Enterprise Resource Planning software (ERP) can be an invaluable addition to your business. It can also present some significant challenges that many business leaders are unprepared for. While the benefits of ERP software can be tremendous, it requires a substantial commitment of time, planning and financial resources.
The first step is research. You need to identify what functionality you need in a software package and research the available platforms. Traditionally, ERP software will replace all, or at least the vast majority of your current systems. You will no longer need to use a combination of tools (accounting software, production management applications, spreadsheets, etc.) to accomplish the same outcomes. Generally speaking, all of your business functions, from manufacturing to HR to financials, will be consolidated into a single technology solution. This provides incredible visibility and efficiencies but also adds a layer of complexity when searching for a solution that will meet your needs.
The good news is that technology is advancing at a faster rate than at any time in history. The number of software providers is seemingly limitless. Start by simply conducting an internet search for “[insert industry here] ERP software”. You can refine this as much as necessary until you find a suitable list of applications. I would strongly recommend that you create a simple spreadsheet to compare your available options. This dramatically simplifies the comparison process, especially since you can expect to suffer from information overload and will likely not recall specific features of each platform.
I recently implemented an ERP project and narrowed our initial list of options to no fewer than eight different providers. It didn’t take long before I was unable to tell one application from the other. Be sure to rank the importance of features on your comparison list. Some functions will be mission-critical, while others may be simply “nice to have” or even relatively unimportant. Software providers are salespeople, so make sure that the fancy upgrades are really necessary and not just pretty bells and whistles. Defining the required features is up to you, not the software vendor.
Once you’ve narrowed the field to a reasonable number, you can start arranging for software demonstrations for each ERP. This is a very time consuming process. You will sit through countless hours of conference calls discussing a mind-numbing amount of detail but this is a critical, necessary process. You need to make sure that any application that makes your short list has been vetted thoroughly enough that it won’t present any show-stopping surprises later.
The list of critical components to consider is exhaustive, but a few of the often overlooked points include:
How much will it cost?
Cost is a very real consideration and is usually one of the first questions to be asked. While important, the cost must be balanced against your expected benefit. Implementing an ERP is an investment in the future of your business and as such, must be evaluated based on the expected return on that investment. What tangible and intangible benefits do you expect to gain from it? You can spend as little as $10,000 or as much as many millions. Quantifying the anticipated benefits to determine ROI can be very difficult but it’s a necessary step.
Will the ERP meet all of your needs and scale as you grow?
The best ERP in the world won’t help you if it doesn’t accomplish everything you need it to or if it won’t support your business over time. Meeting this qualification requires a good balance between current and future needs. Make sure you’re comfortable with how it handles your most critical processes and that it can grow with you. You don’t want to go too big, but you don’t want to go too small either. Given the complexity, your ERP should be able to scale with you as you grow over the course of 5 to 10 years.
How will you support the technical and training requirements?
Does your chosen ERP require a substantial investment in hardware? Will it be hosted on-site or in the cloud? Does your supplier provide technical support? What about training and ongoing maintenance/updates? You want to make sure that you consider what it will take to use the system on an ongoing basis. ERP systems generally require more specific processes to be followed and are not particularly forgiving if not used properly, so initial and ongoing user training is an extremely important component.
Once you’ve selected the right ERP for you, spend some time with your provider to develop a reasonable and thorough implementation plan. Good ERP suppliers have done this many times before and can provide you with templates, timelines and all the tools you need to plan for a successful implementation. This can take anywhere from a few months to a year or more, depending on the scale of your operation.
Be sure to include your key personnel as early in the process as possible or practical. Assign portions of the project to your leaders based on area of expertise and ability. Dedicating a person to manage the project on a full-time basis can be very beneficial if you have the resources to do so. If not, some serious consideration should be given to hiring a consultant to help guide your implementation. Again, no matter which path you choose, you’ll want to engage your experts as early in the process as possible to make sure that you make the most of their knowledge and abilities.
Don’t underestimate the time and effort required to successfully implement your ERP. Countless implementation failures can be traced directly back to a lack of the necessary resources being made available. ERP implementations must be made a high priority. While you can’t ignore your day to day business, allowing your new software project to be pushed off will exponentially increase the chances of a failure to launch. Keep everyone on task and avoid mission creep. As long as you have a reasonable timeline, sticking to it will dramatically improve your chances of success, while minimizing unnecessary expense.
Like any project, implementing an ERP in your business requires a significant amount of resources in both time and money. Research, planning and follow through are the keys to making sure that your investment translates into success.