The main goal of implementing an ERP system is to optimize the company’s business processes and gain a competitive advantage. Since ERP implementation projects require a lot of time and money, it is important to accurately define goals and objectives even before the start of the project. Such goals can be, for example, to increase the growth rate and / or improve the return on investment (ROI). Most companies use new technologies primarily for the purpose of increasing profits. To make timely decisions, it is necessary to promptly receive up-to-date information, which is ensured by a competently implemented ERP system.
Goals and objectives of ERP implementation
In order to minimize risks and get the maximum benefit from ERP implementation, it is necessary to carefully plan and evaluate each stage of the project. It’s important to start with setting small business ERP goals and answering the “why” question. Carry out diagnostics of current business processes and IT systems, draw up maps of business processes “as it should be” and only then select solutions that will best help to implement them. These tasks are usually part of a business audit before implementation. Then it is necessary to determine the architecture of the future solution, the project budget and the time frame for its implementation. And only then the ERP Software that is most suitable for the budget and relevant to the goals is selected.
According to the survey results of Panorama Consulting Solutions, the main reason for introducing ERP in 2018 was to improve the efficiency of business processes – 64%. This is followed by the desire to secure growth prospects and the desire to reduce working capital. They account for 57% each. 54% of enterprises implement ERP in order to improve the quality of enterprise resource planning, 49% to facilitate the work of employees, 41% to integrate disparate systems, 38% indicated the reason for replacing the old accounting system, 32% – to meet the requirements of company management and shareholders.
ERP implementation stages
We note right away that there are many options for the stages of implementation of projects based on ERP. It depends on the complexity, tasks and implementation technologies. Let’s consider here just one of the options for the classic design implementation, which, as a rule, is implemented in 6 stages: survey, modeling, design, development, implementation and trial operation.
There is another option with two additional stages: commissioning, maintenance and development of the implemented system. Let us dwell in more detail on the first 6 stages.
This project management methodology is called “cascading” and involves detailed planning even before the start of the project with logically aligned project stages.
However, today many companies are choosing a more flexible approach to project management using the Agile methodology. In contrast to the traditional approach, Agile is based on the principles of collaboration, continuous customer feedback and continuous improvement. This methodology is suitable for projects that need a quick start. On the other hand, the process of implementing Agile projects requires the constant involvement of all team members in the process and significant financial investments. There is an element of uncertainty that can make the management of the company nervous.
In order to decide on the approach to implementing 1C, you need to weigh all the pros and cons of each of them in relation to your company and the planned project.
Preparing for ERP Implementation
It is important to remember that goals must be well thought out, substantiated, and measurable. Ideally, you need to assemble a team of experts who will be responsible for the project from your company. Each team member also needs to be assigned tasks. However, they can and should be changed during the implementation of the project, if this has a positive effect on the results. Before starting implementation, the following aspects should be considered:
- Why does a company need to implement ERP? What processes require automation and why? What metrics need to be improved to reduce costs and improve efficiency? This will make it possible to draw up a list of program requirements, on the basis of which a choice will be made in favor of an ERP from a particular vendor. The more specific the goals are, the better.
- Next comes the stage of selecting a solution. It is important that the implementation partner has experience and expertise in your industry and is ready to provide a relevant reference.
- ERP implementation is an investment and it is important to be sure that your investment will pay off. Most likely, you will not be able to save a lot on implementation. There are risks that, as a result, the implemented system will be clumsy and will not solve the assigned tasks, and as a result, will not be fully used by the company’s employees. All this requires a thorough financial assessment: how much the company is ready to invest in this project, and how much ERP will help to save in the future and how quickly it will pay off. All this will help you choose the most suitable solution for the needs and budget of the company.
- Companies invest not only money in an ERP project, but also the time of employees to learn new Business Process Mapping Software. Often, the company’s management faces resistance from users who sabotage innovations. It is also necessary to provide for and develop a number of measures to minimize the negative impact and rational use of the company’s resources. Implementation and commissioning times can be significantly reduced through rational planning and the use of modern technology.
- There are examples of ERP projects failing due to insufficient resources to train staff or provide end-user support. At the same time, it is the employees using the program that ensure the success of the implementation. It makes sense to discuss the goals of implementation with employees: how they see the process, what functions need to be implemented.
The final cost of ERP implementation depends on many factors and is calculated, as a rule, individually for each specific project. It consists of the cost of the ERP System Ireland product and licenses, as well as the cost of implementation and support. When calculating the cost of a project, the following are taken into account: the number of workstations, labor costs, the complexity of the project, improvements, integration with other systems, etc.
The cost of support and maintenance consists of the cost of the contractor’s work and the ITS contract. If the solution is industry-specific, then the industry-specific ITS is also purchased.
According to Panorama Consulting Solutions, almost 64% of the survey participants did not meet the original budget, which is 10% less than last year. At the same time, 57% of respondents were satisfied with the cost of implementation.
Economic effect of ERP implementation
Companies that have implemented ERP projects note a number of benefits that they have received from the implementation.
ERP Implementation Challenges
Successful implementation depends on many factors. During the course of a project, companies face a number of challenges that can affect how successful the implementation will be.
The most common reasons for a failed ERP implementation are:
- Inappropriate implementation;
- Lack of a clear goal of implementation;
- Poorly designed implementation plan or lack of it;
- Weak project management;
- Underestimating the amount of required resources;
- Too many improvements;
- Excessive trust in contractors;
- Lack of experience from the performer;
- Lack of proper testing of the system;
- Poor training for end users.