SUCCESS FACTORS OF ERP IMPLEMENTATION:
Not
quite. In order to keep your ERP solution working at peak efficiency – and
providing the business advantages you’re paying for – you need to have a plan
for maintenance or you risk having your ERP system eventually become obsolete.
Without a maintenance plan, the efficiency of your system will decline and its
lifespan will be shortened. However, this kind of maintenance isn’t so much
nuts-and-bolts as it is figuring out how your company uses the ERP solution and
figuring out ways to enhance its performance for your company.
Stay Up-to-date: Of course, one of the primary
components of ERP maintenance is keeping
abreast of upgrades from your vendor. Not only do these updates contain
important bug fixes and increase your security, they also keep your solution
from getting stale since many upgrades improve the functionality of your
solution or add features. This is one way you can ensure that your ERP solution
continues to meet your company’s needs. You may feel that some upgrades aren’t
necessary for your company, but many need to be done sequentially. If you fall
too far behind on the updates, it may be too difficult to catch up.
Changing Business Operations: Your
business is constantly changing and so are your needs. If you don’t have regular maintenance and support your ERP solution
is likely to become static.
The
longer that goes on, the less it will fulfill your requirements. You may have
added new customers, new services, or new technology – all of which can have an
impact on how your run your organization. If your ERP solution can’t keep up
with these changes, employees will develop ways to get their desired results by
working around it, thus diminishing the efficiency of the system. You should
have an annual review of your business, its needs, and how it has changed so
you can ensure that your ERP solution is keeping up with the times.
Training: Remember that people are an
important component of ERP success. Yes, you
had them trained when you installed the system, but do they remember everything
they learned? Brush up training can help them use the system more efficiently,
learn about the system’s new functionalities, and get rid of bad habits that
impede efficiency. Not to mention that you probably have new employees who have
only learned the system through on-the-job training.
Improving the System: You will
probably want to make adjustments to the system as the employees get used to it. They will use it differently after a
year than they do when they’re newly trained. Ask your employees for
suggestions on how to enhance the system’s functionality. You’ll get more out
of your solution if it can adapt to more knowledgeable users. Equipment:
Hardware can decrease in efficiency or wear out. Look at your equipment’s
metrics to see if there’s been a drop off in performance. Sometimes the
technology needs maintenance or such declines point to where you need
maintenance on your ERP solution. Or there might be new technology on the
market that can really improve your ERP solutions efficiency or effectiveness.
You owe it to yourself to review your hardware needs and capabilities on a
regular basis.
A true
Enterprise Resource Planning (ERP) system integrates both internal and external
information flows used by the organization within a single, comprehensive
solution. An ERP solution
incorporates the practical systems used by organizations to manage the basic
commercial functions of their business, such as: planning, inventory/materials
management, purchasing, manufacturing, finance, accounting, human resources,
marketing and sales, services etc. The objective of the ERP solution is to
drive the flow of information between all internal business functions while
managing connections, or "touchpoints.
ERP
solutions run on a variety of computer hardware and network configurations,
including "on premises" (i.e. client/server) or hosted (i.e.
"cloud-based" or Software as a Service). ERP solutions use a common
database to hold information from the various business functions that's
accessible in some form or another by various users. The use of an integrated
database to manage the solution's multi-module application framework within a
common information system is one of the primary ERP benefits of this kind of
system over "point solutions.
Unlike
point solutions (historically used by small to midsize businesses) that rely on
multiple (sometimes duplicating) databases which strain IT resources, ERP
solutions standardize the use of one application to run an entire business.
This not only increases efficiencies, but also decreases the overall total cost
of ownership (TCO), thereby reducing operational costs and improving the
company's profitability.
Key
benefits of ERP software:
1. Scalability: An ERP system is easily
scalable. That means adding new functionality to the system as the business
needs change is easy. This could mean easy management of new processes,
departments, and more.
2. Improved reporting: Much of the
inefficiency in operational work stems from improper reporting. With an ERP
system, this possibility is eliminated as reporting follows an automated
template system, allowing various departments to access information seamlessly.
3. Data quality: As compared with manual
record-keeping or other traditional approaches, an ERP system improves data
quality by improving the underlying processes. As a result, better business
decisions can be reached.
4. Lower cost of operations: An ERP system
introduces fundamental innovations in managing resources, which eliminates
delays and thus reduces cost of operations. For instance, use of mobility
allows real-time collection of data, which is indispensable to lowering costs.
5. Better CRM: A direct benefit of using a
good ERP system is improved customer relations as a result of better business
processes.
6. Business analytics: Having high-quality
data allows businesses to use the power of intelligent analytics tools to
arrive at better business decisions. In fact, many good ERP systems have
built-in analytics functionality to allow easier data analysis.
7. Improved data access: Controlling data
access properly is always a challenge in organizations. With an ERP system,
this challenge is overcome with the use of advanced user management and access
control.
8. Better supply chain: Having the right ERP
system in place means improved procurement, inventory, demand forecasting,
etc., essentially improving the entire supply chain and making it more
responsive.
9. Regulatory compliance: Having the system
in control means organizations can better comply with regulations. Further, the
most important and recurring regulatory requirements can be built right into
the system.
10. Reduced complexity: Perhaps the most
elegant argument in the favor of ERP systems is that they reduce the complexity
of a business and introduce a neatly designed system of workflows. This makes
the entire human resource chain more efficient.
There are
many more benefits of an ERP system, but these are the chief ones. Needless to
say, a good ERP system is indispensable in the modern economic scenario.
KEY SUCCESS FACTORS :
One of
the most common fallacies with ERP implementations is that organizations are
prepared for the undertaking. Organizations need to not only recognize and
understand the success drivers, but also to take action on related preparatory
recommendations that support them.
Success is defined as getting what you want with
the ERP implementation, on time, on budget and with a satisfactory Return on
Investment (ROI).
The key
success factors are:
1. Project
Startup
2. Management
Commitment
3. Project
Scope
4. Project
Team
5. Change
Management, Communication and Training
6. Customizations/Modifications
7. Budget
8. Project
Closure
1. Project Startup
Perform
the due diligence of getting the project on the right track by preparing all
the necessary information and communicating it to the appropriate personnel.
Recommendations:
• Prepare/review
the business strategy.
• Prepare/review
the IT strategy.
• Prepare/review
the ERP strategy.
• Prepare/review
the project scope (included in more detail below).
• Prepare
the organization for process changes and the new system by applying the proper
change management strategies and techniques.
2. Management Commitment
An ERP
implementation is going to impact how a company operates by updating business
processes and changing system transactions. IT should not be the only area
responsible for the project. Senior managers and mid-level managers should be
involved in the project from its inception to its completion. This gives the
project the proper visibility across the organization and shows the staff in
general the importance of the project.
Recommendations:
• Involve
management in project sponsorship, a steering committee, issue escalation and
issue resolution. This involvement will help to maintain management support and
keep them informed about the project.
3. Project Scope
The core
ERP system will most likely not satisfy all the needs of the organization.
Develop the ERP strategy and understand the components of the ERP, and how it
will fit with other systems and tools. Define your project scope from a
position of knowledge, fully detailing what the project is going to include.
Recommendations:
• Understand the business requirements and plan how they are going to be satisfied.
• The ERP
will satisfy some of your business requirements. Put together a plan as to how
other business requirements such as data management, business intelligence,
social media, etc. will be met.
• Document
items that are not in scope.
4. Project Team
The core
project team should be composed of full-time personnel, including a project
manager and others representing the core areas of the business. If a consulting
integrator is used, the core project team needs to have a good and cohesive
working relationship with the consultants. Also, identify a set of resources
from the various areas of the business to provide subject matter expertise.
Recommendations:
• Use
proven implementation methodologies and tools for the project.
• Empower
the implementation team to make decisions.
• The core
project team should be in the same location to aid in communication.
Create a
competency center for post go-live support needs.
• Identify
subject matter experts (SMEs) from pertinent areas across the organization.
• Project
team to have a good working relationship with the consultants.
5. Change Management, Communication and Training
The ERP
project will not only result in changes in systems, but also process and
organizational changes. A change management team will be necessary for the
organization to deal with the impact. The size of the team will vary depending
on the size of the project and amount of changes. Training falls under change
management, and the most common method is to “train the trainers.” Normally the
software vendors or the consulting integrators will train the trainers, who are
employees in the organization. This approach is most helpful, because the
organization will end up with the trained professionals on its staff.
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