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Chapter: Business Science - Enterprise Resource Planning - Post Implementation

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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.

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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