ERP Software

There are times when a company makes a decision that will change life as it knew it. One of those times is the installation of Enterprise Planning Resource software.

Successful implementation of ERP software will integrate all departments across a company into in one happy computer system. Accounting, finance, sales and manufacturing will all be able to update the same record.

This, is as opposed to, sales entering an order into their system…..notifying accounting…...who does a credit check…...approves the order….letting the warehouse know to get inventory ready for shipment….who then checks to see if they have enough stock…...which then packs the goods and readies for shipment..…and then checks to see when the next scheduled delivery is.

In the world of ERP, all these departments may have different applications; but they all update the same database. By the time sales enters the order, the warehouse will be notifed if the customer is kosher. Shipping will know, it leaves on a Wednesday afternoon truck. Ok, maybe that was a perfect world of ERP.

ERP software vendors can connect all functions of a company or just start with finance and HR. To be an ERP candidate your company should be grossing at least $200 million per year. The average cost of an implementation is about $15 million.

More than 60% of multinational firms use ERP software and SAP is the favorite.

ERP can be transformational for your company. Not to mention expensive.

Internally, it will provide:

• A host of best business practices to live by.

• Changes in the way people do their jobs. Customer service reps won’t have to re-enter data. Through an ERP portal, a CSR can see a customer’s credit rating, maybe even take the order, how much inventory is left and order history. This means at least two things. Certain positions will be enriched by decision-making and certain positions will be eliminated.

• Improved financial information. There will be one version of the truth. Not sales vs. accounting. As soon as one record is updated, everyone’s records are updated.

• The manufacturing process is enhanced. As soon as inventory is sold, purchasing knows immediately what to replace. As products flow though the supply chain their status becomes transparent to all.

• Your friends at HR. Vacation days, requisitions, benefit updates can all be tracked by employees and managers as soon as an event happens.

Externally it means:

• ERP generates close to half the revenue for national consulting practices.

• Firns using ERP software handle & process their business in real-time. They will expect the same from their partners.

ERP software usually handles back office processing. It takes an order and systematically move it to the next department for processing. Front office processing or sales functions are handled by CRM (discussed in this site). Another product brought to you by the ERP vendors.

Some of the rationale considered when buying ERP software include: resource planning, making productivity more efficient, gaining a competitive edge by improving customer service and quality.

There are several strategies to consider when implementing ERP. The most common is the franchising method.

The ERP project finds a friendly department that is open to a little transformation. This department is usually not an intricate part of the business process should something go wrong.

Once the group is up and running it acts as a reference. The project team brings other departments online and they can say "Hey, finance is using it and they're happy."

Although each department will be running their own instance of ERP software, they will be able to share high-level views of company data. Yes this process will take a long while…..but $250 million later, you want things done right.

ERP Risk

Unlike installing Microsoft Office, some ERP implementations have failed. And failed miserably. The costs are huge. Not only is there the cost of the software but there is company-wide training. Once a group gets its ERP application, they may not like the process. This is where IT gets bogged down in tweaking applications. Customization makes the software unstable.

Another challenge is changing people’s habits. As I said earlier, jobs will change, jobs may be eliminated and things will happen faster. If employees reuse to adapt to ERP they will find ways to work around it. This degrades the quality of data everyone will use.

ERP & The Web

These two didn’t start out being made for each other. The original goal of ERP was to enhance productivity and promote real-time transactions within a company. It assumes people using the software are employees.

There are two important reasons to work with vendors who provide internet access with their applications. Suppliers & customers.

Competitive advantages include a tight partner network. Customers want shipping information, billing amounts and availability. Granting access gives your customers the latest information….and keeps them happy. Your suppliers can serve you better when they know what you need…..even before you tell them.

ERP software does not need to be installed in every office of your company. If you have the money (and you’ll need it), ERP will change the way you do business.