The true cost of siloed business software systems

As companies grow and expand their business operations, the need for greater visibility increases. The common path most businesses take to solve this problem is to turn to point-based applications to shore up various areas of the business. In the short term, these software products or applications can meet the users’ immediate and primary need by answering to one particular area of the business. However, over time, the company will require more and more point solutions to run other aspects of the business, often resulting in a number of disparate software systems that don’t integrate or share information. The result? Countless spreadsheets, repetitive data entry, and the increased chance of human error. Instead of having a global view of the business, the company now has a collection of systems that may contain redundant, incorrect, missing, or miscoded data.

The solution to this dilemma can go one of two ways:

Find a company that can bring all of this disparate data and information together in some kind of data warehouse and provide a more consolidated view of the business; or

Move to a more robust solution, such as an Enterprise Resource Planning (ERP) system, with specific industry-based functionality.

The first alternative is often taken as the path of least resistance as departments and user groups can continue to use their various apps and not worry about making the switch to a new system. In theory, this should be a good way of getting around the problem, since the industry has a wide range of vendors that offer data warehousing, reporting, and business intelligence solutions. This doesn’t eliminate the problem of having siloed systems—the non-connected databases still mean that data can be redundant, erroneous, duplicated, and more, which can call into question the validity of the reporting. It may be the easiest step to take, but it can result in unreliable business information.

The second alternative is to move to a single, all-encompassing ERP system. This means getting rid of the siloed software systems and bringing in one single software package that offers all the features in one system.

With the right ERP, companies can have increased real-time information visibility, full integration, increased employee productivity, and, most importantly, increased customer satisfaction and corporate growth.

While many might think that purchasing an ERP system is more expensive in the short term, it can often be a more cost-effective option overall: long-term and short-term. In fact, there have been many instances of data warehousing and dashboard implementation projects that end up costing several times the amount of a full ERP system—simply for the base dashboard tool and user licenses. It’s important to determine exactly what is needed when selecting the first option and knowing just how many users will need access and how much that will cost the company.

On the other hand, many companies with a best fit ERP system not only see the benefits of a full business management solution, they also see a greater return on investment. Of course, the more functional the software, the greater the overall benefit. For example, modern fully integrated ERP software systems that have been specifically crafted for different businesses have advanced features and characteristics that are not widely present in many older legacy-based systems.

For many, digital transformation is necessary for companies to survive in today’s fast-paced global economy. Real-time visibility and a unified view of a company’s operations will always be a challenge when running several disconnected business systems. Companies can no longer think about individual departments and user information requirements and instead must think about the entire enterprise. Without software options such as ERPs, information silos will continue to be the number one contributor to management frustrations and corporate miscommunication.

Originally posted on March 30, 2017, by Ken Ingram, Director of Sales and Marketing, on LinkedIn Pulse