Does Your Company Need An ERP System?

2/8/2013 10:31:38 AM

Yes, but the depth depends on your business

ERP (enterprise resource planning) systems are in-depth solutions that cover multiple facets in your company and are designed to simplify business processes and ease the burden on your workforce. "ERP is a term used to de­scribe the software a company uses to run its business on," says China Martens, an analyst with Forrester Re­search (www.forrester.com) in the area of application development and delivery. "It's a combination of accounting and finance, human resources manage­ment, order management, procurement, project management, and vertical busi­ness processes specific to the industry or industries the company operates in."

ERP – Enterprise Resource Planning

ERP – Enterprise Resource Planning

But having a definition for ERP doesn't necessarily make its importance abundantly clear. Yes, it's a large part of your business, but it's difficult to know what constitutes an ERP system and how you should go about imple­menting or upgrading one. We'll show you some of the benefits of utilizing ERP and help you determine whether you're company will benefit from im­plementing a new system.

You may already have it

If you're asking yourself whether an ERP is necessary for your business, George Goodall, senior research analyst with Info-Tech Research Group (www.infotech.com), has a simple answer: "ERP is essential for companies of all sizes." But you may also be surprised to know that your company more than likely already has a functioning ERP system, even if that isn't what you call it. "Any company or organization that has to manage financials and assets within the enterprise has some sort of ERP system," says Goodall. "The real issue that people have is that in many cases the systems that people use might be underpowered or lack features."

ERP is essential for companies of all sizes

ERP is essential for companies of all sizes

As Martens pointed out, an ERP sys­tem is essentially the backbone of all of your business processes. Whether you are balancing your books for accounting purposes, keeping track of employee information for HR purposes, or trying to make sure the production floor keeps its schedule, you're using some form of an ERP system. In fact, simple account­ing programs that many small com­panies use to balance their books are forms of ERP systems. The key is to recognize the benefits of having a dedicated ERP system that goes beyond simple functionality and becomes a manage­ment center for your entire operation.

The benefits of general ERP systems

ERP systems are designed to simplify process management for companies and make it easier to operate the businesses themselves. They can often remove the need for manual number crunching and provide the information necessary to make decisions as they happen rather than well after the fact. "In general, a key benefit is the ability with ERP to au­tomate more tasks, workflows, and en­tire business processes so a company is less reliant on manual data entry," says Martens. "The goal is to end up with more timely and accurate data within the ERP system, which users can then run reports on to gain insight into the company's current operations and to help plan for the future."

In essence, the biggest benefit of an ERP system is that it will improve your company's stability now and in the years to come. It will improve your organization's overall efficiency, mini­mize data entry to free up all-important data man hours for other pressing tasks, and "reduce the amount of time it takes to close books and complete each ac­counting cycle," adds Martens. A well-established ERP system will take care of simple processes and specialized tasks.

Getting specific

Because companies of all sizes should have some form of ERP in place, it stands to reason that those ERP systems should also be customizable enough to meet the needs of various industries. "There are packages built for every in­dustry that you can imagine, including some shockingly specialized ones," says Goodall. If you have highly specialized business processes that aren't present in other industries, communicate with your vendor and implementation partner to ensure those features are present.

Pick the best possible implementation partner

If you decide to implement a brand new ERP system, the most important decision you'll make is who you bring on as your implementation consultant. According to Goodall, too often compa­nies will get hung up on who the vendor is or how sophisticated the solution is without putting enough emphasis on their implementation partner. From his findings, most companies cite problems with a consultant more often than they complain about the product itself.

"When we do post hoc analysis and ask people how their implementation went, they very rarely say that we made the wrong technology choice," says Goodall. "They say that they had problems with their integration partner and the implementation process. They didn't engage their business leadership enough, they didn't prepare for the cut-­over from implementation to operation well enough, or they didn't prepare their end users. All three of those really have to be done internally with the help of a consultant."

Goodall recommends that you choose an implementation consultant at the same time you select your ERP solution to ensure that individual is ex­perienced and capable of installing your ERP system correctly. Martens adds that "a company needs to be very engaged throughout the entire process, partic­ularly if it is heavily reliant on third-party implementers and integrators." The ERP system you select is impor­tant, but if the solution isn't installed, implemented, and integrated with the upmost care, you could run into huge problems in the future.

Key points

Recognize that you may already have an ERP system in place, but you need to make sure that it meets your company's needs.

ERP systems can help automate tasks, ease the burden on your workforce, and help you better manage your company.

Regardless of your industry, you can find an ERP solution specialized enough to complete unique tasks.

Make sure you select the best possible consultant. Even if you choose a good ERP solution, it won't give you maximum benefits without correct implementation.

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