Author: Pardeep Kansal | Project Manager IT & ERP | Maier+Vidorno
First published in June 2016
Indian economy opened its gates to the world in the year 1991 and since then India has witnessed a significant growth. Be it manufacturing, retail or services – organizations have experienced tremendous growth as well as competition. The desire to lead and the quest for increasing market share has forced the organizations to re-look at business processes and to implement solutions to make business functions more efficient and effective.
One of the key solutions to fulfill this requirement is implementation of Enterprise Resource Planning (ERP) Systems. Any good ERP system can help organizations to improve their business processes by integrating different business functions on one platform like Supply Chain, Finance, CRM, HR etc. Not only that, ERP systems can increase the level of transparency and provide real-time information, which is essential for success – especially for foreign companies entering the Indian market. Standard ERP systems, such as SAP, Oracle, Microsoft and various others include standard processes which are already embedded in the application.
The journey of ERP implementation is never easy and it starts with the identification of business needs, budgeting, evaluation of ERP systems and eventually, choosing the right implementation partner. But the implementation of good ERP systems is no child’s play and it has been seen that many a times ERP implementations fail. Most of the major decisions and actions that ultimately determine whether an ERP implementation is a success or a failure occur very early in the process.
So let’s have a look at things, that if taken care of well, increase your chances of having a successful ERP system:
Identifying and prioritizing the business needs
Every organization going for ERP implementation needs to identify their business needs or pain areas in different business functions before making an investment on ERP. It can be done by having discussions with all the business functions and should be well documented. The inclusion of end users at this stage will increase acceptance during and after implementation and break the ‘us versus them’ barrier. But one may end up having a list of requirements coming from wishful thinkers along with critical business needs. So it is imperative to categorize all the requirements based on priorities like:
- Must have
- Important to have
- Nice to have
- Not a consideration
Selecting the right ERP system
Evaluation and selection of the right ERP system can be a painstaking process. The key considerations for selection of an ERP system are:
- The Success of an ERP implementation depends a lot upon complexity of business processes. Remember, good ERP design can’t fix broken business models. Complex business processes create opportunities for organizations to fail their customer. It also adds to scope of ERP, ultimately increasing the overall costs of implementation. Compromising with scope or cost may have adverse impact on the end result
- ERP software should be an integrated solution covering all the business functions. An accounting package or any application covering some specific business function is not an ERP system.
- Scalability is another key factor. Good ERP solutions do not succumb to volume pressure as the organization grows and can work in different geographies. Standard ERP systems like SAP, Oracle and Microsoft support multiple languages and different taxation systems of different countries.
- ERP systems are generally costly. Someone rightly said, “Price is what you pay and value is what you get.” But value of ERP system is not easy to measure in monetary terms as most of the benefits are intangible in nature and will be realized over a period of time. But still a cost-benefit analysis can be done looking at the larger picture and as per growth plans of the organizations. Basic cost components of ERP system include cost of ERP software, cost of computer hardware and software (database, operating systems), consultant fees, and cost of support. ERP system costs can be optimized, and you will see the value for the money spent once the systems are in place and utilised optimally.
Post implementation support is very critical because lot of issues will crop up after the system goes live. Once I heard an ERP head of a consulting company say, “An ERP project is like a marriage between the customer and consulting partner. All the major planning and execution will happen during the implementation. But post go-live is like having a baby. Take care of it.”
Commitment of stakeholders
ERP implementation is not an IT Project, it is a Business Process Re-engineering Project. It is not a package to be installed and run. Commitment of all stakeholders to the new system is vital to success of ERP.
Does the investment on a good ERP system guarantee to produce the desired results? The answer is no, because the process of implementation has to be managed with professionalism and delicacy. ERP implementation changes processes and sometimes reporting structures also. Addressing this paradigm shift is the biggest challenge. The Key Driver for this change management process is the People. If people perceive the benefits of the ERP to the organization and can adjust their way of working then chances of a successful implementation is much higher.
ERP is more than just a software. Organizations need integrated systems in today’s highly competitive world which can streamline the business processes and maintain information in an accurate and consistent manner. In the last four decades organizations have expanded their business globally and strong reliable information systems have played a big role in that. Today every big ERP player has solutions for small and midsize segments. Success of ERP systems lies in identifying the needs, selecting the right product and managing the implementation process with finesse.