3 Management approaches to choose an ERP System

What is an ERP?

ERP stands for Enterprise Resource Planning and refers to software and systems used to plan and manage all the core supply chain, manufacturing, services, financial and other processes of an organization.

ERP can be used to automate and simplify individual activities across a business or organization, such as accounting and procurement, project management, customer relationship management, risk management and supply chain operations.

 

How does an ERP System Work?

The main purpose of an ERP system is to increase organizational efficiency of an organization by managing and improving how company resources are utilized. 

ERP systems typically cover all aspects of business operations and commonly provide:

• An integrated system
• Common database 
• Real-time operation
• Support for all applications/components
• Common user interface across application/components
• On-premise, cloud hosted, or SaaS deployment

 

 

3 Management Approaches to choosing a New ERP System?

Top down Approach: First, there’s the high-level, top-down approach. This begins with a quick and short identification of critical, high-level vendor, strategic, technology, and business requirements. The search then focuses on carving the universe of vendors to a short, manageable list very quickly based on which ones fulfil these high-level requirements.

The benefits to this approach are speed and management buy-in. Executive management and the Information Technology Department may drive this process without extensive end-user involvement.

Upfront Discovery and Requirements Gathering Approach: The second approach includes greater, upfront discovery and requirements gathering. In this approach, the company’s subject-matter-experts and essential duty ERP users are observed and interviewed to determine a much longer list of requirements.  Afterward, software vendors’ packages are compared and contrasted according to their fit to the company’s requirements.

This approach results in fewer risks, especially the risk of extensive, unplanned software modifications. By defining the requirements upfront and seeking software that fulfils the requirements, “out of the box” customizations can be avoided.  In addition, this approach results in a lower chance of buyer’s remorse.

 

Process Mapping & Blueprint Approach: The third approach includes process mapping and blueprinting exercises prior to the requirements building efforts. Using this approach, the buying company defines its current state business processes and then redesigns them into improved, optimized future-state processes.  The redesigned future-state processes serve as the basis for detailed ERP software requirements building. Thus, this approach requires even more preparatory work than the second approach.

This third approach is best, almost exclusively recommended for companies that currently perform activities and processes in non-standard and dissimilar manners.

 

The Benefits and Business Value of ERP

·         Cost savings and improved ROI efficiency: Increased productivity and efficiency as a result form the integration and automation that ERP software provides.

·         Improve business insights: Improve decision making with a single aggregated source of truth and real-time data.

·         Manage Regulatory Compliance: Manage and monitor compliance with regulatory standards, and even set up alerts for non-compliance.

·         Mitigate and reduce risk: Automate core business operations, manual tasks, and reporting.

·         Scalability: Consistent infrastructure for streamlined operations can grow as your business grows.

·         Optimize customer and partner management: Service, customer relationship management, as well as partner and supplier management with insight from seamless shared information.

 

Ways for selecting and implementing an ERP System

        i.            Get Upper Management Support

      ii.            Make a clear and extensive list of requirements before you start looking at vendors.

    iii.            Don't forget mobile users. 

     iv.            Carefully evaluate your options before selecting your ERP system.

       v.            Get references. 

     vi.            Think before you customize.

   vii.            Factor in change management. 

 viii.            Provide the necessary time and resources for training on the ERP system.