ERP Information for Existing and Potential ERP Users

Enterprise Resource Planning (ERP) is a group of business management software that integrates the key business processes such as finance, sales, purchasing, inventory, manufacturing, etc. of enterprises, businesses, and organizations.

ERP enables seamless and efficient execution of business processes from orders to cash. It captures business transaction data for planning,  management analysis, and reporting. 

Enterprise Resource Planning (ERP) solutions comprise functional modules for key business processes and may vary for different industries.

All ERPs will at least consist of the following core modules:

• Finance and Accounting
• Sales and Marketing (Sometimes called Customer Relationship Management or CRM)
• Purchasing
• Inventory Management

More advanced ERPs may have advanced modules  to meet the needs of the specific industry:

• Manufacturing
• Project Management
• Service Management
• Human Resource Management (HRM), etc

Some ERPs enable third parties to build add-on modules for niche markets and requirements.  Some of these examples are:

• Dealership Management
• Mining
• Retail Management, etc

The following characteristics should be available in Enterprise Resource Planning (ERP) solutions:

• Integrated
• • ERP should integrate core Business Processes such as sales, purchasing, inventory/logistics, finance/accounting
  • It should make available advanced functionalities such as manufacturing, marketing, project, service management, HRM, and other industry-specific functionalities
• Extendable
  
  • ERP should have the ability to integrate with external systems such as E-Commerce Web Site, IoT System, Point of Sales (POS), Artificial Intelligent (AI), etc.
  • It should have the ability to allow third parties to build add-ons to enhance its core functionalities (POS, E-Commerce, Dealer Management System, etc)
• Configurable – An ERP should have the ability to change the design of key business flow without the need for tedious programming and coding
• Centralized Database in an ERP should be able to acts as a central depository of information for:
  • Management Reports
    • Pre-built reports with filtering functions
    • Built-in report design tool
    • Third-party report design tool
  • Business Intelligent (BI) and Analytics
    • Built-in information dashboard
    • Built-in BI tool
    • Third-party BI tool
• Programmable – An ERP should provide the use of programming code:
  • To alter part of the behavior of the core software to meet specific business needs
  • Build API to connect to other systems
  • Code management scheme and tool to manage the customized codes and their future version upgrade
• Upgradable – It must be able to carry out future version upgrades for its core software, configuration, add-ons, and customizations without the need for fresh implementation
• Scalable – A capable ERP must be able to handle the transaction volume of its intended projects

• Improve Decision Making – from timely availability of business information
• Reduce Processing Costs for Business Process Execution – from efficient execution and automation of integrated business processes.
• Inventory Optimization – from better information and planning
• Faster Customer Fulfillment – from integrated business processes
• Better Cash Flow – from faster order tracking, invoicing, payable tracking, optimized inventory, and shorter sales cycle.
• Reduce Errors – When functional areas are linked, users downstream can easily discover the errors and misses of the upper-stream users.  A linked system also offers better traceability of errors.

Companies and organizations should consider investing in ERP solutions when their business expanded to the following stage:

• Managing beyond the line-of-sight – Management is no longer able to personally track and control business operations effectively and efficiently
• When there is sufficient ROI to automate repetitive business processes resulting from the increased transaction volume

• Treating ERP Projects as IT Projects

ERP projects should be treated as Business Process projects rather than  IT projects.  It should preferably lead by a senior manager who understands the business processes and requirements rather than an IT person (Except in cases when the IT person has a deep understanding of business processes and management requirements)

• The ERP Systems should Replicate our Existing Business Processes

This misconception often leads to heavy customizations of the ERP solution that increase the risk and total-costs-of-ownership of the project.

Just like there is no one best car for everybody, there is no one best ERP.  Organizations and companies have different cultures, processes, resources, business life cycles, and management objectives.  Each ERP has different strengths and trade-offs when evaluated based on each organization’s situation.

The key to finding the best ERP is to focus on the most appropriate ERP that meets the expectations, resource constraints, budget, project timeline and mitigate against the strengths and trade-offs of the different ERP options.

Evaluating and selecting an Enterprise Resource Planning (ERP) solution is a lengthy and complex process that will take months.  There are many complex information and considerations to deal with but the key steps can be summarized as follows:

1. Form an Evaluation Committee that consists of key business stakeholders and decision-makers
2. Establish the objectives, system requirements, and project schedule
3. Research on the available ERP solutions and vendors
4. Shortlist ERPs for further evaluation
5. Invite the shortlisted ERP vendors for discussion, presentation, and demonstration
6. Clarification and thorough discussion with the preferred vendor including interviewing consultant and customer site visit
7. Negotiation and finalize the final vendor

You can read our articles on ERP Selection for more information.

Multiple types of knowledge are required for effective ERP evaluation and selection:

• Minimum Knowledge
  • Basic understanding of Finance and Accounting concepts
  • Strong focus on Business Process Optimization
  • Strong understanding of Information technologies and trade-offs
• Bonus Knowledge
  • Leadership quality in managing the complex evaluation process
  • Background knowledge of the ERP Industry and its operations
  • Understand the Management objectives and concerns
  • Experience in ERP evaluation and implementation

Learn more about how 1st ERP Consulting can help you evaluate the right ERP solution to optimize your business.

The terms ERP (Enterprise Resource Planning) consulting or ERP Consultants need to be differentiated between:

• Consultants who sell, market, implement, and support specific ERP solutions, and
• Third-party ERP consultants who are product-neutral and provide ERP consulting services to help end-user companies/organizations evaluate and implement the most appropriate ERP solution based on analyzing their requirements and readiness level

1st ERP consulting provides product-neutral ERP consulting services to help companies and organizations optimize their business through better ERP practices.

Learn more about how 1st ERP Consulting can help you optimize your business with the right ERP solution.

Yes, if:

• You do not have experienced internal expertise
• Your organization is sizeable and you expect the project to be complex
• You failed in your previous project

No, if:

• You have internal resources that have deep involvement in previous successful evaluations and implementation of ERP
• That you expect the project to be small and straightforward

Learn more about how 1st ERP Consulting can help you evaluate the right ERP solution to optimize your business.