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Is It Time to Retire Your 'Homegrown' ERP System?

By Rich Vurva

In today’s complex business environment, it can be challenging for in-house IT professionals to keep up with the pace of change necessary to sustain a competitive advantage. Your homegrown or custom-built IT solution may seem fine for now, but these options likely can’t offer the level of protection and security of an outside enterprise resource planning (ERP) solution.

This article, based on a white paper from Epicor Software and comments from users of that company’s Prophet 21 (P21) software, explains the inherent risks of a homegrown solution.

Compared to a robust ERP system built by a well-established software provider, homegrown tends to be fragile and lacks 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:

• Is software development really your core competency?
• Can you spare the programming resources?
• Do you have the years and the capital to develop, test and fine-tune your application?
• What happens if you lose the precious few resources that can support and maintain your older technology?
• What is your visibility into emerging technologies and industry best practices that other distributors are using?
• 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.

“Add-on features from Epicor, and third parties as well, have provided many beneficial options to our company,” says Jack Mullins, IT manager for SMA, a distributor of agriculture-related parts based in Jonesboro, Arkansas. As examples, Mullins sites SMA’s B2B website, which is fully integrated to the Epicor Prophet 21 ERP system and provides real-time stock levels and pricing, a warehouse management system that initially improved SMA order fulfillment times from several days to same-day for most orders, an inventory management system that can accurately predict stocking needs months in advance, business intelligence systems that provide important information to management staff to help them make informed decisions, and more.

Mullins adds that it would require several on-staff developers to keep up with the latest technologies if his company tried to develop its own software solution. “With the rapid changes we see today, it would take an army of developers to keep any system up to date. That includes feature updates as well as infrastructure changes like moving to the cloud, SaaS platforms, browser-based user interfaces and security considerations. Those are complicated challenges for an in-house IT department to take on,” he says.

Mullins says the knowledge and support his company receives from Prophet 21 would be difficult for an in-house team of developers to provide. “ERP software companies specialize in ERP systems and there is simply no way an in-house software staff will be able to compete with that,” he says. “Our annual maintenance for Prophet 21 is less than what we would spend on a full-time developer and the features of Prophet 21 and access to third-party add-ons and solutions that complement the P21 system would be hard to replicate on an in-house developed system.”

Dan Benischek, vice president of operations for Gustave A. Larson Company, a distributor of heating, ventilation, air conditioning and refrigeration products in Pewaukee, Wisconsin, says partnering with Epicor Prophet 21 has enabled his company to keep up with market-changing technologies.

“In today’s current market environment, HVAC distributor margins are under pressure both from vendors and customers. Customers are looking for partners that provide value-added solutions that will save them time or make them more efficient. Epicor Prophet 21 provides us a platform to transform our business so we can provide an even higher level of service to our customers,” says Benischek.

Since her company began using Prophet 21 software, Cindy Loewenberg, a project manager at Southern Leather Co. in Memphis, Tennessee, says the guesswork has been removed. “Not only can we glance at live inventories at multiple locations to check the availability of products, we can ship those items the same day from other locations with the click of a mouse. We also have the ability to conduct constant inventory counts and recounts that involve almost no travel or overtime,” she says.

Loewenberg adds that working with Prophet 21 has saved countless hours of staff time. “Prophet 21 has advanced our company on so many different levels. We can set up pricing for big-volume customers in a way that wasn’t possible before. Year-end processes took more than two months of intensive work by multiple people. We currently complete the same task in under a month with less staff,” she says.

Scott Jacobs, president of Interstate Connecting Components, a distributor of connectors for the military and aerospace markets based in Lumberton, New Jersey, says that since his company began using Prophet 21 software, he’s seen an increase in sales.

“In our first year on the solution, our sales grew over 25 percent, and we haven’t looked back. Prophet 21 is a no-brainer—I don’t know what we would’ve done without it.”

Nine reasons to retire your ‘homegrown’ ERP software

Epicor has developed a white paper entitled “9 Reasons to Retire Your ‘Homegrown’ ERP software.” You can request a copy of the white paper by sending an email with your name, title, company and contact information to rvurva@directbusinessmedia.com. Meantime, here’s a brief look at the top reasons from Epicor Prophet 21.

Reason 1: Vulnerability and isolation of knowledge
Using 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.

Reason 2: Immediacy and breadth of data
Even 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.

Reason 3: Data duplication and discrepancies
It 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.

Reason 4: Lack of testing
Homegrown 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.

Reason 5: Lack of vision/new advances
Up 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.

Reason 6: Shortcomings 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.

Reason 7: Maintaining your homegrown solution may be costlier than you think
While 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.

Reason 8: No built-in learning management system to maximize employee adoption and utilization
The 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.

Reason 9: Lack of ability to easily integrate with other leading technology solutions
Your 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 extensive duplicate data entry or custom development work.

This article originally appeared in the Sept./Oct. 2018 issue of Industrial Supply magazine. Copyright 2018, Direct Business Media.

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