The concept of ERP or Enterprise Resource Planning has been around for more than two decades, when the term was first used by technology industry research firm Gartner.
It’s a term that often misused, widely misunderstood and can be difficult to define in any meaningful way.
Much more than simply an accounts or finance package, an effective ERP system should allow the business to capture, manage and interpret data from a range of activities.
However, it shouldn’t stop there. At the same time as informing key business decisions, the system should create operational efficiencies and help colleagues across departments to work and collaborate more effectively.
Sadly, a poorly implemented system can act like a straightjacket and become counter-productive.
All businesses, large and small
At one time, as E for Enterprise suggests, ERP was the preserve of large organisations with their scale allowing them to invest the large sums required to develop a solution.
Thankfully, that’s no longer the case.
As technology has evolved, significant levels of functionality are now accessible and within reach of relatively modest sized businesses.
In fact, a skilled and experienced partner can now configure and customise a standard software package to replicate many of the sophisticated features typically only offered through highly specialised solutions in the past.
Equally, mobility is now readily available, allowing data to be captured and reviewed in real time at the same time as eliminating the need to re-key information.
Don’t be afraid of change
A fundamental principle underpinning any ERP project is that it shouldn’t simply replicate existing working practices, but always look to improve, enhance and add value.
That makes change management critical, with the people who will use the system placed at the heart of the project and clear about the benefits it will bring.
Return on investment needs to be clear and measurable and in many cases that will relate to time – introducing automation to eradicate routine manual interventions and paper-based processes.
Colleagues will be freed up to focus on more productive tasks.
Other measures might include accelerated sales, optimised inventory and improved cash collection, all of which have a direct impact on the bottom line.
Everything that happens ‘because that’s how we do it’ should be open to challenge and a considerable degree of imagination applied to what might be possible – guided, of course, by a partner who has implemented many comparable systems.
In the past implementing a new ERP system, or taking on a system for the first time, would inevitably involve a radical shift even when upgrading from one version to another.
One major advance in the ERP industry is that the best software solutions on the market have now adopted an evolutionary approach to product development, making the jump more manageable. And importantly, facilitating ongoing adaptions and improvements with far less disruption.
The art of the possible
Whilst the numbers are always likely to be the starting point for most ERP deployments, especially as the FD is likely to sign off the budget, there’s far more that can be achieved when you understand what’s possible and what others have done.
Linking the front end with the back office, operations and supply chain can be incredibly powerful.
That might be through integration with a transactional website with orders being processed automatically and creating workflows to prompt everything from fulfilment to invoicing.
Using digital signatures, quotations can be converted seamlessly into orders thereby cutting out several steps and facilitating great customer experiences.
The risk of errors is also greatly reduced.
Improved inventory management in the warehouse not only leads to fewer ‘out-of-stocks’ but also reduces the level of cash tied up in stock and provides sales with a real-time view of availability.
Using mobile devices to capture proof of delivery and for cash collection not only removes unnecessary paper-trails but also helps to improve cash-flow.
Real-time information becomes just as critical as long-term analysis in driving decision-making, budgeting and strategic direction. Not to mention building competitive advantage by responding more effectively to customer expectations.
Building on a standard software platform, it’s also possible to build sophisticated features such as visual warehousing.
Dashboards, role centred interfaces and integration with daily essentials such as spreadsheets and email help to make life for users across business functions straightforward and that’s essential when user-adoption is critical for any successful deployment.
Do or die
There are numerous high profile examples of projects, involving big players such as the UK NHS and the BBC, that have failed spectacularly although naming too many names is probably not wise considering the litigation that has resulted in a number of cases.
To a certain extent that’s not surprising considering the level of complexity and the vast array of data and processes involved. Not to mention the fact that huge projects can take years to complete and involve hundreds of consultants.
Regardless of the size of the project, it’s important to consider a number of key factors.
Senior management must be involved from the outset and be confident that the aims of the project align with the strategic direction of the business.
Planning is an essential element and can’t be overlooked.
Consultation with users not only helps to illuminate areas for improvement but their buy-in to the process is central to achieving a smooth transition when the time comes for go-live.
Your partner needs to have demonstrable experience in your sector and also invest time to understand the specifics of your business. Working with the right partner will allow you to tap into best practice.
The software platform should allow you to evolve your systems as the business grows or the market environment shifts. Standing still is not an option.
Test. Test. Test. Whilst it’s rarely possible to replicate the full operational scope of your new system, testing is essential. Bug fixing, sense checking, the application of rules and conditions. Quality assurance should be built in to the development process to ensure that there are no unpleasant surprises when it comes to making the transition.
Ask yourself whether the business could fulfil orders, keep customers happy and maintain cash-flow if everything doesn’t go smoothly.
After all, your ERP system sits at the heart of your business and if you’re not confident that it’s beating effectively then maybe you shouldn’t switch off the life-support!
Dave Rawes is Microsoft Dynamics NAV & Pegasus Product Leader at TSG – Technology Services Group – UK IT specialist.