The time for your business to implement an enterprise resource planning solution has finally arrived. You’ve grown to the point where you require centralized software that connects your supply chain with accounting and human resources. You’re hoping to improve communication between departments and the efficiency behind your company’s processes.
But bringing an ERP platform into the mix isn’t something you should rush into or take lightly. You need any company-wide software that requires a large investment to be right for your business. Ensuring that the selection, deployment, and ongoing use are successful takes careful analysis, employee involvement, and some degree of customization.
You’ll also have to account for future growth and whether the ERP platform you choose is flexible enough. Plus, there are the initial, recurring, and long-term costs to think about. Your business is not alone in wanting to ease into an ERP solution and needing to determine what to consider beforehand. Here are four factors you should pay attention to.
1. Examine Your Existing Software
Your company already has several software packages and tools employees are accustomed to using. An ERP solution isn’t going to necessarily replace those tools, but it should consolidate and bring them together. Maybe your warehouse facility uses a program to track inventory, but it doesn’t sync with ordering activities in your customer relationship management system.
With ERP integration options, information between your CRM and inventory applications will flow back and forth. Warehouse, customer service, and sales teams will be able to access the same data, knowing when supply is in jeopardy. Warehouse and manufacturing staff can also become better aware of the demand, adjusting supply chain activities when necessary.
A crucial aspect of choosing an appropriate ERP is knowing which existing software applications need to integrate. Some ERP software allows you to integrate various applications through APIs. You’ll want to know whether you can combine your existing software with a centralized platform. Find out if you’ll have to replace any of your current applications or if you must keep them.
2. Look at Your Current Business Processes
Sometimes you can decide whether you need to retire an existing application by looking at how different departments operate. You wouldn’t be considering ERP software if you didn’t want to realize improvements in your processes. Start by seeking opportunities to increase efficiency, productivity, and/or collaboration.
Is there more than one functional area or department that’s underperforming or experiencing roadblocks? Or are the company’s priorities focused on improving how customers and vendors are billed? Outline the business processes you want an ERP to help you modify.
If more than one department is involved, examine the processes behind workflows, handoffs, and cross-communications. You may require an ERP solution to help create them. The more enhancements you’re looking to make, the more comprehensive a solution you’ll need. Larger shifts in how multiple departments handle operational activities will also require a broad-ranging platform.
3. Evaluate Different ERP Systems
ERP software usually comes in one of three forms: on-premise, cloud-based, or hybrid. An on-premise solution is software your company installs and operates from onsite servers. Your IT team is responsible for making sure there’s enough server space and for maintaining the software. Your company controls and assumes responsibility for upgrading and troubleshooting the software. IT will also have to manage access rights and safeguard any sensitive data.
Cloud-based ERP solutions are hosted remotely. A vendor runs and maintains the software, typically making it available to your organization on a subscription basis. Employees access the solution and its resources through an internet connection instead of from your local network. Your IT team may still be able to manage permissions and control which employees can use the software. However, you won’t need to find or purchase server equipment for the software or maintain it.
Hybrid systems rely on a combination of on-premise and cloud-based features. You might keep some aspects of an ERP system onsite for larger departments or critical business functions. For example, you can choose to keep applications your executive staff uses on a local server. Other applications that smaller departments or business units rely on can be hosted in the cloud. These departments and units may include teams that work remotely or in satellite offices.
4. Incorporate Training Costs Into Your Budget
Organizations fail at their initial attempts to implement an ERP system approximately 50% of the time. In addition, bringing these systems into the mix usually costs up to four times more than businesses originally anticipated. Implementation failures can happen for numerous reasons, but one of them is a lack of training.
When employees aren’t given the tools to understand the full capabilities of an ERP system, they can’t use them. Your staff must grasp why your business is implementing the solution and how it can improve their jobs. Employees also need to understand what processes will change with the ERP system. Don’t just train them on how to log in and navigate through the software’s main functions.
Instead, ensure your team sees how the different pieces of the system fit together. Talk to your ERP software vendor to see what kind of training resources are available. Your vendor may provide a combination of self-paced online training modules and in-person, structured class time.
Employees will also require more than a series of training sessions before they use the software. The need for continuous and supplementary sessions will arise as the software updates and your business requirements evolve. Circle back with the team periodically to see which functions they need to understand better. Also, investigate whether certain aspects of the platform are creating roadblocks and whether these are due to a lack of knowledge.
Stepping up to an ERP system can feel like an achievement. It means your business has grown to the point where it’s no longer practical to rely on separate processes. But an ERP solution can’t be 100% responsible for bringing things together and making your company more efficient.
ERP platforms are meant to support improvements in communication, collaboration, and the technical tools employees use. Choosing and implementing the best solution for your business starts with analyzing your current software and processes. Pulling off a successful integration also means considering what system will best fit your needs and ensuring employees understand its capabilities.