The purpose of an ERP system is to maintain and enhance an organization’s competitive advantage by linking the various business units into an integrated, cohesive single system. This integrated information system greatly enhances an organization’s ability to generate accurate and meaningful information in a timely manner, critical for making intelligent business decisions.
Consequently, the selection and implementation of an ERP system is an important and challenging commitment for an organization to undertake and requires a careful and considered approach at all stages of this undertaking. From an organization’s perspective, there are many critical issues that must be examined and taken into account prior to selecting an ERP solution. To better facilitate this aspect of the project, a company should approach the prospective vendor and/or implementer with a predetermined set of questions that will address issues such as:
- Successfully implementing the ERP solution within an established timeframe and budget
- The vendor’s implementation methodology – does he have a detailed implementation plan for all stages of the implementation process, including post-implementation?
What follows is a discussion and critique of 5 questions that would provide a sound basis for judging a vendor’s and/or implementer’s approach to an ERP implementation:
- Professional Services refers to the vendor’s own experience and approach to handling business challenges that arise during an implementation. Does the vendor employ proven methodologies for overseeing project management, employee training, and change management? Documentation that supports a vendor’s credentials is a legitimate request by the customer. This can include, but is not limited to, customer references, professional certifications, best practice guidelines, and training modules. Selecting the appropriate vendor is a long but important process. Investigative work done before the final selection can prove to be of great benefit to the company in its future relationship with ERP.
- Data Migration is central and critical to a successful ERP implementation. A major challenge for Data Migration involves the decision regarding legacy data – which data to move to the new ERP and which data can be discarded. Additionally, if processes for data input have not been standardized across the functional groups, the data will require ‘cleansing’ before migration. Asking questions about the tools and methodology available to the implementer for data migration are critical. Specifically, what data cleansing and data reconciliation tools and services are included in their data migration methodology?
- Deployment Model most commonly used for an ERP deployment process can be described as a hybrid of two models – the in-house and the in-cloud models. The cloud-based model aims to achieve a reduction of costs, and, consequently might be a better solution for small and medium sized enterprises (SMEs). The popularity of this hybrid deployment approach rests on its flexibility in terms of being able to offer different approaches to the different business units to adopting the ERP system. The importance of evaluating the best approach for the company as a whole is critical to the overall success of the ERP system. An organization may allow its business units to adopt a different deployment model if doing so is in its best interest and responds to a unit’s individual needs. Importantly, the in-cloud solutions should be compatible with the organization’s principal in-house system. This is an important question to clarify with the vendor before final selection of an ERP system.
- Integration is another very critical and important process because it links together the different software applications and allows them to work as a coordinated whole. In this regard, it is important to determine whether a vendor is equipped to provide an automated data transfer between the various capabilities of the system, or, whether the vendor will rely on third party system integrators.
- Support and Upgrades are a necessary and important adjunct to the ERP implementation process. ERP vendors and their implementation partners offer (for a fee) a variety of support services that can reduce the burden on system end users. These services are a popular option and may even be a factor in a company’s competitive advantage. Support services included in these packages are help-desks, access to an ongoing stream of releases and upgrades to fix bugs, add new functionality to the package, and keep up-to-date with external changes that could affect the software (e.g., new laws impacting human resources). Before deciding on a post implementation package, an organization should consider seriously the type of intervention best suited to their needs and the resources available to them from the vendor or implementation partner.
An ERP solution requires a considerable amount of capital investment as well as the endurance of a significant amount of stress by the organization. Consequently, before reaching a decision on an ERP system, tactical decisions such as vendor selection, employee training, project management, and the implementation method should be made. An ERP system must conform closely to the needs and expectations (present and future) of the organization in order to provide the maximum benefit to the organization and its employees.
Contributed by Gabriel Gheorghiu – Experienced consultant and analyst focusing on business software and customer interactions