ERP is an
acronym for "Enterprise Resource Planning". An ERP attempts to
integrate all departments and functions across a company onto a single computer
system that can serve all those different department's particular needs.
E: Enterprise is a huge business
Organisation.
R: Resources are Money, Material,
Man power, Machinery, and Methods
P: Planning for optimal Utilization
of resource for a huge business Organisation implementation
Enterprise resource planning software, or ERP, doesn’t live up to its
acronym. Forget about planning—it doesn’t do much of that—and forget
about resource, a throwaway term. But remember the enterprise part. This
is ERP’s true ambition. It attempts to integrate all departments and
functions across a company onto a single computer system that can serve
all those different departments’ particular needs.
That is a tall order, building a single software program that serves
the needs of people in finance as well as it does the people in human
resources and in the warehouse. Each of those departments typically has
its own computer system optimized for the particular ways that the
department does its work. But ERP combines them all together into a
single, integrated software program that runs off a single database so
that the various departments can more easily share information and
communicate with each other.
That integrated approach can have a tremendous payback if companies install the software correctly.
Take a customer order, for example. Typically, when a customer places
an order, that order begins a mostly paper-based journey from in-basket
to in-basket around the company, often being keyed and rekeyed into
different departments’ computer systems along the way. All that lounging
around in in-baskets causes delays and lost orders, and all the keying
into different computer systems invites errors. Meanwhile, no one in the
company truly knows what the status of the order is at any given point
because there is no way for the finance department, for example, to get
into the warehouse’s computer system to see whether the item has been
shipped. "You’ll have to call the warehouse" is the familiar refrain
heard by frustrated customers.
ERP vanquishes the old standalone computer systems in finance, HR,
manufacturing and the warehouse, and replaces them with a single unified
software program divided into software modules that roughly approximate
the old standalone systems. Finance, manufacturing and the warehouse
all still get their own software, except now the software is linked
together so that someone in finance can look into the warehouse software
to see if an order has been shipped. Most vendors’ ERP software is
flexible enough that you can install some modules without buying the
whole package. Many companies, for example, will just install an ERP
finance or HR module and leave the rest of the functions for another
day.
Why ERP-
There are five major reasons why companies undertake ERP.
Ø Integrate financial Information
Ø Integrate Customer Order Information
Ø Standardize and speed up manufacturing processes
Ø Reduce inventory
Ø Standardize HR information.
ERP is used for planning resources [Money, Material, Man power, Machinery and
Methods] to get maximum profits with minimum Efforts. For this, all the business functions and processes
need to be atomised and integrated. The
common business functions of any large enterprise are-
FICO -Financial
Accounting & Controlling, HR -Human resources,
PP-Production planning, MM -Material Management,
SD -Sales and distribution
PM -Plant Maintenance, QM -Quality Management, etc depending on the enterprise.
ERP Implementation -
No matter what type of business you're in, implementing an ERP
solution is a critical project that must be taken seriously. From
concerns about cost and demonstrating ROI, to practical considerations
about who will manage the process at your company, ERP implementation
efforts require commitment by a project team and support by business
leaders to ensure success.
There's no getting around the fact that ERP deployment is a major
undertaking, but the process doesn't have to be painful. With proper
planning and execution, implementing an ERP system should be a smooth
process and quickly improve efficiency across your business. Here are
some critical ERP implementation best practices to consider when
selecting and deploying a solution.
Select the Best ERP Implementation
Given the range of functions that ERP encompasses, it should come
as no surprise that there are multiple types of ERP implementations.
You can choose to build your own custom ERP and program it from the
bottom up, though the cost and complexity of taking on such a huge
project can make a do-it-yourself approach a poor one.
Or you can purchase on-premise ERP software and install it on your
company's computers and servers. Before investing in an on-site ERP
solution, however, consider this sobering fact: Two-thirds of mid-size
businesses are running old versions of their ERP software.
1Why
the lag? Organizations often decide that the pain required to
re-implement incremental releases is too great—especially since each
upgrade means the business risks losing critical customizations and
integrations. Keeping ERP technology current is key to maximizing its
potential, so it's essential to choose a system deployment option that's
easy to update and will preserve custom features.
There's a third alternative: a cloud-based ERP solution like
NetSuite. Because the system is cloud-based and managed entirely off
site by the ERP provider, a cloud-based solution means you don't have
to make expensive upfront investments in IT hardware and servers, nor
worry about dedicating significant personnel resources to managing it.
In addition, cloud-based implementations are usually much faster and
easier to deploy than on-site deployments, and maintenance is much
easier since the cloud-based ERP provider is responsible for keeping the
technology up to date. Most importantly, with cloud technology,
product enhancements are painless—customizations and integrations
automatically update with system upgrades—so you can always be assured
that your business is running with the most advanced capability.
Consensus around ERP Implementation
Getting buy-in from company executives means more than just getting
a signature to approve investment in an ERP solution (though that is
certainly important); it means educating leadership about what ERP
implementation means for the company. More than just software, ERP
technology can transform the business, an idea that executives must
support before moving forward with any deployment effort. Frequent
communication from executives about ERP implementation plans and
changing processes are vital to helping build consensus—and even
excitement—across your company.
Set Realistic Expectations for ERP Implementation
ERP software is powerful technology that can streamline processes,
improve visibility, reduce costs, and completely change the way that
your company does business—but it won't happen overnight. ERP solutions
encompass many complex front- and back-office systems, from accounting
and inventory management to ecommerce and CRM, which need to be
integrated to create a seamless experience for end users.
This takes careful planning and time to execute. To accelerate the
implementation process, make sure your project is scoped appropriately
and consider working with an experienced, knowledgeable ERP expert. The
average NetSuite customer is typically able to implement its ERP system
within three months—much less than the on-premise ERP implementation
industry average of a year and a half.
Before starting any ERP implementation, make sure that your company
has the staff resources in place to see the project through to
completion. This may seem like an obvious point, but many companies
begin deployment without resourcing it adequately, resulting in
overworked, unhappy employees and a less-than-optimal installation.Identifying a dedicated project leader and a team for your ERP
implementation will help ensure that the project goes smoothly. For ERP
team members, consider reassigning or removing some of their normal job
duties so they have enough time to concentrate on the task at hand.
Identify a team leader with strong project management skills who can
facilitate team communication, address any issues that may arise, and
keep the implementation on schedule.
Keeping these best practices in mind will help you launch your
deployment on the right track and keep it there throughout the entire
process. Researching the best ERP implementation option for your
business, building consensus around the effort, setting realistic
expectations, and giving your staff the support they need—these steps
take more time, but they result in a more effective ERP experience and a
better-run business in the long term.