What is an ERP system, and how can you choose one from the 200+ available?
Enterprise Resource Planning, solutions enable the integration of operations, marketing, and financial systems.
The right ERP system will improve productivity, management, and your bottom line.
An ERP system includes processes essential to running a business.
The system includes:
- Inventory & Order Management
- Accounting & Financials
- Human Resources
- Customer Relationships and more.
At its most basic level, ERP software integrates these functions into one system to streamline processes across the company. The goal is saving time, increasing productivity, and bottom-line impact.
Choosing the right ERP system will take time so start with the process by preparing your team and getting their commitment to the process and change that will result from the new software.
1. Start with the Top
Getting upper management support is essential. It’s necessary from the start that the tone at the top is both supportive and driving accountability for an ERP system. The best ERP implementations start at the top.
People at every level increase their engagement with the project and implementation more when management drives the initiative. This doesn’t mean executives need to know every line item in the project.
They need to be aware of the department heads involvement, weekly status, and impacts to the project on-time and on-budget implementation.
2. Outline the Scope
Before you start asking for requests for proposals for your ERP system, outline the scope. When you outline your content, focus on business processes and system requirements. This will help you narrow down what methods will and won’t work for your company.
The more specific you are, the better your proposals will be. When a vendor works with you, they are a partner in your project success. Getting the up-front requirements correct across processes and systems will help the project kick-off well.
One of the biggest failures with ERP systems is missing requirements upfront leading to delays and budget overruns. Make sure you include department heads and IT in the requirements process.
Don’t make the mistake of selecting a system on market buzz, appearance, and price alone. Some of the best ERP system implementations include being industry-specific and meeting your business needs.
3. Change Management
Change management is essential to include in your planning process. Implementing an ERP system isn’t easy. The impact on organizations before, during and after implementation is massive.
Consider the impacts day to day during the implementation. If you don’t know, ask for IT input on the best way to roll-out—factor in feedback from operations. Think about deadlines for operations and financials.
Ensure you communicate at pivotal points to teams and employees on what is happening, how they will be impacted, and the long-term benefits. It’s important to show any pain points are worth it in the long-run. The earlier you get buy-in, the easier the process will be.
4. Internal ERP Champion
Right when the organization starts considering an ERP system, assign a champion. This will help the company coordinate efforts from the start. Make sure you have an internal winner or team. Do not solely rely on the vendor’s project manager. You’ll likely need your own ERP specialist, so what does an ERP consultant do? Manage your ERP, from implementation, configuration to ongoing analysis and operational support.
Select someone knowledgeable about processes and systems and comfortable managing others. Use your consultant as the leader responsible for gathering requirements, learning the new system, managing data conversions and coordinating training for the company.
Many companies will make the mistake of putting all their time and energy into selecting software and not managing the process. It’s essential to have an internal team working the entire process across departments.
5. Ask for References
With an ERP system you are seriously considering, ask for at least three references. Make sure you ask the customers what went right, what went wrong and what they would have done differently.
If a vendor can’t give you three references, that’s a good indicator, they are not the right fit for your business. If you are part of any associations, ask trusted friends for any referrals for great ERP systems.
6. Evaluate Your Options
When evaluating ERP systems, make sure you look at anywhere from 3-10. Present the vendors with your requirements and review their proposals in detail. Ask for fixed fee arrangements. This will challenge the vendor to dig deeper into your organization in advance.
Dashboards are an overlooked area by organizations that may later add to costs.
Make sure you outline all specifics in the contract and scoping document to prevent any unpleasant surprises. It’s better to take the time needed on the front-end with requirements, options, and warranties than to pay for it later painfully.
7. Customize with Caution
Any vendor you evaluate for an ERP system, customize with caution. Customization increases time, budget, and unknown factors. Some courses may require customization for something you need vs another system will have it included.
Make sure you ask various vendors. Take the opportunity to review your processes to determine if customization is needed, or if it’s time to simplify and standardize. That’s one of the benefits of ERP systems, to begin with.
8. Make it Mobile Friendly
Don’t forget checking to make sure the system is mobile-friendly. With mobility increasing, having access to ERP systems on a desktop-only doesn’t work. You want to have a system that allows access on smartphones too.
9. Take the Time to Train
You can have the best system and fail with training employees on it. This part is just as important as getting the requirements for the system. The internal champion will be in charge of the implementation and training of the ERP system.
It’s essential to consider which departments should be rolled out first and at what times. Consider running a test pilot in a remote location or department. Performing user acceptance testing in general and pilots are smart in any implementation process.
Outline an exact training program with regular updates for employees. Make sure you communicate regularly with employees. It’s important to also review roll-out against busy times and holidays.
Like with all software decisions that result in change, it pays to start communication from management downwards. Staff buy-in will result in the transition to the ERP being seamless.
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