Saturday, June 12, 2010

Continuous ERP training is a must

Organizations must realize that there is a need for continuous training programs and refresher courses for the ERP success. There will be occasional new recruitments of employees and these employees should be properly trained in the basics of ERP and how to use the ERP system before they can be allotted to different departments. So there must be an induction, orientation and training program that is conducted on a regular basis.

It is very important that new employees undergo these programs before start work as they will have an opportunity to imbibe the correct work culture and learn the correct work practices, so that they will be doing things in the correct way from day one.

Once the ERP system is introduced, the way in which the companies conduct business will change. With the ERP systems will come, automation and new technologies. The company should make it a point to familiarize users with these technologies and find ways to motivate them to use these technologies. It is also a good idea to conduct refresher programs for the employees to reinforce the basics, correct working practices and also to update them on the latest developments.

When a new module or a system upgrade is done new capabilities and features become available and the employees should be trained on these new features so that they will be a position to make the best use of them and their capabilities.

For example, most ERP systems have the facilities to send automatic notifications to managers regarding some issues as and when it arises. The company managers have the facility to see the details of the problems and then query the ERP database to analyze its implications. So the managers can communicate with their peers to resolve the issues as soon as possible.

But for this to happen, the managers should make use of these technologies. One member abstaining from this process can delay the problem resolution. The company should therefore, have a plan to train and then motivate its employees to get the best out of the new features and facilities that are available to them.

Most systems can be configured to have an escalation mechanism - a mechanism that can escalate the issue to a higher authority if something does not happen within a specified period of time. For example, the system could be configured to send a mail notification to the superior of a manager if that manager has not taken an action regarding an issue within a specified period.

In such cases, senior managers should find out why the person is not using the technology and take the steps necessary to get him involved. Many people are dazzled by the technology or are afraid to use it. These fears should be alleviated for the proper functioning of the ERP system and to get the maximum benefit from the system.


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Avoid excessive customization of ERP system

CUSTOMIZATION is very much necessary in ERP implementation but not in the way the user wants. User must customize their policies only as per ERP practices. ERP implementation is the opportunity to get aligned with world-class practices, and one should to change those practices to suit current practices.

Customization of ERP creates multiple problems like huge costs of customization, threat of becoming obsolete either because new versions of ERP cannot be directly appended or due to the fact that support from vendor may not be available all the time, risk of random bugs due to non-testing coding, etc. Against all these, the most of the time the organization gets benefits of customization in terms of avoiding change management problems. This resistance to change can really be interpreted as refused to the best or world class or scientific practices.

Sometimes, the company demands customization for trivial issues like rephrasing of terminologies. One blue chip pharmaceutical company argued with the ERP vendor on the term work order used in his ERP brand. Normally, this term is used in all ERP brands in the context of production order. This company argued that there cannot be work order for manufacturing but work request. Ultimately, the ERP vendor agreed to customize it. In fact, in some ERP brands the glossary management to support these name change requirements.

Here is an example of how a major customization of ERP in a compressor manufacturing company affected its functioning. They opted for the ERP, which was the best in manufacturing management. Unfortunately, the company did most of the customization in the same module. The company's scenario was Assemble-to-order and Make -to-order. The measure issue with ERP was the weak engineering module of the ERP. The company's main selling strength was in the unique design of compressor and the support to customers after sales.

The rest of the functions including manufacturing were expected to be utilities. The clients did not understand the concept of ERP and its fitness to their company at all. Also, the consultants failed to adopt suitable implementation approach. The consultants were from an IT division of the parent automobile manufacturing company that had the same ERP brand at place. That company never manufactured automobiles properly and is now consulting to another company on ERP. Perhaps, it was strategic approach to take revenge against what ERP did to them and spread it across.

There are cases where ERP failed to provide expected return on investment. The reason behind this could be anything but ERP is bad. And the sad part is Indian companies are not able to extract value out of ERP. Instead of blaming the ERP system we must explore what exactly ERP has to offer for Indian companies.

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ERP ensures right quality control procedures

WITH product quality under the microscope in all industries today, every company strives for superior quality in its products and services. All manufacturing modules track quality control activities across the enterprise - from intermediate producers to finished goods.

ERP systems allow a wide variety of characteristics and parameters to be specified in test and inspection operations and maintain an extensive history to improve product quality and identify recurring problems.

Elimination of defects in standard product design and manufacturing methods before production is just as important as eliminating defects during production. In fact, to achieve quality levels manufacturers must focus on identifying and correction defects in underlying product designs and production methods not simply inspect the in-coming material and finished goods.

The quality management system usually support the benchmarking and use of optimal product design, process engineering and quality assurance data by all functional departments within the manufacturing enterprise; thereby facilitating definitions of repeatable processes, root-cause analysis and the continuous improvement of manufacturing methods. This documentation supports the job functions of the quality assurance and production managers in validating the manufacturer's conformance to ISO 9000. Good Manufacturing Practices (GMP) worldwide and a variety of country specific industry standards of quality assurance.

Specification control in the quality management system offers a state-of-the-art approach for documenting specifications and enables an organization to standardize and simplify its quality assurance as well as control function. Sample types, sample rules and testing levels are completely user-defined for maximum flexibility and ease of use. Maintenance of standard specifications detailed sampling instructions and testing procedures are performed online.

Cyclic, subsequent and repeat testing options are available to support the material acceptance function, with breakdowns of test procedures into multiple dispositions to improve inventory turnover and reduce inspection lead-timers. The system's database eliminates redundant specifications and ensures that a single change to standard procedures takes effect immediately throughout the organization. User-defined review and commitment controls ensure maximum accuracy.

The material procurement sub-system provides tools for implementing total quality management programs within an organization. Original manufacturers may be defined independently from vendors so that business can strictly adhere to quality assurance and control functions without preventing their buyers from seeking the best possible price and delivery terms. Each item supplied by an original manufacturer may be linked to a standard product specification. Actual test results and material disposition histories are retained according to item, lot, original manufacturer and specification, for an-in-depth quality performance review and analysis.

The material inspection sub-system offers a wide range of capabilities for process supervision and control. These capabilities are fully integrated with the other modules such as purchasing, inventory management and shop floor control function to ensure that the right quality control procedures are followed.


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BPR and ERP: Some important factors

PROCESSES, organization, structure and information technology is the key components of BPR which automates business process across the enterprise and provides an organization with a well-designed and well-managed information system. Organization has two options to choose from when it comes about BRP. First option is reengineer business processes before implementing ERP and the second is directly implement ERP and avoid reengineering.

In the first case, before implementing ERP, the organization needs to analyze current processes, identify non-value adding activities, and redesign the process to create value for the customer. This would be a customized solution considering the organization's structure, culture, existing IT resources, employee needs and promises relatively less disruption to routine work during the change programmer.

It is likely to have a high probability of implementation. But the reengineered process may not be the best in the class, as the organization may not have access to world-class research and best practices. Moreover, this may be the only chance to radically improve in the near future and going for less than the best may be a costly mistake. Also, developing an in-house application or implementing a modified ERP can never be an advisable practice.

The second option of implementing ERP package is to adopt ERP with minimum deviation from the standard settings. All the processes in a company should conform to the ERP model and organization has to change its current work practices and switch over to what the ERP system offers. This approach of implementation offers a world-class efficient and effective process with built-in measures and controls, and is likely to be quickly installed.

But if the employees do not have good understanding of their internal customer needs or current processes, or if these processes are not well defined and documented, then It is quite possible that while selecting the standard process from the ERP package, employees may not be able to perceive the difficulties likely to be encountered during the implementation stage. Employees would lack process ownership and orientation. Other than technical issues, issues like organization structure, culture, lack of involvement of people, etc, can lead to major implementation difficulties. It may lead to a situation where the organization may have to again reengineer its processes. This could be a very costly mistake.

There is also other option of reengineering business process during implementation of ERP also exists. It may sound to be the best option but, being an ideal situation; it does not seem to be a practical option and is likely to cause maximum disruption to existing work. It should not be forgotten that during BPR and ERP initiative, routine work is still be carried out and customers need to be served.

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Importance of O&M phase in an ERP system

The full benefits of an ERP system will be visible only during the Operation and Maintenance (O&M) phase. However, this is not going to happen automatically. Just implementing an effective ERP system successfully will not assure you that everything will go on nicely and without any problem.

The operational and maintenance phase has to be carefully planned. During this phase the ERP sponsor should monitor the progress of the ERP system with the assistance of the ERP project manager. The ERP project manager is the most logical person to be entrusted the task of looking after the EP system during the O&M phase. He has the experience, the knowledge and the contacts with the tool vendors and external consultants, and he has worked closely with the ERP champions' in the organization.

So appointing this person as the post-ERP implementation in-charge is a very good idea as things will be easier for him than for anyone else. There should be ERP teams (not end-users) who will assist the ERP post-implementation in-charge in the discharge of his duties. These people will do the various activities of the O&M phase like re-training, training of new employees, installing software upgrades and so on.

The main objective of the O&M phase is to ensure that the ERP system achieves its projected benefits, the users are satisfied and there are no conflicts. The organization of the ERP system and ERP team will depend on the nature of the organization. There can be a central ERP team or there can be independent ERP teams for each division. In either case the EP team members report directly or indirectly to the ERP project manager (now the post-implementation in-charge).

The project testing, marketing, technical support, etc. so that he can coordinate the ERP related activities. The main activities of the ERP project manager are ensuring that the ERP activities of the O&M phase are performed correctly, coordinating the ERP issues with the various departments, assessing the deficiencies in the system and correcting them, assessing the training needs of the existing and new users and giving them training, liaising with the top management giving the progress reports and getting the resources, etc.

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Products aplenty but choose the right ERP for SMEs

THE leading players in the SME segment are keen to increase operational efficiencies, increase labour and capital productivity, reduce fixed and variable cost and integration with the implementation of effective ERP system in their organizations.

The pressure from large Original Equipment Manufacturers (OEM) to streamline their supply chains is forcing SMEs to streamline their operations and drive the demand for ERP in the SME sector.

As per some latest survey 50% of small to medium-sized businesses (SMBs) have yet to deploy enterprise resource planning (ERP) solutions because of concerns about the level of resources required to make such an implementation.

Most of the time SME segment is ignored by large software firms. But this attitude has ultimately helped competitiveness among local ERP vendors which turned out to be a blessing in disguise for the SME segment. Lately there are numerous quality ERP products made their entry into the market which are affordable to SMEs.

There are also other reasons for the bigger players avoiding the SMEs. The level of customization and the work demanded by the SMEs sometimes appear to be too much for a bigger player. So when it comes to the question of SMEs it takes a great deal of time for them to understand the business and design software programs based on modality. On the other hand small ERP vendors are genuinely get involved with these SMEs and understand their needs. This helps them to develop and implement a solution which will be suitable not just only for their needs but also will fit into their budget,

Sometime there comes a big dilemma for companies evaluating ERP solutions because they are unsure of choosing software offered by a branded player or a small player. Some companies debate that only a branded player can satisfy the requirements even though the recipient is a small concern. It is not true. What one must understand is it really makes no difference as long as the software and vendor suits all the requirements.

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Demand grows for ERP in India

TODAY, all business houses in India are keen to have Enterprises Resource Planning (ERP) solution implemented in their organizations. Defined as an integrated, multi-module system that absorbs all the data and processes of an organization into a unified system, ERP has become an indispensable business tool for all major enterprises.

Though initially the concept of ERP has been originated in the large industrial types of companies ERP has evolved as a more comprehensive system and now it is largely available to companies of all types and sizes. It serves and supports a wide range of business functions like manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources.

ERP had its own concern of worries in the beginning with Indian companies some of which were triggered negative opinion. This includes change management, organizational intervention, replacing outdated software, shifting from function view to process view, hiring ERP-literate staff and faith in package software in the place of custom-built software. But as the time progressed, Indian industrial segments has started realizing the positive factors of ERP, which have started contributing steadily into the growth of large and medium sized Indian industries alike.

Several well-known business houses in India like Cadbury India, Mercedes Benz India, Siemens, Haldia Petrochemicals, L&T, TISCO, UTI, Maruti Udyog, Kellogg's India Ltd., Sony India Pvt Ltd., and CESC have been running on ERP systems. Companies like Hyundai, Nestle Limited and financial sector companies such as HDFC Bank and Standard Chartered Bank use ERP package.

Having an ERP system can give many advantages to the Indian companies. ERP systems automatically adhere to most of the standard company rules and compliances, making it easier for the organization to follow. The developed performance modules help the businesses to develop refined analysis, insights, and innovative schemes for improvement.

One of the major misconceptions about the ERP system is that it will curtail job opportunities. In fact ERP systems in India will produce more dynamic jobs and improved customer care service and it will also enhance product values

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Industry-specific ERP products galore

A large number of players are currently in the market today in the ERP segment. Though some of these ERP solutions are tailor-made for certain industry segments only, most solutions are designed to cover a range of industry segments.

The extent of customization/configuration and modification of these packages mostly depend on the particular ERP solution shortlisted for implementation and its applicability for a particular organization, as well as the extent in which the organization is willing to change its business processes.

ERP systems do not neatly fit the traditional distinction between custom-built software and 'off-the-shelf' package in several aspects. First, the ERP packages are much broader than that of early enterprise solutions. ERP packages integrate many formerly discrete applications around a common database. They enable the adapters to integrate data and processes throughout the organization and they support nearly all functions.

This means that they are much more complex than traditional packages requiring more knowledge, effort and skill to adapt them to the characteristics of a particular organization. Second, ERP packages allow for a great deal more flexibility in the way a company operates than traditional packages do. In traditional packages, business processes and procedures are hard-coded making them inflexible. Adapting them to the unique business procedures of a particular organization usually requires modifications in the package code. It should be noted that modifying ERP packages is often strongly discouraged. Mostly, the vendors may refuse to make changes themselves, claiming high development and maintenance costs and low market demand.

However, because of the way ERP packages are designed, some customization/modification is always required to get them up and running. But the extent of the above customization/modification may vary from one organization to the other.

One factor is the degree of fit between the features and functionalities of the selected ERP package and the business processes of the organization. In addition, where the functionality of the ERP package for a particular organization does not match, specific 'bolt-on' solutions are also available. Bolt-ons are extensive modification of a basic ERP package developed by a third party, independent software vendor, under licensed agreement with the original vendor).

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Do not expect ERP to perform miracles

Having discussed about the success factors in the previous articles it is time to anaylze on failure factors. Here is the second part of article on this series. We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.


A poor fit between the software and users procedures: If the selected package is a poor fit then either the organization has to change its business processes or the package has to be customized to follow the organization's processes. If the company's processes are efficient and cannot be changed the only option is to customize. This is a time-consuming, costly and error-prone process. So while selecting the ERP package care should be taken to select a package that offers the best fit with the company processes.

Unrealistic expectations of the benefits and the ROI: ERP systems are capable of producing dramatic productivity improvements if successfully implemented and properly operated. But expecting ERP to perform miracles will be asking for trouble. The management and employees should be made aware of the benefit so that there are no over expectations. If ERP is touted as a panacea, then there will be dissatisfaction and disappointment about it, which can lead to failure of the system.

Poor ERP package selection: If the right package - the one that is best suited for the company - is not selected, it will create a lot of problems for the implementations and customization teams as well as the end-users and will result in failure. Choosing an ERP package that is not suited for the company or one that will require huge amounts of customization is one of the major factors that contribute to the failure of the ERP project. So the package selected should be one that addresses the basic business functions of the organization.

Extensive customization: Be prepared for people to argue that they need to customize a report or tell you that your new software does not accommodate the way your company pays invoices. However, you should always challenge those arguments aggressively. Most companies can live with standard business processes. When you over-customize an ERP installation, you not only add time and costs, you also make installing the next release of the ERP software increasingly difficult and costly.

Change management: Long and expensive customization efforts often result in the lapse of the release deadline and budget overrun. Customizations make the software more fragile and harder to maintain when it finally goes to production. Major changes may be required in the later stage of the implementation as a result of incomplete requirements and power struggles within organizations.

Failure of accommodating evolution of business processes: Business process fall into three levels - strategic planning, management control and operational control. Organizations continuously re-align their business processes at all levels in response to the ever-changing market environment. Many ERP systems are not flexible enough to accommodate evolution of business processes. An ERP system that worked well last year may need major overhaul.

Failure factors in ERP implementation

Having discussed about the success factors in the previous articles it is time to anaylze on failure factors. Here is the first article on this series. We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.


ERP implementation is, at its core, a people project: The biggest challenge before and after implementation is not the technology; the biggest issues are related to people. At every stage, companies must work harder to manage change, secure buy-in, communicate with and educate their employees. Top human resources issues are related to changing management, training and internal staff adequacy.

Employee resistance: If the employees are not educated and informed about the benefits of the ERP system and assured about the security of their jobs by the top management, they will start believing in the rumours that float around and will either resist or sabotage the ERP implementation.

Lack of top management commitment: The top management should pledge and demonstrate that the ERP implementation has its full support. They should assure the employees about their jobs, clear any doubts and explain why the ERP system is a necessity for the organization. The CEO or some senior level manager should sponsor the ERP project in order to demonstrate the management commitment.

Inadequate training and education: All users of the ERP system should be trained properly in using the system to its fullest. Different groups of people in the company will have different training needs. Managers need more focus on the decision-making and analysis features of the system, while the clerical staff need more focus on how to perform their jobs. But all the users must be trained in the ERP basics, overview of the system and its working, how an action by an employee triggers a host of events through the organization, how automation will help, what processes are changed and so on.
Educate everyone so that they understand what is going to be achieved with the new system. Additional education should include total quality management and change management strategies. Also the training sessions should be used to gain acceptance for the ERP systems by dispelling the myths about ERP. When the employees do not understand what the new system is and what it is supposed to do and how to operate it, they will not use it or use it incorrectly. This can lead to failure of the system. Train process owners (department managers) in how to use the system. Have them train the users.


Inadequate requirements definition: If the requirements of the new system or what is expected from a new system are not adequately defined, then the implementation team will find it very difficult to plan the project. Only if the requirements are specified correctly, the ERP package that is best suited can be selected.

Inadequate resources: ERP implementation is a complex, costly and lengthy project. The initial budgets are very often exceeded and there are still many hidden costs in an ERP implementation. So, while preparing the budget and allocating resources for the ERP implementation care should be taken to consider all the factors that could affect the costs, manpower requirements, infrastructure needs and then reserve a reasonable amount of buffer of buffer for any contingencies that might occur during implementation.

Make the best use of consultants' knowledge

This is the fourth and final part of article on Success factors of an ERP implementation. We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.


Implement aggressive project management processes: The magnitude of an ERP implementation requires aggressive and structured project management processes. An ERP implementation is complex and touches virtually everyone in the organization. Without the structure of project management processes and without a project manager who understands this methodology, the project runs significant risk in time, quality and costs. "Go-live" dates could be missed and the credibility of the project team and the ERP software itself could suffer dramatically.

Create a project organization structure to provide planning and quick response for decision-making and issues management: The toughest problems with any project implementation involve people issues. Pre-project planning must include the creation of clearly defined roles and responsibilities. The following critical roles need to be filled by qualified people: project sponsor, project director and/or project manager, functional team leaders, technical team leaders, project coordinator/scheduler, etc. These people must have dedicated time to the project and they must be willing to be accountable for dealing with issues and making timely decisions. Many ERP implementations become paralyzed when issues are put on hold and are not dealt with quickly.

Make the best use of the external consultants and experts: These people are paid huge amounts of money for helping you in implementing the ERP system. So you must make the best use of their knowledge and skills and ensure that the knowledge transfer is complete before they leave the project.

Teach the organization to use new capabilities: The natural progression from building capabilities is actually using them. While this may sound obvious, many organizations are far better at building new capabilities than at teaching (and motivating) people to use them. Successful companies avoid this fundamental imbalance. For them teaching goes hand-in-hand with building new capabilities, from defining roles to developing skills to culture shifts.

Implementation review: This review must be performed after users are competent with the system. The goal is to ask the software vendor to suggest better ways to use the system.

Assign clear ownership of benefits: During implementation, it is usually clear that the responsibility for going live-on-time and on budget-ultimately belongs to one person, the project leader. But after going live, who owns the benefits that are being targeted? In many companies, this is a difficult question to answer - no one is identified as the owner. But in successful companies accountability for results is no mystery. The owner may be the business unit leader, a project sponsor, a process owner or someone else. What is important is that there is somebody whose responsibility is realizing the benefits.

ERP is not 'everything for everybody' solution

This is the third part of article on Success factors of an ERP implementation. We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.


Communicate and manage expectations at go-live: Many stakeholders in the organization expect the ERP to be an 'everything for everybody' solution. Even in the best-case scenario, this is rarely true. And inevitably, some functionality must often be re-scheduled into a post "go-live" phase. All of this combined could crate disillusionment with the new system. If the project teams are struggling to meet deadlines, they may have to make decisions on the functionality that needs to be delayed in order to meet the original "go-live" date and avoid delays. These decisions must be communicated and "sold" in the stakeholders to ensure expectations are effectively managed. The organization needs to know what will be in place at "go-live" and when they can expect the additional functionality.

Extend capabilities beyond the ERP foundation: As a backbone technology, ERP delivers more powerful benefits when companies do their utmost to build on that platform. In doing so, successful companies turn to a host of complementary applications that generate ROI, from advanced planning and scheduling to warehouse management to sales force automation. Successful companies also pay closer attention to the constant stream of innovative new solutions developed by today's software developers like CRM, SCM, BI, etc.

Ensure the project has sufficient budget: What project teams feel they have enough money budgeted for their projects? The perception of not enough funds is likely to be even greater in a project with the complexity of an ERP. Careful planning during the budgeting process helps project teams make better decision on timing and allocation of resources. If budgets are not sufficient to support the deadlines, project resources find themselves working extensive overtime and under constant pressure. Ultimately, morale disintegrates along with the quality of work. If counter measures are not implemented the image of the entire. ERP system could suffer not only during implementation, but also long after go-live.

Encourage functional ownership of the project: Doing project work is a way of life for most IT departments, while functional departments typically have little or no experience with projects the size of ERP implementations. So, many organizations choose to let IT lead the ERP implementation. Rarely is this decision successful. In the long term, the functional departments with own the ERP. Hence, they must establish the rules that govern system functionality; learn how the system will handle business processes within their departments and be able to obtain information by on-line inquiry or by creating their own reporting. This ownership should be in place at the start of the implementation project.

Develop dependency-driven project schedules that can be tracked and managed to provide early warnings and help avoid crises: Successful ERP project implementation have well planned project schedules. These schedules are not built from a desired end date. Instead, they are built with a realistic view of the amount of time needed for the various tasks. These tasks are lined with clear dependencies - what must happen before a task can begin. With a schedule, you can track and manage your progress throughout the project. Most importantly, a well-designed project schedule can provide early warnings of problems.

Implement pre-project readiness assessment and overall project planning: Most organizations have never been involved in a project as complex and cross-functional as an ERP implementation. Additionally, an ERP project requires near full-time participation. A readiness assessment conducted prior to the project kick-off can help identify areas of strength and potential problem areas in need of improvement. This information is extremely helpful when planning the project budget and the project tasks.

Set targets, establish budget and make it happen

This is the second part of article on Success factors of an ERP implementation. We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.


Make ERP-related decisions quickly: How about a rule that all decisions must be made within three days? This may seem arbitrary, but setting a fast and deliberate implementation pace is critical. Experience has shown that when an ERP project stretches more than 10-12 months, it is at risk - mostly because key team members move on.

Put the very best people on the implementation team: The natural tendency is to staff projects with people who are the most available. But these people may not have the skills or process knowledge required to get the job done. This is complex stuff. An ERP project will require the best talent that you have. And if you assign only part-time talent, then work gets prolonged and the project is at risk. ERP work is not just a project. It is the beginning of a continuous improvement process. There are at least five years of benefits to get out of any ERP implementation.

Phased approach: It is important to break as ERP project down to manageable pieces by setting up pilot programs and short-term milestones. Depending on the IT experience, some organizations choose the easiest piece as the pilot project, while others may implement a mission-critical application first. The pilot project can both demonstrate the benefits of ERP and help gain hands-on ERP implementation experience.

Data conversion: Second generation ERP systems use relational database management systems (RDMBS) to store enterprise data. If large amounts of data are stored in other database systems or in different data formats, data conversion is a daunting task, which is often underestimated in ERP implementation. A two-hour data conversion task could be turned into a two-month effort as a result of the DBA group's lack of technical experience and the management's incompetence or ignorance.

Organization commitments: The involvement of ERP implementation goes far beyond the IT department to many other functional departments. The commitment and smooth coordination from all parties is the key to the success of ERP project. The commitments come from the understanding of how ERP can benefit each functional department. For example, if the warehouse staff is not completely sold on the benefits of the inventory control module, they may not input the kind of usage data that is essential to the project's success.

Create partnership between your software vendor and your stakeholders: While this concept may seem obvious, it has been found that the vendor-client relationship is often contentious and sometimes outright hostile. This fact is particularly true if the organization is severely divided regarding the choice of vendor software. As problems arise during implementation, and they will arise, the blame game often begins. Before long, the project evolves into a standoff with neither vendor nor client willing to admit fault. A third-party project director or manager is often the best solution for this dilemma. This person can usually serve as an objective mediator to bring the parties together, finding solutions, rather than allowing the project to slow down to a crawl.

Sell, sell, and continue to sell the ERP to your stakeholders: Implementing ERP systems are extremely complex and take months or even years, to implement it. If your stakeholders understand the long-term benefits of the system, they are much more willing to accept any perceived temporary steps backward.

Build and leverage process expertise: Process focus is if anything, more important after going live since the company now has an even greater core of process expertise. Successful companies fully capitalize on this expertise and the power of ERP-enabled process. One way is by sending process experts from the implementation team back into the organization, or by having some serve at centers of excellence, some as key process performers and some as business managers. Successful companies never forget the point of the integrated enterprise - that it is not about ERP so much as it is about people involved in ERP-enabled processes.

Adequately resource your project: Ensure that replacements are in place to release key team participants. The people who do the daily work of running functional departments are the same people who will be essential to implementing an ERP system. No surprise. The people with the most knowledge will be needed for the majority of the project. Priorities will conflict between the demands of the office and demands of the project. The most effective solution we have seen is hiring or contracting with additional resources to serve as backfill for key office personnel. Admittedly a new resource cannot do everything that an experienced resource normally does; however, the replacement can handle routine work and coordinate with the experienced person for critical decision.

Define metrics and manage them: Successful companies set targets, establish budgets and make it happen - especially after gong live. On the other hand, after seeing head-counts fall and inventory shrink to more efficient levels, less successful companies can see these giants reversed if they do not continue to decline metrics and stick to them.

Success factors of an ERP implementation

IMPLEMENTATION of an ERP system is a major investment and commitment for any organizations. The size and complexity of ERP projects are the major factors that impact the cost of ERP implementations. Different companies may implement the same ERP software in total different approaches and the same company may integrate different ERP software applications by following the same procedures.

However, there are factors common to the success or failure of ERP implementation regardless of the ERP systems they implement and the methodologies they use.

Starting with this article we will discuss the various success and failure factors of an ERP implementation. So when you are planning to implement the ERP system in your company, try to follow as many success factors as possible and avoid the failure factors.

SUCCESS FACTORS


Project Planning: ERP implementation starts with project planning - setting project goals, identifying high-level business requirements, establishing project teams and estimating the project costs. Project planning offers the opportunity to re-evaluate the project in great details. If the ERP project is not justified at the planning phase, organization should not hesitate to cancel the project. For every successful ERP project there are projects that are cancelled before implementation.

Align the organization on the true destination: You should make sure that everyone in the organization has the same vision about the original motivations for implementation ERP-enabled processes: what the targeted capabilities were, as well as the targeted benefits. Only then can an organization really know how close its ERP program is to being complete. This alignment needs special focus on people: communicating, expectations, education, and top management support.

Architectural Design: While high-level architectural decision is made in the process of ERP vendor selection, it remains a crucial successful factor in integrating ERP with other eBusiness applications, e-commerce applications or legacy systems. Choice of middleware interface software or programming languages drastically impact the implementation cost and release date.

Transition project roles to a way of life: Information technology people, ERP expert, process expert, site leaders, the project manager and the steering committee - going live can involve hundreds of people, in dozens of roles. But at go-live, once the program is operational, the way roles change and the way such change is orchestrated can be an even larger undertaking. Companies successful in the post-implementation phase are simply better at mobilizing and guiding such efforts. They are also better at preparing people for the critical shift, moving from being team members to champions.

Data Requirements: Unlike in-house eBusiness applications, much of the packaged ERP implementation involves the integration of ERP systems with existing eBusiness software (CRM, SCM and SFA) and legacy information systems. Appropriate level of data requirements is critical for an ERP to interact with other applications. Data requirements usually reflect details of business requirements. It costs ten times to correct a mistake at later phase of ERP implementation than the effort to correctly define requirements at analysis and design phase.

Apply planning and program management practices throughout the program life cycle: If there is one thing that companies should master by the time they go-live, it is program management and planning. Companies that will succeed are those that accept the fact that if they are to achieve their benefits, the operation and maintenance phase demands at least as much planning as the implementation phase did.

Achieve balanced people, progress and technology chances across all areas: Companies undertaking the ERP journey must make changes and take action in all areas of the modern enterprise. They need the best-of-breed technology tools, the most effective work processes using world-class practices and people who are trained and motivated. They will also need strategies that fully leverage these new organizational abilities. Far from being a one-dimensional project, the ERP journey must keep change in play and in balance, in all these areas - a fact that successful companies never forget.

ERP must b e driven by business case: In other words, the work must be directed toward improving specific business metrics: improved cash flow, faster hiring, reduced costs and accelerated shipments. Both line and IT managers must identify the processes that need improvement. Focusing on business process improvement is the only way to know whether you have got your money's worth.

Active executive direction: Executive direction in this case means more than just oversight or support. People do not adapt to doing work in new ways without some inspiration from the top. ERP systems are huge, influencing thousands of people, processes, practices and policies. There are thousands of decisions to be made - both large and small. Someone at the top of the organization has to make the call.

Focus on capabilities and benefits, not just going live: The ERP implementation was initiated because of its benefits. So it will not matter much if a schedule is missed by a few days or even weeks. However, if you miss out on an expected feature or benefit, then it is going to hurt. So make sure that all the features that were planned are implemented

Friday, June 4, 2010

ERP Consultants: Make best use of their knowledge

This is the fourth and final (http://www.erppandit.com/Make-the-best-use-of-consultants-knowledge.html) part of article on Success factors of an ERP implementation.We are sure this series of articles will guide our readers make their ERP system work effectively and successfully.

Implement aggressive project management processes: The magnitude of an ERP implementation requires aggressive and structured project management processes. An ERP implementation is complex and touches virtually everyone in the organization. Without the structure of project management processes and without a project manager who understands this methodology, the project runs significant risk in time, quality and costs. "Go-live" dates could be missed and the credibility of the project team and the ERP software itself could suffer dramatically.

Create a project organization structure to provide planning and quick response for decision-making and issues management: The toughest problems with any project implementation involve people issues. Pre-project planning must include the creation of clearly defined roles and responsibilities. The following critical roles need to be filled by qualified people: project sponsor, project director and/or project manager, functional team leaders, technical team leaders, project coordinator/scheduler, etc. These people must have dedicated time to the project and they must be willing to be accountable for dealing with issues and making timely decisions. Many ERP implementations become paralyzed when issues are put on hold and are not dealt with quickly.

Make the best use of the external consultants and experts: These people are paid huge amounts of money for helping you in implementing the ERP system. So you must make the best use of their knowledge and skills and ensure that the knowledge transfer is complete before they leave the project.

Teach the organization to use new capabilities: The natural progression from building capabilities is actually using them. While this may sound obvious, many organizations are far better at building new capabilities than at teaching (and motivating) people to use them. Successful companies avoid this fundamental imbalance. For them teaching goes hand-in-hand with building new capabilities, from defining roles to developing skills to culture shifts.

Implementation review: This review must be performed after users are competent with the system. The goal is to ask the software vendor to suggest better ways to use the system.

Assign clear ownership of benefits: During implementation, it is usually clear that the responsibility for going live-on-time and on budget-ultimately belongs to one person, the project leader. But after going live, who owns the benefits that are being targeted? In many companies, this is a difficult question to answer - no one is identified as the owner. But in successful companies accountability for results is no mystery. The owner may be the business unit leader, a project sponsor, a process owner or someone else. What is important is that there is somebody whose responsibility is realizing the benefits.

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Web site: www.erppandit.com.

Avoid excessive customization of ERP system

CUSTOMIZATION is very much necessary in ERP implementation but not in the way the user wants. User must customize their policies only as per ERP practices. ERP implementation is the opportunity to get aligned with world-class practices, and one should to change those practices to suit current practices.

Customization of ERP creates multiple problems like huge costs of customization, threat of becoming obsolete either because new versions of ERP cannot be directly appended or due to the fact that support from vendor may not be available all the time, risk of random bugs due to non-testing coding, etc. Against all these, the most of the time the organization gets benefits of customization in terms of avoiding change management problems. This resistance to change can really be interpreted as refused to the best or world class or scientific practices.

Sometimes, the company demands customization for trivial issues like rephrasing of terminologies. One blue chip pharmaceutical company argued with the ERP vendor on the term work order used in his ERP brand. Normally, this term is used in all ERP brands in the context of production order. This company argued that there cannot be work order for manufacturing but work request. Ultimately, the ERP vendor agreed to customize it. In fact, in some ERP brands the glossary management to support these name change requirements.

Here is an example of how a major customization of ERP in a compressor manufacturing company affected its functioning. They opted for the ERP, which was the best in manufacturing management. Unfortunately, the company did most of the customization in the same module. The company's scenario was Assemble-to-order and Make -to-order. The measure issue with ERP was the weak engineering module of the ERP. The company's main selling strength was in the unique design of compressor and the support to customers after sales.

The rest of the functions including manufacturing were expected to be utilities. The clients did not understand the concept of ERP and its fitness to their company at all. Also, the consultants failed to adopt suitable implementation approach. The consultants were from an IT division of the parent automobile manufacturing company that had the same ERP brand at place. That company never manufactured automobiles properly and is now consulting to another company on ERP. Perhaps, it was strategic approach to take revenge against what ERP did to them and spread it across.

There are cases where ERP failed to provide expected return on investment. The reason behind this could be anything but ERP is bad. And the sad part is Indian companies are not able to extract value out of ERP. Instead of blaming the ERP system we must explore what exactly ERP has to offer for Indian companies.

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Tuesday, June 1, 2010

ERP Products

A large number of players are (http://www.erp-products.com ) currently in the market today in the ERP segment. Though some of these ERP solutions are tailor-made for certain industry segments only, most solutions are designed to cover a range of industry segments. The extent of customization/configuration and modification of these packages mostly depend on the particular ERP solution or ERP Products shortlisted for implementation and its applicability for a particular organization, as well as the extent in which the organization is willing to change its business processes. ERP systems do not neatly fit the traditional distinction between custom-built software and 'off-the-shelf' package in several aspects.

ERP products within reach of any midsize company, Today more and more midsize companies are looking to replace outdated ERP systems or jump into the technology for the first time. A recent research survey says, "in the small and midsize business (SMB) segment, which continues to outgrow the overall market, companies are buying new ERP systems in response to new customer requirements and the desire to participate in the global market." ERP solutions tailored to the midmarket abound, making it a buyer's market. In this age of mergers and acquisitions, many of these organizations were once small companies, and now, as midmarket organizations, they need to consolidate various software systems and standardize business processes. Most companies in this space are coping with increasingly complex operating environments, aging technology - including outmoded ERP systems - proliferating business-management software and, of course, the need to grow revenue.

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ERP for SMEs: Products aplenty but choose the right ERP for SMEs

The leading players in the SME segment are keen to increase operational efficiencies, increase labour and capital productivity, reduce fixed and variable cost and integration with the implementation of effective ERP system in their organizations. The pressure from large Original Equipment Manufacturers (OEM) to streamline their supply chains is forcing SMEs to streamline their operations and drive the demand for ERP in the SME sector. As per some latest survey 50% of small to medium-sized businesses (SMBs) have yet to deploy enterprise resource planning (ERP) solutions because of concerns about the level of resources required to make such an implementation.

ERP for SMEs package evaluation: IF you think that all ERP packages are the same then think again, because they are not. Of the many ERP packages available in the market today, the features they offer vary, as do the technologies they support, the technologies they use, the architecture on which they are built and the available platforms. Each tool has its own strengths and weaknesses. For example, some are better at human resources, whereas others have excellent production and production planning capabilities. Over the years ERP systems have gained popularity and their usefulness has increased to a point where organizations without an ERP system are almost non-existent. ERP systems are now available in all sizes and shapes for all platforms and development environments.

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ERP in India

Today, all business houses in India (http://www.erp-in-india.com ) are keen to have Enterprises Resource Planning (ERP) solution implemented in their organizations. Defined as an integrated, multi-module system that absorbs all the data and processes of an organization into a unified system, ERP has become an indispensable business tool for all major enterprises. Though initially the concept of ERP has been originated in the large industrial types of companies ERP has evolved as a more comprehensive system and now it is largely available to companies of all types and sizes in india and abroad. It serves and supports a wide range of business functions like manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources

ERP Consultants are responsible for administering each of the phase of the implementation so that the required activities occur at the scheduled time and at the desired level of quality and with effective participation of all those who must participate. For keeping the promises that the consultants have made during the negotiations, they have to transform their approaches and methodologies into detailed work plans. The methodology will have to be converted into tasks and should be allocated to the right people. The time schedule for each phase and each task has to be determined and the project plan has been finalized. Consultants should value to the project. They bring know-how about the package and about implementation - know-how that is not included in the standard documentation.

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ERP in UAE: Trading industry ERP in UAE

United Arab Emirates (UAE) is becoming the most sought after destination for all major enterprises and it is on the verge of becoming the world's business hub. Abu Dhabi, the capital and one of the seven emirates in the union, is emerging as a major global economic powerhouse and one of the world's top oil producers. The prominent Gulf state Dubai is the prime investment banking center and also the biggest exporting and re-exporting location in the Middle East. The Liberal government policies, world class infrastructure and cost-effective service sector are some of the important factors for the growth of this Gulf state which can envy any other developed countries in the world. Transforming into a paradise for trading and commerce, the number of enterprises and business houses establishing in this region is unimaginable. In this challenging scenario organizations should be equipped with effective business applications to make their mark on the soil. You cannot allow to slip away even a single opportunity that comes to you. Be vigilant on your mission. Be equipped with an effective trading business solution, an Enterprise Resource Planning (ERP) solution that can take care of your business and put you ahead of your competitors.

ORGANIZATIONS planning to implement ERP system must realize that developing an ERP package is a very complex and time-consuming process that requires a lot of skilled manpower and other resources. Though they may have personnel on their payrolls who can absorb the necessary knowledge and who have experience in developing sophisticated systems, the problem is that ERP package development is not the main business of these companies. By developing the ERP package by themselves they will be directing all of their available resources into improving their own products or services so that they can remain competitive and better serve their customers.

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ERP Evaluation News

Evaluate ERP Package: The selecting of Enterprise Resource Planning (ERP) package is a herculean task. When selecting the ERP solution you must make sure that the package is a good fit for your organization. Erppandit is helping organizations find the suitable ERP package compatible for their business operations. An ERP package should provide an organization with a solid foundation, incorporating all of the fundamental aspects of running a business. Expectations run high when an organization deploys an ERP package - if the solution is a good fit for the company, the company stands to gain tremendous cost savings and service improvements across the enterprise. Every industry has industry-specific requirements. The ability of ERP vendors to handle these requirements should be carefully evaluated because they can be a major differentiator in your selection process. You should evaluate both general ERP vendors as well as industry-specific vendors. Industry-specific vendors are very functionally focused and already understand many of the issues you need to resolve.

An ERP system also enables companies to maximize the utilization of both human and financial resources, better track vendor managed inventory and other off-site or remote stock, and significantly improve workflow management by better planning, mapping, and executing key processes across the business. ERP packages come in all shapes and sizes. The sophisticated and high-end ERP tools are very expensive. ERP system needs people to manage it. Thus implementing and managing an ERP system is an expensive affair. But these expenses should be weighed against the benefits of the ERP system.

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