Enterprise Resource Planning systems, better known as ERP systems, consist of various and numerous business functions, which typically are packaged and sold in separate modules and connect to multiple departments and business functions in large companies, as shown in diagram. They are considered by many as the most complex business application(s) to implement in any business regardless of the industry.
ERP modules oftentimes break down as follows:
EERP can substantially lower inventory costs, reduce rework, relieve bottlenecks, lower transport time/cost, reduce write-offs, improve marketing/sales efforts, permit growth without related increase of employees, and more if the information produced is accurate and if properly applied into action. ERP systems can provide better information to managers and execs gain better understanding of what’s going on in the company to make better business decisions.
Ideally, ERP systems centralize data into a consolidated single data base containing all data for the software modules to manage information (e.g., employee records, customer data, purchase orders and inventory) so that everyone in the company relies on the same data.
Some organizations — typically those with sufficient in-house IT skills to integrate multiple software products — choose to implement only portions of a vendor’s ERP system and develop an external interface to other ERP or stand-alone systems (such as financial, human resources, warehouse management and logistics applications) for their other application needs. The decision of whether to buy a whole ERP application suite or specific single application products which must be integrated by the customer’s staff or consultant, is often referred to as the “Best of Breed (BoB) applications solutions vs. the integrated multi-product suite (ERP)” dilemma.
Many of these ERP systems have been tailored by ERP vendors to specific industries such as the Oil and Gas industry, or the retail industry, or the grocery store industry, or the fast-food restaurant industry, requiring modified or additional functional applications such as front-end POS (Point of Sales) devices to capture orders, process coupons, collect payment, etc.
ERP implementation utilizes various ERP software applications to improve the performance of organizations for resource planning, management control and operational control. These systems are built with logic and work flows touted as “industry best practices” that a customer can configure, to make the system more relevant to the way the business operates. Some customers prefer writing new modules and/or customizing current modules. This can pose serious problems when the core software is updated by the vendor and your system is “one-off” (i.e., different than the system all the other customers have). In such cases, it may be very relevant to change the company’s operations and work flow to correspond to the best practices codified in the ERP system to avoid upgrade and support problems, AND to improve company operations so that the new ERP system doesn’t simply re-automate bad practices and procedures.
ERP systems can work in real-time, meaning that the exact status of everything is always available. Further, many of these systems are global. Since they can be deployed at sites around the world, they can work in multiple languages and currencies.
In WSRcg’s experience, this is because ERP systems/projects are:
ERP selection and implementation is so difficult because it ordinarily involves not only implementing new software, but also accomplishing the following tasks, among others, in a tight timeframe:
Identifying and prioritizing real functional requirements (including: must have, nice to have, can defer, can live w/out functionality – and where to change its policies, procedures and workflows to meet the current configuration alternatives),
Preparing a proper Request for Proposal (RFP) with selection criteria. It is important to let the bidders where the customer needs special support and help – in the RFP, so critical staffing decisions can be tailor made,
Performing independent research on short-listed vendors, plus “appropriate reference checks”. This step is the most critical step in selecting your systems “Partner” and so few companies do it well or at all. Perform site visits to another company(ies) using the system in a manner similar to your intended use. See a Conference Room Pilot; review prototypes and system documentation; Have your design engineers and maintenance staffs talk to theirs. Based on references/reviews, determine who you want on the project and who you do not. Determine how you and the implementation partner will refill empty or turned-over positions.
Negotiate clear, measurable, enforceable contracts that allocate risks and incentivize parties to work thru difficult parts of project and clearly identify "agreed-to":
REMEMBER: The kind of working relationship you have during the meet & greets and contract negotiations sessions will let each party know how the other side will likely react when the project starts,
The contract, which will take 2-3 months to knock out with the to-be-attached “Statement of Work” (SOW), is meant to be a living document that is be reviewed during the project for guidance and clarification. Thus, the contract should be negotiated with appropriate Financial Management (CFO), Chief information Officer, Project Champion, Project Manager(s), Attorneys with experience with such contracts, a preferably with an executive with each party at some of the negotiating sessions.
Remember to staff, train, reward the onsite team that will support, update and retrain the users in how to best use and get the most value of the evolving ERP system.
Don’t forget the often mistreated and maligned post-mortem. This is where the most can be learned and improved while not under the pressures of implementing the new system. Here’s also where multiple departments can learn what others need and why.
Develop Acceptance Criteria (with company QA input, review, signoff) for: