May 4, 2018
What is Enterprise Resource Planning (ERP)?
ERP or Enterprise Resource Planning provides an integrated management of core business processes controlled by the combination of software and technology. ERP is a business management software having integrated applications and is maintained by a database management system. A typical ERP system integrates varied organizational systems and facilitates error-free transactions, thereby enhancing the organization’s transparency as well as efficiency.
A typical ERP module has the following processes;
- Sales
- Procurement (SRM)
- Production (PLM)
- Distribution (SCM)
- Accounting
- Human Resource
- Corporate performance and governance
- Customer services (CRM)
Any ERP implementation can be complex and sometimes challenging. ERP Success factor depends on the implementation strategy of the concerned organization as well as on their ERP selection. Understanding the organization’s requirement and selecting the ERP software is a long, tedious and time consuming task. Moreover, ERP Implementation is not a one man game. It takes into consideration the joint efforts of the entire management and support team. ERP Implementation varies from organization to organization based on its size, processes and the selection of ERP Module.
- Clear Identification of the Project Scope
Project scope is that part of project planning which involves active participation of all stakeholders in determining and documentation of specific project goals, deliverables, deadlines that needs to be completed within a stipulated time period and finally decides on the budget or the costs that will be incurred on that particular project. The scope defines the work boundaries where you can develop your ERP strategy and understand its components to plan your way forward.
- Change Management
People fear change, and change management is essential to pacify those fears. Suppose an organization decides to upgrade their systems or processes. In this regard, every single unit is bound to change. And, every single individual is supposed to embrace the change. ERP implementation is much more than that of technology promotion because software alone does not deliver profits – people do! A change management team will be of utmost importance for the organization to deal with the impact. Effective change management will increase business value through improved acceptance and usage of the system. Therefore, change management is not an optional on an ERP project; it is a Critical Success Factor.
- Customizations
Generally, most ERPs are built with best practices rooted deep inside them. Customization or modification in an ERP can have many outcomes – both positive as well as negative. Positive in the sense, various types of experiments can be done that might suits the user or the organization. On the other hand, excessive modifications may result in an increase the project scope as well as the budget of the company. To gain an upper hand, in these scenarios, the management can set company’s pre-determined decisions regarding customization. Additionally, they should also research the ERP implementations of other organizations in the same industry and prioritize what customizations are necessary.
- Budget
It is one of the core responsibilities of the organizations to create a realistic budget to include all costs for the implementation, such as software, hardware and staff resources. It is always advised not to reduce costs in change management and training the users. In that way, you might lessen the budget in the initial period but it can cost you beyond your imagination post implementation period.
- User Training
User is the end customer, be it in case of a product or even a service. Usually this category of people is reluctant to accept the change. Training the user is not an easy task, so the user training should be planned out very carefully. It has to be ensured that the user is mentally well-prepared to learn. Though the training is provided by the software vendors but the urge to learn something new should come from within the learner, who is your organization’s employees. Training should be provided to the users well in advance or at the time of the ERP implementation, so as to provide enough time for the user to digest the information. It must also be ensured that the user is flexible with the operations as soon as the process goes LIVE!
- Testing
Testing is an important phase in any project – whether it is an implementation project or any development or research project. A systematic testing of the ERP is a must at every amendment and configuration phase. Not only the ERP functionality testing is required, but the SQL server, connection, and all integration points, needs to be tested very well before and after the process goes LIVE! For example, if a code takes 3 days to code, then no matter how experience a person is, he / she must take at least another 4 to 5 days for testing.
- Progress Meetings
Regular meetings within a week, either twice or thrice between the internal users and the ERP team is necessary for the successful implementation of the ERP Module. Regular meeting is useful in tracking problems as well as progress in a timely manner.
- Communication
Communication plays an important role in every aspect of life. Whether it is a business plan or a military strategy, communications have to be loud and clear. It is in this way that, each and every stakeholder will be able to highlight any issues or provide solutions. Always try to maintain a regular follow up with your internal as well as external users and corporate partners with regards to their tasks. At the same time, also keep a track of the pending tasks and issues that might have crept up in course of action.
Summary
Organizations that have the intent of effective ERP implementation for its success must consider these above factors. In order to ensure consistent success, few organizations have set up their internal ERP team having expertise in ERP and project management experience. In some cases, organizations also have MIS department that has the concerned person managing the project.
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