There are several reasons why companies decide to implement new ERP application, but regardless the reason, it is important to thoroughly plan and prepare for the ERP implementation or upgrade. There are some important steps that must be taken both before and after the ERP application is applied to ensure its success. After the implementation, there are also some key factors to measure the return on investment (ROI) of the ERP implementation.
As stated earlier, there are several common reasons that drive companies to implement a new ERP application. One key reason is to support growth and increased operation as the company begin to grow. Another big reason to upgrade is if a company’s current ERP application has limited reporting capabilities and management tools. Lastly, many early-stage companies often run multiple disparage systems. By implementing a single compressive feature-rich ERP application they can reduce costs and increase functionality.
When looking for a new ERP application select a system produced by a reputable and stable developer to ensure reliability. The application should also be scalable so that it supports the needs of the company as it grows and expands in size and operations. It is important to select an application that will be supported in the future as well as support the company in the future.
When preparing for the implementation process be aware of the additional work that may be required. It can be helpful to hire temporary workers to support the daily operational responsibilities of the project team members so that they can instead focus on the tasks required for a successful implementation. This is a big step for a company and it is important to have all hands on deck during the entire process. After selecting the application be aware that the implementation can take anywhere from 45 days to six months depending on the complexity.
Once the implementation is complete, there are five main variables to examine when estimating the anticipated ROI: IT costs, productivity, visibility, risk, audit and compliance impacts.
IT costs: This is the most measurable factor involved. IT costs includes hardware costs, replacement costs, personnel costs, ongoing training costs, and software and subscription costs, all of which should be considered.
Desired Productivity Impacts: It is important to estimate the impact of better system support if there are specific areas the company is looking to improve.
Visibility Impacts: With the new system financial control should be gained through better information and more reliable data.
Audit and Compliance Impacts: The new ERP application should allow better controls and repeatable processes to reduce audit and oversight costs, which then increases ROI.
Risk Impact: Although this costs is the most difficult to estimate it is the most important. The company will need to consider how much risk is built into the current systems. Risks can include relying on people-based processes where the company is highly dependents on specific people or revenue leakage and unhappy customers.
At Tensoft, we understand that selecting an ERP application is a substantial investment both financially and in terms of time. Selecting an ERP application can be an overwhelming and complex process. With these tips we hope to simplify the decision making process as you choose the best ERP system for you and your company.
By Dan Berube, Controller, Tensoft Inc.