ERP (Enterprise Resource Planning) systems can be a big investment, but they can also be of great help in managing enterprise data. As a business management tool, ERP software helps organizations manage accounting, supply chain, order management, production, human resources, sales and customer service functions, providing the ability to automate and integrate most processes across the organization.
Here are a few questions to ask yourself when trying to determine whether your company is ready for an ERP system:
1. Do I need to replace an existing legacy system? Legacy systems are difficult to integrate with today’s web-based applications and are expensive to support and maintain. ERP systems provide shared information across the organization, which can be displayed in user friendly methods such as business dashboards to continuously monitor business performance.
2. Do I need to migrate from applications that were developed in-house? Many organizations have developed in-house applications using off-the-shelf technologies. These development applications can improve business processes, but they also create a significant drain on resources as they require continuous maintenance and upkeep, not to mention increased business risks. Furthermore, in-house applications can create data silos, which lead to duplication of data and activities across the organization.
3. Do I need to improve business processes? Business process improvements are major drivers for ERP initiatives. ERP systems allow organizations to use industry best practices and can offer a quick way to achieve process excellence based on rules and capabilities defined in such systems. For example, within the sales function, increased efficiency leads to the ability to provide lower quotes, reduce lead time and improve overall responsiveness to customer needs. In manufacturing, concurrent engineering means faster product design and production. In service, data on customer service history and parts under warranty is available to expedite customer problem resolution and show accurate charges.
4. Do I need to make better decisions, faster? The online, real-time operational data that ERP systems provide enables managers to make better decisions and improve responsiveness to customer needs. Project managers can enhance their efforts by being proactive with resource allocation decisions rather than an after-the-fact approach of project cost analysis. In the supply chain, orders to vendors and receipts are processed more accurately, resulting in reduced inventory levels, faster supply chain throughputs and reduced overall operational costs. In accounting and finance, properly selected and implemented ERP systems enable more accurate and timely processing of accounts payable and receivable transactions, resulting in improved cash flows, decreased financial-close cycles and better financial reporting practices.
5. Do I need to enable business growth? ERP systems enable standardization of business processes across various operating units, helping organizations to scale their operations through acquisitions or organic growth. Properly selected ERP systems will enable management to add users, locations and subsidiaries with ease and allow more uniform communications and reporting across various units.
ERP systems are a major investment for most organizations, requiring not only substantial financial resources, but also a significant level of change-management resources. However, a properly selected ERP system that is backed by senior management and supported by sufficient internal and external resources will enable the organization to establish a world-class operating platform, improve decision-making capabilities and provide a scalable growth platform.