Choose the correct ERP
The success rate for implementing not just MRP and ERP systems but all large software packages has never been very good. In survey after survey, in the USA, Europe and elsewhere, less than one third meet the basic criteria set out at the start of the implementation. Too many software engineers know how the software works but do not know how to integrate it into the business in a way that delivers real business benefits. With enterprise resource planning (ERP) packages costing hundreds of thousands, many costing millions, this failure rate is frightening.
A D V E R T I S E M E N T
The question is - how can you minimise the chance of failure or, more difficult, rescue a package that is not delivering sufficient business benefits to justify the cost of implementation? The good news is that, when properly implemented, an ERP package can be the most cost effective project a company has ever seen.
ERP failure cannot be tolerated by organizations as it involves great money. On the contrary ERP success makes great money. Selecting a new ERP system can be time-consuming and risky — but with the right strategy and tools, the selection can be turned into a positive change. Here are some steps to help identify the best solution for a company. The following elements acting in combination or individually results in good planning and choosing the best posssible ERP solution:
Meeting and consultations in the organizations to decide ERP
Selecting ERP software does not happen all on a sudden or as a result of an overnight's discussion. There is lot of groundwork that needs to be done in this regard. There are many reasons for the ambiguity, with the foremost being advent of Internet. This has expanded the scope of computers and redefined the technological implications in the business. As a result there is more expectations and demand. These were not foreseen earlier. Advancement in computing indirectly implies the advancement in enterprise resource planning. Needless to say the constant updating, upgrading and innovating have become the benchmark of ERP packages. The indecisive mind of companies in choosing ERP soft ware solutions needs no explanation.
Hire or Buy ERP
There are two alternatives in choosing ERP software for the company. The first one is purchasing the software while the second one is obtaining one on hiring basis. There aren't any differences in terms of costs or benefits irrespective of the option that the company goes for. It all lies in how best the company makes use of ERP. However the company has to stick on to any one option as soon as it finalizes.
ERP should Suit company preferences
Companies that choose ERP on grounds of their own preferences succeed in the long run than other companies. Other companies who sail by some decision that does not justify their preferences are most unlikely to succeed.
Choosing the ERP vendor
The quality of the services offered by the vendor is equally detrimental in choosing ERP software. Buyers generally tend to purchase from sellers who have got adequate experience in ERP Products and services. This is the usual practice for any commodity. This has to be strongly followed in the case of ERP as there are several dimensions involved with regards to decision making. Nevertheless Choosing to buy from the right person is alone not enough. How the organization makes the best use of it in response to the specific needs, to avail the best services is more important in deciding to buy ERP Systems.
ERP implementation will be successful if certain guidelines are followed in choosing ERP software. There is a dual purpose in ERP. It is neither meant exclusively to benefit the trade procedures in the organization nor help the technological contents. It has to make both ends meet. This Key function holds ERP in a special manner when compared with any other system. Therefore the company must be prudent enough to choose an application that caters to this advantage to the maximum extent. Therefore if a company chooses an enterprise process to assist the business or technology alone the decision will not yield the required results.
Essential Elements of an ERP System
If a company is able to obtain all the related products of ERP from one seller /vendor then it can be termed as a profitable Venture. The company will be able to avail their services in all matters relating to ERP solutions. This is highly recommended and regarded as a wonderful combination. When they choose to buy an ERP application of a particular module it must be ensured that they enable connectivity and facilitate data transfer which should easily be made available to the stakeholders. The advantage in buying a modular application is that the company can choose to select them on the basis of the function for which it is purchased. These are the essential element of ERP systems.
Time constraints in respect to the organizations function
The ERP system should be purchased based on the long term needs of the organization. In that sense the firm should visualize its prospects, position and requirements in the long term also. Therefore it has to be made sure that ERP is not restricted to meeting the current needs. This will also help in implementation of ERP.
Suppose if a company is engaged in one particular domain of banking it also needs to understand that it may have to cater to the entire banking sector if the need arises. Hence it must purchase ERP that can serve related banking applications or if not be capable of modification for the said purpose in the future. This will also stand out to be true in the case of organizations that aim at diversifying the business. A choice is to be made from ERP implementation models. This will also help in implementation of ERP
Employees to express their opinion on ERP
The core members in the decision making body (for ERP) should hear and heed to the views of all the employees in the company as long as they are valid. This will make sure that everyone is given an opportunity of being heard so that they don't lament that they were not allowed to express their opinions on ERP. This discussions will facilitate the decision making body to know how well ERP is received in the company and what are the setbacks that are to be removed. This will also help in implementation of ERP
There is another important objective in these meetings. They help to bring out the various modifications and technological changes that the company has to undergo to become ERP friendly. Gap meeting and business process requirements do help in bringing out them. But these processes will witness the employees difficulties and requirements directly. The impact is also bound to be more when it is voiced out in person and in detail.
Customizable and predefined Modules
A large majority of ERP sellers sell customized application in addition to predefined applications to ERP customers. They assist the customers in making all decisions right from implementation to use. Both have their own advantages and disadvantages. In the case of customizable applications the buyers will be instructed about the various options available for modifying. The users have to make a decision of choosing the appropriate combinations on the basis of their business requirements.
Resorting to an External Body for ERP Services
Some organization finds it tedious to undertake the above mentioned steps. Their workload would be too large to concentrate on this. In that case they can be outsourced to a third party who can take care by keeping the needs of the organizations in mind. There are many competitive advantages in availing the services of such person. Firstly they have the professional expertise and the required experience. The third party will also face the difficulties of the firm but there wont be any mindset or favoritism as far as he is concerned .these are all inevitable when the company is doing the service. Their services will be suited even for bigger operations that have numerous complexity and ambiguity in operations. This will also help in implementation of ERP.
Verifying the credibility of Vendor's services
The company has to check if the Vendor has already installed a similar configuration elsewhere as it would not be advisable to be subjected to first time testing given the huge investment in the name of ERP. If possible the company can try to get information from the ERP customers of the vendors but it is not practically possible to elicit the necessary information whether they are competitors or not, as business ethics and professional code of conduct would not permit the same. They will also help in analyzing ERP Systems.
Application Service Provider
Application service provider is an emerging concept in ERP packages. These are built in packages that have their own setups for hardware and business process. The usual manner of choosing ERP viz Deciding, buying and installing has even been given a go by in some occasions. This will also help in ERP integration
The edge enjoyed by S.M.E.'s
ASP was discussed as a profitable option. The actual fact is that it is a boon to small and medium enterprises (S.M.E.'S).They would not have been able to think about ERP but for ASP and outsourcing. They would choose these due to efficient services and affordable costs.
Choosing an outsource service provider
These companies may also choose to select the systems on a rental basis so that they are not burdened with the tasks like administration, handling network as these are too big when compared with the size of their firms. As per ASP arrangement the infrastructure part will be taken care of by the service provider. The company can access everything online, while the customers access to ASP at an agreed Service charge for the stipulated periods.
In the case of business process outsourcing the organization can avail the services of a consultant for its business that will perform the required functions on behalf of the company. The company can also choose to outsource inhouse operation to the outsourcer to get maximum benefits be made from ERP implementation models.
Choosing ERP vendors for ASP
Companies must exercise caution in choosing Asp service provider. Many ERP sellers offer ASP services in response to the rising market demand. Their expertise is unquestionable but the trouble lies in terms of costs as the ERP vendor would price them at high rates. In addition the choices are not plenty interms of choosing players. Therefore it is advised to refrain from vendors offering ASP services and approach ASP service providers alone. This will also help in implementation of ERP.
Resorting to an External Body for ERP Services
Some organization finds it tedious to undertake the above mentioned steps. Their workload would be too large to concentrate on this. In that case they can be outsourced to a third party who can take care by keeping the needs of the organizations in mind. There are many competitive advantages in availing the services of such person. Firstly they have the professional expertise and the required experience. The third party will also face the difficulties of the firm but there wont be any mindset or favoritism as far as he is concerned .these are all inevitable when the company is doing the service. Their services will be suited even for bigger operations that have numerous complexity and ambiguity in operations. There are different software solutions available for both purposes.
Verifying the credibility of Vendor's services
The company has to check if the Vendor has already installed a similar configuration elsewhere as it would not be advisable to be subjected to first time testing given the huge investment in the name of ERP. If possible the company can try to get information from the ERP customers of the vendors but it is not practically possible to elicit the necessary information whether they are competitors or not, as business ethics and professional code of conduct would not permit the same.
The Nuances in choosing ERP Software
Pre ERP implementation includes analysis, constructive criticism; homework's has a significant place in the whole process of ERP. Lot of research and background work needs to be completed prior to the implementation of ERP or even before thinking about bringing Erp into the organization. The plans of the organization must be clearly charted out and how it intends to benefit from Erp operations have to be looked from a broader context.
Important Points in the discussion
This discussion should include important element namely financial issues. Besides it should also account for the potential threats, strengths and weakness. How much profit will be incurred have to be discussed and substantiated? Other non monetary benefits should also find a place. These studies should involve the contribution of the entire group in the organization right from the person in the highest hierarchy to the one in the lowest level. The contribution should be validated and sharpened by means of presentations which will help everybody to get insight of the different perspectives, and views. All of them will be helpful in implementation of ERP.
The cost factor and compensation
ERP will definitely yield the required monetary benefits to organizations whether they have the practice of built in systems or individual practices. If we are to calculate the costs involved in preserving and building them over a period of time it will be evident that the ERP costs incurred to support and facilitate the said functions will be comparatively less.
This calculation will prove to be equally true even if we take the case of individual department for that matter. Another important point in this issue is that it has to align with the target goals of the organization (the purpose for which it is sought and justified) as organizations generally tend to go far ERP with a view to improve or increase the efficiency of a particular section /dept and the whole process in general. Similarly the costs incurred to facilitate that particular function must not be monetarily pinching on the organization and even if they are the benefits and profits from that particular department or the whole organization preferably should exceed the exorbitant costs. Everything has to be calculated on the basis of the chosen ERP software systems
Committee to look after ERP process
Analysis and criticism will go a long way in deciding the fate of the ERP product. They are alone not enough. The next process would be the services of the team who can decide everything concrete with regards to ERP. The required powers are to be delegated to them. They will do the screening of the potential vendor based on the organizational needs that have been classified and discussed earlier. This will be helpful in implementation of ERP.
The organization should focus on what it wants to achieve out of ERP before going ahead with the process. When that is done successfully the ERP operations will have to be shifted to that particular objective in general and to the whole organization in particular. This cannot happen in the absence of ERP integration.