Choosing the right ERP software
Apr 18, 2001
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© 2001 TechRepublic, Inc.
By Adam Golden and Dawn Scaiano
Obviously,
selecting an enterprise resource planning (ERP) system will have a tremendous
impact on your company's present and future success. With several reputable
vendors on the market, it's not always clear which product represents the best
option.
However, by analyzing the way you do business, evaluating your
organization's unique needs, and creating a vision for the future, you can
ensure you are investing in the right software package.
Here are several,
simple ways to help you make the right choice when determining the best ERP
package for your business.
First in a series |
Adam Golden is director of e-engineering and Dawn
Scaiano is director of software evaluations for Acuent, Inc., a provider
of e-services for Fortune 1000 companies. In this article, Golden and
Scaiano examine how managers can prepare for ERP implementations. After
considering your business processes, business requirements, and vision for
your organization's future, you're ready to look at the external factors
that will influence your ERP software choice. Part two of this series will
provide pointers on how to evaluate the software vendors that will compete
for your business. |
Business process evaluation
Begin by evaluating the way
your organization does business and determining what needs to be changed. This
exercise is commonly called business process assessment.
Remember that
all ERP solutions are designed not only to automate what you do but also to
change the way you do it. Assessing your processes prepares your organization to
use technology and helps streamline procedures.
The most successful
companies assess their processes so that they can perform business process
redesign work before, during, and after an ERP implementation or
upgrade.
Look for inefficiencies that can be streamlined, as well as
redundant processes that can be eliminated. For example, is the same information
stored in more than one database? Do employees in different departments perform
the same calculations?
Also, be on the lookout for tasks and activities
that aren't aligned with the overall objectives of your organization or job
function. These might be tasks that employees do because they've "always done
things this way." Most likely, there's an opportunity for
improvement.
You may be able to stop performing nonvalue-added tasks,
consolidate information into a single database, institute a data-sharing plan
among departments, eliminate shadow systems, consolidate similar processes or
forms, etc.
Is customization
necessary?
The new processes you design should help you better
leverage the technology you're about to purchase. Though it may seem wise to
modify software to fit the way you currently work, it's often
not.
Today's software packages are extremely powerful, yet customers
often only use a very small percentage of the products' overall capabilities,
often because their existing processes don't support some of the software's most
beneficial features. Therefore, it's generally easier—and much cheaper in the
long run—to rethink your processes prior to implementation.
We once had a
client that undertook a costly customization to automate its processes on its
ERP system—only to learn that the "plain-vanilla" version of the software
performed certain functions much better.
A process assessment will
benefit your project in several ways:
- It will prevent you from migrating outdated processes to your new system.
Since you're implementing ERP to make your company more efficient, it doesn't
make sense to continue using processes that are inherently inefficient.
- Studies consistently show that the companies that incorporate business
process redesign into their ERP strategies realize a much higher ROI than
those that don't.
- By eliminating the duplication of efforts by your staff, you may be able
to reduce your operating budget significantly or free up your staff to
implement the continuous process improvements you've identified.
- Understanding the streamlined processes you plan to implement will help
you gather the right requirements for your new system—the second phase of
choosing an ERP application.
Requirements gathering
Make a list of the functions the
new system will be required to perform. Begin by asking those who will use it.
Don't just talk to senior management: Interview end users at all levels about
what they need to do their jobs.
For example, an accounts payable
department may need the ability to print 1099 forms at the end of the year or
accommodate multiple payment addresses for the same vendor. Each of these
functions represents a separate requirement for your new system.
After
you finish this information-gathering process, you'll have a long list of
requirements. To organize them, develop a summary of your findings and identify
common themes and concerns.
Once you differentiate users' wish lists from
their true business needs, you may find yourself with up to 50 requirements for
each functional area. The system that you ultimately choose should be able to
handle all of them. Refer to this final list as you write a request for proposal
(RFP) that you'll ultimately send to software vendors.
Creating a vision
While it's impossible to predict what
technology will be like in the future, it is imperative that you create an idea
of how you want your system to work 10 years from now. Base your vision on what
you'd be able to do in a perfect world.
For example, "Ideally, we
wouldn't have to fill out paper forms for the HR department. Instead, end users
would submit information online via our company's portal." This scenario, though
unfeasible today, represents your vision for the future.
Each new
technology or process improvement you implement should be a step toward reaching
that goal. If your vision includes eliminating paper forms in favor of online
self-service, don't purchase scanning technology enabling you to upload forms to
your computer system.
Although you may realize an incremental gain in
productivity, the investment represents a short-term improvement that doesn't
help you reach your long-term goal. Instead, invest in process changes and
technologies that enable you to create and access new forms directly via the
Web.
If you don't take the time to consider what you want for the future,
you run the risk of selecting an ERP system based only on what you do
today—forever restricting you to the limitations of your current environment and
of today's technology. Without a blueprint for the future, many organizations
lose the motivation to change the inefficiencies that led them to consider an
ERP package in the first place. Creating a vision focuses your organization by
enabling everyone to keep an eye toward the future—ensuring the project's
long-term success.
Adam Golden is director of e-engineering and Dawn Scaiano is
director of software evaluations for Acuent, Inc., a provider of e-services for Fortune 1000
companies.
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