these forward-thinking distributors will be comfortably in the end zone.


Mike Kean, CPA, is a partner in the technology practice at Sikich LLP, a professional services firm.

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