Enterprise resource planning (ERP) is not really new for business, regardless of the size. Having spent most of my software engineering days working with ERP companies, I know for a fact that a well-implemented ERP solution can help you streamline your business processes, enhance efficiency and drastically improve your bottom line.
However, it is understandable that businesses are quite hesitant to adopt an ERP system because of the high costs of implementing it. It is not a magic bullet, and there is no guarantee that the implementation and operations of ERP system would be successful. A lot of businesses do not understand that not fully utilizing their ERP systems is like using a computer only for word processing: a big waste of resources.
ERPs are not your most business-critical application, but it can really help you have a sustainable business that can easily scale as you grow. This is because using your ERP systems correctly can increase visibility and this will in turn lead to a better way to develop and execute the right strategies.
The thing is, a 2013 study conducted by Panorama Consulting Solutions shows that more than half of all ERP implementation projects experience overruns in either costs or schedule, and that around 6 out of every 10 implementations are botched. That gives rise to the sad reality that these companies only experienced less than half of the promised benefits of ERP.
Myth #1: When it comes to ERP, one size fits all
Not considering the right fit is a common mistake in ERP deployments.
A lot of people mistakenly think that choosing an enterprise resource planning system is easy and that one size fits all. This could not be further than the truth. For example, did you know that Microsoft has at least five variants of its ERP offerings, which range from small-scale to large enterprise? Choosing the wrong implementation can be a costly mistake.
ERP systems are very similar to other business software in that there are those that are designed for large enterprises and those designed for smaller businesses. If you do not have a detailed and accurate inventory of what your business requires before you begin shopping for vendors, then you’re in for some difficulty.
If you do not fully understand what you need, then there will be a mismatch between what you require and the software you implement. And this would in turn result in decreased productivity. It will be a waste of time. You will also not be able to take full advantage of your ERP system. And worse still, if you choose the wrong software for your business, you would unintentionally take longer to finish tasks and business processes might even slow down. So instead of being more efficient and becoming faster, you get bogged down.
Be sure that you select the right system for your business, and do not rely on emotions. Do not be awed by features, bells and whistles that you do not need. Instead, focus on what features should be present in order to make your ERP deployment work not just during the implementation stage but also in the course of your business’ daily activities.
Apart from having a comprehensive, detailed and accurate list of your requirements, you will also benefit from adequate planning and getting buy-in from the key stakeholders. Consider the size, the complexity, the scope and the organizational changes that an ERP system entails. Your company’s most important decision-makers should be involved in the process right from the start. This is a good way to get a better view of your enterprise requirements, while also making sure that nothing is overlooked. It will also ensure that proper documentation, testing and process integration is carried out well before the system goes live.
Myth #2: Updating your ERP is very expensive and time consuming.
One of the misconceptions that people hold about ERP systems is that it requires a big investment to keep updated. But is it very costly, time consuming and tedious to implement fixes, updates and patches? This is not necessarily true, especially for smaller-scale ERP solutions that run on a software-as-a-service cloud model. For bigger platforms like SAP, Oracle and Salesforce, automation may be the key to efficiency in doing patches, upgrades and testing.
For example, Panaya’s ERP tools automate test transactions and use big data in testing upgrades before actual rollout, so you know what to expect from these changes, such as potential problem areas and how to fix them. Automation platforms provide code cleansing, which helps do away with redundant programs and unused lines of code, as well as code remediation, or suggestions on how to fix your code so that you get to avoid problems later on when you are live. Upgrades, fixes and patches are very important to keep your system current, because outdated software can also be very limiting.
Myth #3: Having a badly implemented ERP system is better than having no ERP at all.
As we have mentioned above, having badly implemented ERP software can actually be bad for business because it makes business processes and tasks slower to complete. Inflexible, outdated and legacy ERP software can limit what you could do.
Worse, a badly-implemented ERP will still be a burden on your business, in terms of cost and manpower. You have already invested money to acquire or subscribe to an ERP – either as a fixed capex and regular opex. But if you are maintaining an ERP solution that you are having difficulty to use, then your IT staff might be wasting their time. If you think it’s not such a big deal, consider a few billion-dollar blunders caused by mistakes and mishandling related to ERPs. And it’s not just the private sector that has made such mistakes. Even government and military agencies, like the US Navy, are prone to such blunders.
ERP Implementation is all about execution
The thing with ERP is that if properly executed, it will pave the way for improved visibility and better decision-making. This will help you improve your processes, expand your business, give better services to your customers and increase the bottom line.
So choose your ERP software well, plan extensively on how to implement it, and keep it updated to reap all the benefits that ERP software can give you. Otherwise, you would be working with incomplete data from a system that is working below par.
Images: “graphic “enterprise resource planning”. Keywords with icons/Shutterstock.com“
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