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6 Things to have in mind when implementing an ERP System

There is no doubt that implementing an ERP System has benefits. These benefits include increased productivity and better margins. An ERP system can also help your company get things in order and be able to easier identify the key operational risks it faces and find ways to manage them.

However, there is also no doubt that  implementing an ERP system is not the easiest of the things to do. It’s not just the scale and the size of the company that can increase the complexity of this exercise.  Just think about the things you expect an ERP system to be able to do. An ERP system is expected to help you monitor and manage your stock, record your transactions, build and assess budgets, monitor and evaluate your employees and so many other things. It’s therefore reasonable that implementing a system like this that does all these things could not be but a complex task.

The list that is below is not exhaustive. In fact, every case is expected to be different and probably require a different and unique approach. However, some points that should be considered in most cases are:

1. It will be helpful (and can actually save you money despite the cost) before considering implementing to talk to an expert. There are companies that specialize in ERP implementation and have a very sound knowledge and understanding of the ERP market and the products available. They can help you see the benefits and compare them with the costs. Performing a cost benefit analysis should be help you understand whether implementing an ERP system is worthwhile in the first place. An ERP system is supposed to help your company be more efficient and more profitable so assessing and quantifying the benefit from implementing an ERP system is vital.

2. Choosing the right product is also expected to be a hard decision to make. There are so many choices and so many very good products. The market appears to be segmented but the key players are not that many. In addition, you should look into products that are designed specifically for the industry your company operates in. Two examples are the ERP systems for manufacturing companies and the ERP system for companies that offer services instead of products. Manufacturing companies would be more interested in an ERP system that focuses on Inventory (Work in Progress), budgets and expenses while a company that sells services and not products will not have physical stock and will probably not have a particular interest in fixed assets modules either.

3. Bespoke vs off-the-shelf is another dilemma that is more applicable and valid for large companies. SMEs might not have the financial resources to choose a bespoke solution. However, there are pros and cons for both choices. The only thing that I think it’s worth mentioning here is one risk that is associated with a bespoke software. Ordering a bespoke ERP System has risks that are associated with the supplier. You should audit the supplier and evaluate (in depth) the level of support you will be getting and whether this supplier will be available to work with you to overcome any difficulties you will be facing.

4. The implementation of an ERP System is not just a task for the IT department. I am not saying that the IT department need not be involved. It’s just that they are waiting for you to set the expectations, guide them to install  and make the system functional. Installing an ERP system is one problem and integrating it with the rest of your systems is another. This is an area where an expert can be also helpful.

5. Data Migration is another significant risk that you should evaluate in depth. Think about the things that can go wrong and try to find solutions to overcome any potential difficulty. Things to consider include having backup of your data and having a contingency plan that involves being able to return to your previous system (for example) in order to be able to operate with minimal “downtime”.

6. Implementing an ERP system is only the first step. You should train your staff so that you can fully utilize the system you have at your disposal. Training might sound easy but consider the scenario where you have to train a lot of people in more than locations. It’s costly and might be also be difficult in practice.

As already mentioned above, this list is not exhaustive. ERP systems are fantastic tools that can help your company grow. There are also costs and risks that an ERP implementation has so analyze them and manage them in advance is highly recommended.

 

Filed in: Accounting, Blog, Entrepreneurship

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