Significance of ERP Implementation
Companies have to unmistakably know what enterprise resource is planning before thinking of implementing them. The catch word of ERP implementation is speed.
The quicker it is realized the quicker and better are the advantages and delivery in terms of results. This in the early hours procedure has one more grasp. The returns are sought at a shorter period. This deviation from the conventional practice has become the order of the day as far as many companies are concerned. Previously Business process reengineering played an essential role with respect to implementation. It is significant to distinguish the components of Enterprise resource planning. Merely defining enterprise resource planning will not help in this.
This obviously cemented way to progress of gaps between the definite results and the one derived during the process of foreseeing. Tuning ERP as per the whims and fancies of the practices followed in the company became an everyday affair. This led to slogging and dragging beyond the time limits permitted. It was financially pinching and played confusion in the customer's confidence. It is also essential to know that sheer ERP planning does not promise the profit of ERP. It has to be implemented as planned after understanding the components of enterprise resource planning.
In spite of having improved the implementation issues what remains still and unfettered is the way in which companies go ahead with ERP implementation. They do it for the heck of it and without following systematic procedures. In fact they don't even test the desirability of going into ERP. Some issues that an organization has to address after defining enterprise resource planning are
*Popular information systems
*Likelihood of fluctuations in the choice of technology
*The ability of market players to stay in tune with it
*The ways and means to implement a business applications like ERP
*To benefit from the same so as to gain a competitive edge
*Their usage and services
*The necessity for innovating software applications
If an organization is capable to answer these questions without any uncertainty and validate the results then it can be said that it has a path or up focus in taking ERP. The questions mentioned above are fundamental and will even fix on the business model of the company. ERP implementation is essential in the entire procedure of ERP. They can take place only if one understands "What is enterprise resource Planning" and defining enterprise resource planning in their organization.
It is essential to have an overview of the current approach.
The current approach is claimed to be relatively successful.
The current approach more popularly referred to as "baan" has two underlying principles.
The idea which concentrates on molding the business
This category is prominent when the organizational unit calls for a radical restructing process by all means. This process will be carried in all aspects of the business .Some of them include strategic manouvere, operation of trade and the circumstances that call for change and adaptability. Defining enterprise resource planning in context to the concerned organization will help to decide on this issue.
The plan which lays more emphasis on technical parameters.
Here business takes the back seat. The thrust lies on technical dimensions. This does not ignore the commercial viability as such but they occupy seat only in the due course of time more so when operations are triggered in full stream and not at the initial stage itself. The advantage with this type is that it does not call for an immediate modification of the business structure. However it is essential to know the components of enterprise resource planning.
What are the different methods in implementing ERP?
ERP implementation support includes all the services of the vendor. Companies spend a lot of time in discussing about the need to go for ERP. They make all sorts of assessments and bring the necessary resources to work on ERP. They even carry the
exercises suggested in restructuring. When the stage is all set to take ERP the next million dollar question that comes to them is the appropriate method of implementation due to the risk for ERP implementation.
Some popular methods for implementation are as follows:
Joint ventures with the Respective Industry
The company need not necessarily implement ERP all on its own. They can as well share it with leading players in the same industry. This will ensure that the risks will not be heavy in the case of loss. This practice is assuming greater significance in the current scenario. The sharing allows them to have an interface with the systems on the basis of a common platform. This is catching up in the market with the only trouble being reluctance of competitive firms to come together on a mutual agreement for fear of losing business tactics. It is also seen as ERP implementation problem solution.
Though the companies are at liberty to create security for their respective information there will not be any protection for the (pool of) records in the common database. However this has helped largely in many aspects. For e.g. the medical history of a patient brought in an emergency condition can be immediately accessed though ERP. This particular fact has itself saved many lives. On the contrary they would have to go through the rigorous process of finding the patient's identity and the steps aftermath which brings down the chances of the patient's survival are very minimal, in the absence of ERP. This is one of ERP implementation support. Perhaps there are many risks for ERP implementation.
Doing it all alone
This is in fact one of the primitive methods and is no doubt followed till date. This method takes a lot of risks in this method. But if they are calculated properly then the regime would be inscribed as a golden period in the company's history. The simple formula behind this phenomenon is that the company should go for it subject to its financial potential, requirements, technical acumen management policy and similar facts. All these will help them to arrive at ERP implementation problem solution.
It has always been said that ERP products and services are purely based on the needs and resources of the company. This is not a risk for ERP implementation. Hence the companies can choose to go for a full fledged ERP system and implement it throught the organization and thereby interlink the whole process and the people concerned. Otherwise they may prefer to go for an ERP system that performs a particular function of the company. This is an important step in choosing the appropriate ERP software but at the same time it also adds more value to the implementation process. It is also an important ERP problem solution.
ERP Implementation Guideline
Research on enterprise resource planning have shown that the flaws in ERP implementation have resulted in the vast majority of companies failing to unleash the benefits of ERP softwares.
This has led to lot of problems right from litigations to misinterpretations in business media. The vendor is always taken aback because the entire community blames him and the products. Enterprise resource planning phases are very important in this regard.
Probable reasons behind Failure
The actual problems lie in choosing the right software for your company. If this is either taken for granted or done hastily then the chances of ERP Success are rare. Some of the reason for failure could be exorbitant costs, inadequate training, longer time, and failure of strategy and the lack of attitudinal change on the part of employees to accept and manage change. They have to analyze "What companies use enterprise resource planning?"
* Very few companies succeed in the first instance after implementing ERP.ERP is not a fortune but a technology that delivers results only after effective execution of the laid down procedures. Therefore to merely bank on it will not suffice to obtain any results. What is more important is the implementation of the necessary changes in the organization so as to combat ERP.
* ERP is not an answer to the errors in business plans and tactics. In fact ERP consultants are reluctant to attend to it because they don't want it to disturb the purpose of ERP. It should therefore be understood that ERP is an I.T. tool that assists and facilitates the business process by being a part of it. On the contrary it is misunderstood that ERP can rejuvenate the business. The answer to the popular question "What companies use enterprise resource planning?" will help in clearing this trouble.
* ERP gap analysis and business process reengineering should be performed properly. This will ensure that other steps are followed systematically and in accordance to the company's need. They are otherwise referred as enterprise resource planning phases.
* IT facilities in the organization should be at par with market standards and international reputation. This will enable the operation people to constantly modify and update as and when it is necessary in order to stay in tune with the competition. Research on enterprise resource planning will reveal this.
* The process of ERP implementation should be carried on by a team of competent personnel so as to ensure perfection, accountability and transparency.
ERP should become a part of the daily routine. If that does not happen then the company cannot expect any fruitful results inspite of having followed the above mentioned steps meticulously inorder to ensure the successful implementation of ERP and no amount of successful planning of enterprise resource planning phases will help in this regard.
There is another important issue that needs to be addressed in this regard. Even after successfully implementing and setting ERP right for action the trick lies in combining it with the business process. The restructuring should also address issues like finding solutions for the current business problems. It should not be done with an illusion that ERP will take care of everything. Unless these fundamental problems are solved the functioning of ERP will do very little to help connectivity and facilitation in business. A choice is to be made from ERP implementation models after knowing "What companies use enterprise resource planning?"
An organization needs to answer the following questions while thinking of taking up ERP.
* Perception of the business problems
* The visualization of solving them.
* How is ERP going to solve the same and how worth is it and how effective are the measures taken to implement it.
* How and who will coordinate the operation of ERP and is it justified in terms of costs, time taken and efforts?
* What is the accountability and transparency of ERP operations and how far it will affect issues like piracy, IPR and their impact on the organizations performance and image and the possible measures to curb any unnecessary elements?
If an organization follows all the abovementioned steps it will definitely result in successful ERP implementation as it has been witnessed in the research on enterprise resource planning phases.
ERP Implementation Life Cycle
The process of ERP implementation is referred as d as "ERP Implementation Life Cycle". The following are the steps involved in completing the lifecycle.
Shortlist on the basis of observation
Selecting an ERP package for the company can nevertheless be compared with the process of "Selecting the right Person for the Right Job". This exercise will involve choosing few applications suitable for the company from the whole many.
Assessing the chosen packages
A team of Experts with specialized knowledge in their respective field will be asked to make the study on the basis of various parameters. Each expert will not only test and certify if the package is apt for the range of application in their field but also confirm the level of coordination that the software will help to achieve in working with other departments. In simple terms they will verify if the synergy of the various departments due to the advent of ERP will lead to an increased output. A choice is to be made from ERP implementation models.
Preparing for the venture
This stage is aimed at defining the implementation of ERP in all measures. It will lay down the stipulations and criterias to be met. A team of officers will take care of this, who will report to the person of the highest hierarchy in the organization.
This stage helps the company to identify the gaps that has to be bridged, so that the companys practice becomes akin to ERP environment. This has been reported as an expensive procedure but it is inevitable. The conglomerate will decide to restructure the business or make any other alterations as suggested by GAP analysis inorder to make ERP user friendly. Click here for a detailed study on GAP analysis. A choice is to be made from ERP implementation models.
Business process reengineering
Changes in employee rolls, business process and technical details find place in this phase of restructuring most popularly refered as business process engineering. For more details on BPR click here.
Designing the System
This step requires lot of meticulous planning and deliberate action. This step helps to decide and conclude the areas where restructing have to be carried on. A choice is to be made from ERP implementation models.
This is regarded as a very important step in ERP implementation. The employees in the company are trained to face crisis and make minor corrections as well because the company can neither be at liberty nor afford the bounty to avail the services of an ERP vendor at all times. For more details on ERP training click here.
This stage observes and tests the authenticity of the use. The system is subjected to the wildest tests possible so that it ensures proper usage and justifies the costs incurred. This is seen as a test for ERP implementation.
The real test
At this stage the replacement takes place viz the new mechanism of operation and administration takes over the older one.
Preparing the employees to use ERP
The employees in the organization will be taught to make use of the system in the day to day and regular basis so as to make sure that it becomes a part of the system in the organization.
The process of implementation will find meaning only when there is regular follow up and proper instruction flow thereafter and through the lifetime of ERP. This will include all efforts and steps taken to update and attain better benefits once the system is implemented. Hence an organization has to perform ERP implementation safely and correctly.
Errors in ERP implementation
ERP implementation failure is a major concern for companies. ERP implementation needs to be done without allowing any scope for limitations and mistakes. If it is not done perfectly then the success of ERP system will remain a question mark.
The first and foremost factor that discourages ERP in an organization is the exorbitant costs and investment. The second one is the drafting of an ERP implementation plan to ensure ERP implementation success.
Some more issues that arise during and after the course of ERP implementation is discussed below:
Enhancement of ERP'S functions
Erg's scope gets wider as it is implemented in an organization. There is a call for including many tasks under the purview. This dilutes the ERP Existing system after modifying it a couple of times. Repeated change in configurations and systems will only add to the confusions. When the functions are operated by a machine it becomes increasingly difficult to make the necessary changes. These troubles arise when they are not foreseen and addressed in the implementation stage. They have to be given a place in ERP implementation plan.
Organizational reaction to change
Changes do happen quickly and immediately in the organization after ERP is implemented. But if there is no proper understanding of the process or mishandling of information, it will result in questioning the ERP process. If updating is not done in the machine it will only affect the business process and create unnecessary confusions. The changes don't happen all on a sudden in an organization and expecting it immediately will only cause needless disappointments. In spite of all this expecting every member in the organization to respond proactively will not happen. If that happens the chances of ERP implementation success are great.
Inflating resources for ERP implementation
The implementation time and money always exceeds the promises and stipulated deadline and amount. This makes companies to lose faith on ERP and ERP vendors. They think that ERP vendors overplay on the costs and time required but it is not so. In fact they are aware of it in the very beginning stage itself but have a different reason for concealing. They don't disclose it in the beginning because it would look like exaggerating. In fact no one would like to lose a prospective business and vendors are equally aware of the fact that "Truths are always bitter"! However many people mistake this to be the cause for ERP implementation failure.
Organizations non adherence to the stated principles
Organizations largely experience a wide gap between practices and preaching .In fact this has a negative effect on the entire business scenario itself. The voracity and impact of loss could be greater and more devastating when this turns out to be true even in the case of ERP. Since ERP successful functioning is purely based on following the laid down procedures the lag could throw a serious challenge on ERP'S potential right from the stage of its implementation.
Problem of Transformation due to ERP
Employees find it hard to digest the transformations that place in an organization all on a sudden due to ERP implementation. In fact employees exhibit positive signs as everything goes right in the first place. But as one progresses he finds difficult to work as it gets more complex. The initial interest and expectation turns into apprehensiveness in due course of time. There is another category of people who did not encourage ERP right from the conceptualization stage. Their state of mind during these circumstances deserves no special mention.
Successful ERP Implementation the First Time
Management is getting its hoped-for results from ERP less often than not, and this begs an explanation for ERP’s often-poor performance. What many manufacturers fail to realize is that extensive supply chain improvement requires that management begin to redefine its business in terms of strategic opportunities. The purpose of ERP technology is to support the business processes that support the company’s strategic opportunities. There are some basic tenets of ERP that should guide management’s actions and decisions.
1. There is no magic in ERP software. ERP’s benefits are a direct result of effective preparation and implementation,
and appropriate use. This seems obvious, but nine out of 10 companies don’t get it right the first time around. Expecting a quick fix, silver-bullet solution is a dangerous mindset.
2. No amount of advanced information technology can offset the problem of a flawed business strategy and poorly performing business processes. This area, in particular, is something that ERP software implementers may not fully address because it can slow system deployment.
3. Define a business strategy that will give you a competitive advantage or, at the very least, make you competitively equal. Then, analyze your current business processes and develop your objectives. Once this step is done, the following steps for preparation, ERP software selection and implementation can support your strategic and process objectives better.
4. Acquire flexible ERP information technology that can accommodate rapidly changing business conditions. The high-velocity flow of information needed to support action up and down the supply chain is a major step forward for most manufacturers. It will be mandatory in the future just to compete, much less stay ahead of, the competition.
5. Have the implementation led by a senior executive who has the authority to make changes happen and happen quickly Make sure there is a sense of urgency and true accountability for completing preparation and implementation activities on time. Moving away from functional silos and creating effective cross-functional processes that are truly integrated via an ERP system is not an easy task. When ERP is not fully integrated into day-to-day business operations, however, it is not likely to be very beneficial. If enterprise integration or more advanced supply chain management strategies are to have any chance of complete success it will be due, to a large extent, to the removal of traditional cross-functional barriers. These silos comprise the organizational boundaries where information flow, and often cooperation, stop. You must ask, “How will we use the ERP system?” Some not-so-obvious issues will surface as you try to answer that question. For example, will you combine demand-based flow and lean manufacturing techniques, which will negate the need for some traditional ERP functionality? Focus on your business strategy and not just software selection and implementation. Many problems are reinforced by contradictory objectives and performance measures that actually create inconsistent value and belief systems, to the company’s detriment. No amount of information technology will correct these problems. Management must aggressively remove them once and for all through business process redesign.
Assess your skills and prepare
Management too often plunges into ERP less than fully informed, with limited knowledge of what to expect. Often, there is a misconception that the skills necessary to select and implement ERP already exist in the organization. That may be partly true, but few organizations have the skills they need to implement ERP effectively within a reasonable timeframe. Consultants may be able to fill some of the skills gap, but given the high risk involved, it’s important to make sure they’re genuinely qualified. Another commonly overlooked area is the issue of information technology change. Often, the IT infrastructure changes required to implement a new ERP system are not given the high priority these technology issues deserve. Certainly, implementing ERP should be driven by business issues, not technology. But it is IT’s understanding and skills that support the technology that improves business processes. Ignoring the prepartion and education new information technology requires is asking for trouble. Further, IT personnel often must make the technology transition quickly. If the technology and infrastructure transition are not done well, the project, at the very least, will be delayed. One of the biggest problems with implementing ERP is misunderstanding what ERP is all about and underestimating what it takes to implement it effectively. Senior operating management cannot relegate critical decisions to personnel who may not have the background or the temperament for this type of decision-making. Companies need a well thought-out, comprehensive process to help plan, guide and control the entire ERP implementation effort. Starting an implementation with an undocumented, skimpy or untailored implementation methodology is an open invitation to disaster or, best case, a long, drawn-out implementation. Everyone from the boardroom to the stockroom needs to understand his role and responsibilities for implementation. Implementation leaders should encourage dialogue to get people focused on business objectives and early identification and correction of any problems. Who will be accountable for results, and when, must be an integral part of this understanding. An implementation that’s going astray becomes recognizable when repeated schedule slippages surface. As time moves on, the missed schedule problems start affecting implementation quality as the almost-inevitable response is to start taking shortcuts and bypassing critical business issues. The slam-and-cram method of an ERP software transplant is now in high gear.
Software selection is not easy
Before the nitty-gritty of software selection begins, it is a good idea for management to know how current strategy, processes and supporting systems compare to what they could be with the new system. In fact, this discovery process should be performed every couple of years so management will know where the company is, compared to a previous stake in the ground. This is a basis from which to evaluate opportunities. Many people avoid examining strategy and business processes and jump right into looking at software functions and features. Software vendors often encourage this because they want to move you along quickly in the sales cycle and get you closer to licensing their product. Be particularly wary of so-called proof-ofconcept offers wherein the vendor implements its software at your site and offers various guarantees. This practice adds confusion to the software selection process, especially for the uninitiated. Obviously, ERP software vendors are in the business of selling their products (just as your company is) and they have their very best people work the sales cycle to guide your organization to their obvious best solution for all of your problems. Start defining software needs by examining current processes that govern your flow of information and material throughout the order-to-delivery process and ultimately the entire supply chain. There is a common tendency to shortcut this very important activity, but you will pay—sometimes dearly—in time and money for avoiding this essential step. Evaluating and selecting ERP software is a complex task. It should be a fact-based process that brings you to a point where you can make a comfortable, well-informed decision. The process requires an objective and comprehensive methodology to guide you through the selection process. This does not mean you should use voluminous predetermined questionnaires that do not recognize your specific needs. Rather, it means your evaluation and selection process should be based on your own strategy and business process model. A comprehensive methodology to plan, guide and control the effort has the potential for dramatic savings, not to mention the most important benefit: avoiding big mistakes. At some companies, management is so preoccupied with other, seemingly more important activities that ERP is delegated completely to the IT department. The idea that this is strictly a technology project because software is involved is wrong and, in fact, is one of the leading causes of ERP failure. The IT function is not well-positioned to evaluate the business implications of various tradeoffs or to determine their impact on day-to-day operating results versus strategic intent. Certainly, this shouldn’t be the case as operating decisions belong with senior operating management and not IT. Once an ERP system has been selected, it’s rare for a company to cut its losses and scrap the project until many years have passed. The political fallout is often the biggest obstacle. No one wants to tell upper management that an ERP investment of millions of dollars was a mistake and the process should be restarted. When a company lives for many years with a poor ERP decision and/or implementation, however, the costs continue to escalate and the benefits do not come. The cost of lost opportunities could be massive. The ERP software search, evaluation and selection process must be done right to minimize this risk. The clean-sheet-of-paper approach, although alluring in concept, has been a big bust for many companies. The clean-sheet business process redesign and the subsequent ERP system configuration is complex, costly and timeconsuming. Consequently, most companies have come to accept the compromises and trade-offs that industryspecific, best-practice templates require. Preconfigured templates allow faster system deployment and faster benefits. Processes can be refined at a later date. This is not to say that it is okay to just slam and cram predetermined processes into place. On the contrary, selected template processes must still be verified for appropriateness, at least for the near-term, before going forward. The demand for rapid ERP implementation is high. This was the primary driver for the development of off-the-shelf templates designed to speed up and simplify the software personalization process. But templates, by their very nature, incorporate specific best practices that support cross-functional business processes. On the surface this may sound like nirvana, but very few organizations take the time to rethink how they should and could run their businesses. By taking the easy way out, these companies end up with generic, albeit industry-specific, functionality.
Plan to succeed
Successfully implementing ERP the first time requires a structured methodology that is strategy-, peopleand process-focused. This is the only way to manage the risk effectively. A good methodology covers all the bases, but when the unexpected pops up, as it usually does, you will be prepared to handle these exceptions without severe negative consequences. One very common mistake is not having your employees prepared to use the The consequence here can range all the way to total failure, but they are avoidable. Evaluate your business strategy and ERP plan before you commit to software acquisition and installation. Doing it right the first time is the only cost-effective way to go. Many people out there wish they had paused to evaluate their direction. The following questions do not cover every possible contingency, but should be helpful to stimulate thought and discussion. • How do we want to run our business?
• What business problems need to be solved?
• Do we know and understand our priorities?
• Do we fully understand our as-is condition versus our could-be/should be processes?
• Have we carefully defined an action plan for pre-implementation preparation activities?
• What tasks will be accomplished and when?
• What are the missing links in our current system and our software of choice?
• What are the real costs, benefits and timetable going to be?
• Do we have an executive-level ERP champion to provide the necessary link to top management?
• Who will implement ERP and make it work?
ERP and supply chain management systems implementations are,in fact, projects without an end. After all, the supply chain is, to a large extent, the very life blood of a manufacturing company. For the well-prepared, new supply chain management systems based on ERP have become significant competitive differentiators. Implementing ERP can become a mind-altering experience for those involved. Following a sound methodology will greatly increase your likelihood of success the first time. Yet, it will not guarantee your success. Only you can do that.
ERP vendor has to address all these issues in order to ensure that there is ERP implementation success. If everything goes as per ERP implementation plan then there are no chances of ERP implementation failure.
(Source: www.erpwire.com and idii.com)