By Akhilesh (AK) Nandwana
Enterprise Resource Planning (ERP) software is used by organizations across industries to manage and streamline business operations. Implementing an ERP solution is a non-trivial exercise that can be expensive and resource intensive. For these reasons, a company needs to select the correct ERP system to address its unique business objectives.
This article will look at factors an organization should consider when choosing and implementing an ERP solution. We will discuss how the right ERP system can help a company achieve its goals while avoiding an ineffective installation that will never deliver the expected benefits.
Why Choosing the Right ERP Matters?
The right ERP solution acts as an organization’s informational nervous system – streamlining business processes, enhancing data analytics, and providing an understanding of a company’s moving parts. That said, incorporating an ERP system is expensive and can put a strain on the overarching IT budget. The wrong system risks an organization’s data landscape by making it vulnerable to security breaches and operational failures.
Simply putting an ERP system in place does not guarantee a company will accrue any of its intended benefits.
Initial Questions to Ask When Assessing ERP Solutions
Several questions need to be asked when considering an ERP solution. The answers to the questions determine the direction and scope of the project.
Some of the critical initial questions an organization should ask when assessing its position about an ERP solution are:
- What is the organization’s use case? This may be the most important question and needs a definitive answer. More than one use case may be appropriate for any given company. Examples of use cases include managing finances, assets, purchasing decisions, projects and customer relationships.
- Is there an ERP solution already in place? If so, what are the problems that led to the consideration of a replacement product? Are the issues so extensive that replacing the current system is the only solution, or is it possible to resolve the problems by upgrading the current system?
- How will the new system impact the business? Will it be able to streamline operations and mitigate risks?
- Is it the right time? Signs that a business is ready to step up to an ERP system include outgrowing current accounting solutions, employing many manual workarounds to address shortcomings and an inability to scale for more speed or expanded geographical reach. All stakeholders need to be on board with the plan, too.
- How much will the new solution cost? The time and expense of implementing a new ERP system or upgrading the existing one need to be understood and aligned with an organization’s investment intentions. Another critical aspect to consider while making this investment is the expected return on investment (ROI) of the project.
- How does the new solution integrate with the existing tech landscape? Does the current infrastructure support the new solution and allow it to be leveraged to the fullest? Will customizations made to the existing systems work with the new solution?
- Should the organization work with a tech partner or should it attempt to implement the ERP solution itself?
Obtaining answers to these questions empowers an organization to understand why implementing an ERP solution makes sense. Further, conducting an ERP assessment with the help of an experienced partner helps unfold the gaps in the assumed requirements and provides a clear roadmap.
Conducting an ERP Assessment
As extensive capital expenditures, planning and time are required to implement an ERP, it often makes sense for an organization to perform a guided ERP assessment for maximum investment value. An assessment can be beneficial for new and existing ERP implementations. A detailed ERP assessment helps determine whether:
- The organization is ready for a new/cloud ERP solution.
- Necessary changes to the existing infrastructure and business processes are fully in place to accommodate the new ERP.
- The organization has the required tools and processes to get the job done.
Existing ERP solutions can also benefit from an assessment by evaluating these three areas:
- The degree to which it is addressing business objectives.
- Challenges or difficulties faced with the current software.
- Opportunities for improvements and potential risks.
An ERP assessment uses a methodical approach to gather necessary information for successful implementation. An assessment carried out by an experienced tech partner aids in understanding the readiness of an organization. The evaluation results also provide direction towards a successful ERP implementation and suggest resources and tools needed for its successful completion.
How to Choose the Right ERP Solution
While the assessment can help determine the right ERP for an enterprise, here are five broader factors to consider when evaluating an ERP system:
- Overall business requirements: An organization should have specific business objectives that it plans to meet through an ERP system. Implementing an ERP solution is too expensive to be undertaken without defined business requirements.
- Functional requirements: Ensure the functional needs of all business groups planning to use the ERP system are addressed with the chosen solution. A viable ERP solution should also be customizable to meet a company’s evolving needs.
- Integration with legacy systems: Integrating a new or modified ERP solution with legacy systems is vital in judging its effectiveness in meeting business objectives. The ERP system should work with existing data streams and not negatively impact any critical systems.
- Budget and expected ROI: ERP systems can be expensive. Once in place, ERP systems are used for an extended length of time. The capital investment needs to be balanced against the ROI expected from the tool’s implementation.
- Scalability: The ERP solution should be able to address the dynamic requirements that are subject to evolving business needs.
Benefits of Working with the Right Tech Partner
A project as extensive as an ERP implementation requires expertise and experience not always available in-house. The right tech partner can be the differentiating factor between a successful implementation and an expensive failure.
When engaging a partner to assist your ERP implementation, keep the following factors in mind:
- Your partner should have experience in your industry to address unique technical or functional concerns.
- The partner should be willing to provide timely support if system issues arise, including performing upgrades when necessary.
- Your partner should be capable of customizing the system to your specifications.
Implementing an ERP solution is a significant project requiring a substantial investment in time and money. Companies taking this step should have identified business objectives they hope to address with the solution. An ERP solution can provide many benefits when done correctly, including improved productivity and a competitive advantage over market rivals.
Selecting the right partner is a great way to start the selection process for your ERP solution. The complexity involved can best be addressed by collaborating with an experienced technical partner. They can smoothen the transition to the new solution and help companies avoid potential pitfalls while achieving the benefits an effective ERP solution can provide.
About The Author
Akhilesh (AK) Nandwana is the VP of business applications at Synoptek. He is a seasoned Business Application Expert who worked with many leading organizations like Ramco, Accel ICIM, HCL Tech, Microsoft, etc. At Synoptek, he currently leads a team of over 175+ consultants across ERP and CRM Services. AK’s responsibilities at Synoptek include the overall growth strategy for this practice, managing day-to-day operations, and the stakeholder relationship management for the entire business applications pillar.