Enterprise Resource Planning
CRM
Technology has experienced ERP consultants in Oracle
and SAP with business process
re-engineering background and software customization and implementation
experince.
There are five major reasons why companies undertake ERP.
1.
Integrate financial information—;As the CEO tries to
understand the company’s overall performance, he may find many
different versions of the truth. Finance has its own set of revenue
numbers, sales has another version, and the different business units
may each have their own version of how much they contributed to
revenue. ERP creates a single version of the truth that cannot be
questioned because everyone is using the same system.
2.
Integrate customer order information—;ERP systems can
become the place where the customer order lives from the time a
customer service representative receives it until the loading dock
ships the merchandise and finance sends an invoice. By having this
information in one software system, rather than scattered among many
different systems that can’t communicate with one another, companies
can keep track of orders more easily, and coordinate manufacturing,
inventory and shipping among many different locations simultaneously.
3.
Standardize and speed up manufacturing processes—;Manufacturing
companies—especially those with an appetite for mergers and
acquisitions—often find that multiple business units across the company
make the same widget using different methods and computer systems. ERP
systems come with standard methods for automating some of the steps of
a manufacturing process. Standardizing those processes and using a
single, integrated computer system can save time, increase productivity
and reduce headcount.
4.
Reduce inventory—;ERP helps the manufacturing process
flow more smoothly, and it improves visibility of the order fulfillment
process inside the company. That can lead to reduced inventories of the
materials used to make products (work-in-progress inventory), and it
can help users better plan deliveries to customers, reducing the
finished good inventory at the warehouses and shipping docks. To really
improve the flow of your supply chain, you need supply chain software,
but ERP helps too.
5.
Standardize HR information—;Especially in companies with
multiple business units, HR may not have a unified, simple method for
tracking employees’ time and communicating with them about benefits and
services. ERP can fix that.
ERP
packages are nothing more than generic representations of the ways a
typical company does business. While most packages are exhaustively
comprehensive, each industry has quirks that make it unique. Most ERP
systems were designed to be used by discrete manufacturing companies
(that make physical things that can be counted), which immediately left
all the process manufacturers (oil, chemical and utility companies that
measure their products by flow rather than individual units) out in the
cold. Each of these industries has struggled with the different ERP
vendors to modify core ERP programs to their needs. This has been
finally addressed by the software vendors by focusing on Industry
verticals.
What are the hidden costs of
ERP?
The following are commonly
overlooked items that most likely to result in budget overrun.
Training—Training
expenses are high because workers almost invariably have to learn a new
set of processes, not just a new software interface. Remember that with
ERP, finance people will be using the same software as warehouse people
and they will both be entering information that affects the other. To
do this accurately, they have to have a much broader understanding of
how others in the company do their jobs than they did before ERP came
along.
Integration
and testing—Testing the links between ERP packages and
other corporate software links that have to be built on a case-by-case
basis is another often-underestimated cost. A typical manufacturing
company may have add-on applications from the major—e-commerce and
supply chain—to the minor—sales tax computation and bar coding. All
require integration links to ERP. You’re better off if you can buy
add-ons from the ERP vendors that are pre-integrated. If you need to
build the links yourself, expect things to get ugly. Testing ERP
integration has to be done from a process-oriented perspective.
Veterans recommend that instead of plugging in dummy data and moving it
from one application to the next, you should run a real purchase order
through the system, from order entry through shipping and receipt of
payment—the whole Quote to-order-to-cash
banana—preferably with the participation of the employees who will
eventually do those jobs.
Customization—Much
more costly, and something to be avoided if at all possible, is actual
customization of the core ERP software itself. This happens when the
ERP software can’t handle one of your business processes and you decide
to mess with the software to make it do what you want. You’re playing
with fire. The customizations can affect every module of the ERP system
because they are all so tightly linked together. Upgrading
the ERP package—no walk in the park under the best of
circumstances—becomes a nightmare because you’ll have to do the
customization all over again in the new version.
Data
conversion—It costs money to move corporate information,
such as customer and supplier records, product design data and the
like, from old systems to new ERP homes. Companies often deny their
data is dirty until they actually have to move it to the new
client/server setups that popular ERP packages require. Consequently,
those companies are more likely to underestimate the cost of the move.
But even clean data may demand some overhaul to match process
modifications necessitated—or inspired—by the ERP implementation.
Data
analysis—Often, the data from the ERP system must be
combined with data from external systems for analysis purposes. Users
with heavy analysis needs should include the cost of a data
warehouse in the ERP budget—and they should expect to do
quite a bit of work to make it run smoothly. Users are in a pickle
here: Refreshing all the ERP data every day in a big corporate data
warehouse is difficult, and ERP systems do a poor job of indicating
which information has changed from day to day, making selective
warehouse updates tough. One expensive solution is custom programming.
The upshot is that the wise will check all their data analysis needs
before signing off on the budget.
Consultants
ad infinitum—When users fail to plan for disengagement,
consulting fees run wild, specially if you have engaged the Big 5. To
avoid this, companies should identify objectives for which its
consulting partners must aim when training internal staff and have
penalty clauses in the contract if consultant firms fail to meet the
dates.
Replacing
your best and brightest—It is accepted wisdom that ERP
success depends on staffing the project with the best and brightest
from the business and IS divisions. The software is too complex and the
business changes too dramatic to trust the project to just anyone. The
bad news is a company must be prepared to replace many of those people
when the project is over. Though the ERP market is not as hot as it
once was, consultancies and other companies that have lost their best
people will be hounding yours with higher salaries and bonus offers
than you can afford—or that your HR policies permit. Huddle with HR
early on to develop a retention bonus program and create new salary
strata for ERP veterans.
Implementation
teams can never stop—Most companies intend to treat
their ERP implementation as they would any other software project. Once
the software is installed, they figure the team will be scuttled, and
everyone will go back to his or her day job. But after ERP, you can’t
go home again. The implementers are too valuable. Because the
implementers have worked so closely with ERP, they know more about the
sales process than the salespeople and more about the manufacturing
process than the manufacturing people. Companies can’t afford to send
their project people back into the business because there’s so much to
do after the ERP software is installed. Just writing reports to pull
information out of the new ERP system will keep the project team busy
for a year at least.
Waiting
for ROI—One of the most misleading legacies of
traditional software project management is that the company expects to
gain value from the application as soon as it is installed, while the
project team expects a break and maybe a pat on the back. Neither
expectation applies to ERP. Most of the systems don’t reveal their
value until after companies have had them running for some time and can
concentrate on making improvements in the business processes that are
affected by the system. And the project team is not going to be
rewarded until their efforts pay off.
Post-ERP
depression—ERP systems often wreak havoc in the
companies that install them. In a recent Deloitte Consulting survey of
64 Fortune 500 companies, one in four admitted that they suffered a
drop in performance when their ERP system went live. The true
percentage is undoubtedly much higher. The most common reason for the
performance problems is that everything looks and works differently
from the way it did before. When people can’t do their jobs in the
familiar way and haven’t yet mastered the new way, they panic, and the
business goes into spasms.
OUR
CONSULTANTS HAVE THE EXPERIENCE TO AVOID PITFALLS
CRM Technology has
experienced ERP consultants who has worked in the industry for a long
time and has the experience to understand the challenges of ERP
implemenation. They will guide the customer in the right direction and
navigate the project in the direction of success.
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