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Choosing an ERP Consultant Getting More Value From Your ERP Investment

 
3.5 stars Average rating: 3.5 (from 66 votes)
By Alison Diana

If your manufacturing department was backed-up with orders, yet only used half its capabilities, the residents of your company's corner office would understandably be up-in-arms.

Not fully implementing your enterprise resource planning (ERP) solution also could be costing your business. After all, you invested valuable time and resources determining which ERP software to use, and a sizable investment in the application software and implementation effort. It's imperative that you realize the maximum benefit from this investment in order to boost your ROI and your business.

But many companies are not leveraging newer, proven process improvements such as using digital documents instead of paper, or adopting end-to-end process automation processes such as order-to-cash or purchase-to-pay, according to Venttana Research. In addition to processing accounting transactions, you can use ERP software to record a wealth of operational data, key performance indicators and driver-based planning, the research firm finds. And some businesses do not collect all the data they could, a move that could damage their decision-making accuracy and timeliness.

There also are ways to expand ERP's value, such as a move to a shared services environment, or adding customized modules. Revisiting your ERP solution gives you the opportunity to further refine, boost and add value to your investment.

Shared Services

More businesses are researching and moving to a shared services model for tasks such as human resources, payroll, payables and receiving. These repetitive, often standardized and labor-intensive roles are an obvious fit for shared services, which centralize tasks to reduce overhead, streamline operations and cut costs. Starting points for this move often include accounts payable, receivables management and procurement.

As a company's financial backbone, the ERP application is in position to enable a move to shared services. In addition to its prevalence, ERP software is equipped to automate many of these repeatable tasks. Moving to shared services reduces the cost of some finance operations by 30% - or $540 million at British Waterways, according to SAP.

Planning Applications

ERP's "planning" component - sometimes known as integrated business planning (IBP) - has, perhaps, been ignored in the earlier days of ERP's history. Today, however, developers such as Oracle, SAP, Infor and IBM are now incorporating enterprise planning tools in their products, according to Ventana.

IT and the original ERP leadership team must educate top executives and department heads about the ERP's power: After all, these managers know their sphere of influence and are in the strongest position to, in conjunction with IT, determine ways in which the ERP system can be of even more use to your company.

Like a living organism, your enterprise resource planning (ERP) software is never completely finished; rather, it should continue to evolve as your company grows, expands into new markets or seeks to further cut inefficiencies and unnecessary costs. From customization to empowering further collaboration, you can build upon the backbone your ERP solution provides. After all, your company changes to adapt to market conditions, competitive pressures or pricing issues. So, too, should your ERP solution adapt.

Software Customization

ERP vendors continue to enhance their applications, a move that eliminates the need for much - or even any - customization, especially in solutions specifically designed for particular industries. And, as some early ERP adopters discovered, early and extensive customizations often left no easy or clear upgrade path, as the in-house designs clashed incompatibly with vendors' roll-outs.

While many businesses no longer require customization, today's ERP developers are better-equipping their software to allow more risk-free customization by companies IT staffs. Software customization tools now often use standard application program interfaces (APIs) to communicate with the ERP software's code. This allows companies to manage their customizations in a layer of abstraction that doesn't modify source code and upgrade to the vendor's latest ERP software.

Before customizing your ERP solution, give end-users enough time to truly put your out-of-the-box implementation through its paces. After all, users may eventually prefer the ways in which the ERP solution organizes data or communicates. Developers expend many hours and dollars testing their software for the broadest appeal and it may be unnecessary to reinvent certain components merely because they do not exactly mirror your firm's prior processes.

But if the standard software program doesn't support business process automation, customization may be a viable option. It is important, however, to adhere to the application's standard constructs whenever possible, perhaps focusing your customization initiatives on unique business processes, mission-critical functions or money-making tasks. After all, in addition to programming costs, you also should consider the costs of additional training and future upgrades.

If possible, you may want to create your customized capabilities as a middleware platform with your ERP software. This then automatically integrates with the ERP solution, often requiring less formal training, and since it is standalone, it is less likely to be affected by the ERP developer's upgrades beyond the back-end interfacing invisible to users. And by providing a modular approach, you can deliver the customized tools to a limited number of relevant users, rather than undergoing a company-wide rollout.

Certainly, documentation is critical to ERP software customization. How many big iron IT departments faced mad scrambles when mainframe programmers retired? Using established methodologies and diligently documenting the customization makes future changes or support more managable, even for the newest IT employee.

Collaborative ERP

One trend gaining momentum is Collaborative Enterprise Resource Planning or cERP. As its name implies, cERP expands information-sharing to encourage and support partnering between retailers and manufacturers, or between manufacturers and suppliers. The gains: More on-target manufacturing within a shorter time-frame, and a decrease in obsolete or unpopular, non-selling items.

Today, many manufacturers deploy ERP systems as standalone installations where data is unavailable for collaborative use. Before entering this arena, it's important to strategize the value of collaboration and the KPIs necessary to monitor these benefits. In addition, take a look at your company's organization and whether employees and processes are ready to collaborate.

Like your ERP implementation, you should work with top executives, a leadership team and employees to determine wants and needs, a timetable and supporting technology requirements. First focus on internal collaboration in pilot programs before sharing the tool with a core group of external pilot partners.

With careful thought, the Enterprise Resource Planning of yesterday can become your ERP system of tomorrow, delivering the results you need today without a major reinvestment of your company's money, people or time. End

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Collaborative ERP expands information-sharing to encourage and support partnering between retailers and manufacturers, or between manufacturers and suppliers. The gains include more on-target manufacturing within a shorter time-frame, and a decrease in obsolete or unpopular, non-selling items.

 

 

 

 

 

 

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