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How to Choose the Right ERP and do you need to Customize ERP Solution

posted 3 Apr 2013, 15:10 by Manish Abraham   [ updated 3 Apr 2013, 15:43 ]

    Market is growing and every time new competitors are being added on your track. To run a business smartly and to retain the right position there is a solution that can broaden your vision and accelerate your organizational activities. Yes, I am talking about Enterprise Resource Planning Solution. Selecting proper ERP software is another high task.  It will be wise to compare your preferred ERP selection with other compatible options before making a final decision. Let’s throw light on some vital facts when selecting an ERP-

Selective Requirements:

    Enterprise Resource Planning software is built with number of installations among which many of it will fulfil hundreds of same objectives just in different ways. So it’s better to specify and determine the required services that you want to be executed from your chosen ERP Solution. From innumerable facilities of ERP, I suggest you to be definite with just 5 targets that will be best suited for your organization. These 5 targets can be anything but should be truly wanted. From my point of view, e.g. minimize inventory by 35%, maximize fill at a rate of 25%, raise production up to 50%, increase in production efficiency by 30% and lastly accomplish perfect costs which stand for real cost.

Focus on Your Core Objectives

    You can test vendors to know if they can execute the task when there are specific objectives that you want to achieve. You need to maintain concentration on the main rationale behind buying the ERP solution by focusing on tiny variances that will distract you. Achieving your goal can be hindered by the over supply of information.

Test the Adaptability of the Solution

It is hard to imagine a time when change was easy yet slow to catch on. When you incorporate the growth in product demand, staff requirements, international competitors and new technologies, you can understand the evolving trends. Taking your ERP solution into consideration, the software can only cope with present changes and any additional upgrades become expensive. An ERP solution that can accommodate the required adjustments is what you need so that you can use it for a minimum of at least two years.  

Many of us have experienced a situation where a major client requests for an upgrade, additional features or customization of the ERP solution.

You need to develop a solution that is versatile allowing for the accommodation of your customers wants.  This means that the ERP solution should have the capacity to be configured in such a way that it becomes a flexible tool, able to cope with the growing demands of you r customer in areas like build to order, configure to order, engineer to order and so on. It reduces the turn around time and increases efficiency all round.

Consider Coverage of the ERP

ERP solutions provide an amalgamation of tools that are meant to manage the whole concern but some are not tailor made for a specific department and are not suitable for the purpose they are used.

Efficiency

Your procurement division will very rightly tell you that they are more comfortable with a small and efficient solution as opposed to a large and complicated ERP vendor.

Support

Another key factor in success is the knowledge and skills of the ERP support team. This determines the success of the implementation of the business solution over time.

An important factor here is to check if support is to be given exclusively by a solution partner of by the manufacturer himself if a case needs to be escalated.

Choose your staff carefully and balance academic qualifications with seasoned staff able to mentor the young recruits. You may be better off using interns as opposed to full time employment of fresh college graduates.

Suitability

“It’s the wearer of the suit knows where it pinches”. This is the same principle that should be applied when buying an ERP solution. Some of the challenges that accompany the selection of the right software are as follows:

Complex Software

A more advanced software is more complicated because of the additional programs required to run it. This is suitable for large co operations that need many modules for operations management and this may not turn out to be cost efficient for small to medium size enterprises.

Advanced Technologies

Due to competition, many software firms strive to keep abreast of the latest trends in technology. Some of these are useful to many firms but to others, they are not of much help. In many cases, they have not added value to the clients that adopted them. Be sure to study them carefully before rushing to acquiring them.

Fast Illusive Demo

When the sole purpose of a vendor is to advertise the ERP solution in a manner as to convince the customer to purchase the software without giving due consideration to his or her needs, it does not add value at all.

Benefits

Always make sure that the ERP solution vendor runs you through the software while giving you the pros and cons about using it. Will it increase future performance? Does it come with a detailed and easy to understand tutorial for new users? It needs to add value by increasing cost efficiency within the organization.

Value Addition

It is important to consider the staff that will operate the new software. You need to understand if they will be able to adopt it efficiently in their new roles.

The staff should benefit from the use of the new ERP solution and their work efficiency including productivity should go up. It should not have a negative impact by being too complicated to work with or understand. This could lead to lay-offs or resignations and the recruitment of new staff at a higher cost.

The employees know where the benefits would be derived by adopting the use of the new ERP solution. Conversely, through testing, they are able to provide necessary information to the vendor on how it can be configured to fit into the work environment and aid operations. If these words of advice are taken into consideration then you will retain the same set of employees and enhance cost efficiency.

Performance

The ERP solution demo may have gone well but what about the Service Agreement. Will all the clauses in the contract be adhered to? Do the vendor’s references mirror actual performance? Is the after sales service satisfactory?

It is important to gather information about training and how effective it is in using the ERP solution. Find out how many have been trained as well.

The vendor should provide information on what new developments and updates have been incorporated into the new solution in order to enhance productivity and improve cost efficiency. The ERP solution functions should fit into your manufacturing concern well to ensure the proper running of your organization.

Do you need to Customize Your ERP Solutions-

Whether to customize or not is a very common dilemma when it comes to ERP solutions. This continues to be a source of confusion and contention.   To make the right decision, you need to know ins and outs of ERP customization.

ERP customization can result in a very expensive ERP system. However, customization and enhancement of ERP solution can provide your company a considerable cost reduction and a competitive advantage over your competitors. Making necessary customization and enhancement, you can make your company’s ERP solution much more customer specific.

It is found that more than 90% of companies don’t want to make any customization to their ERP solutions. To be more specific, most CFOs and CIOs want to keep using the old system without changing the software codes. All the time, there will be personalisation and configuration for each and every ERP implementation, but when it comes to a number of changes to the systems; most clients don’t want to make those as it costs considerable amount of investment and efforts.

But strange things happen at the time of ERP implementation. ERP software operators suddenly find the software is not doing several things quite right and then they consider making some minor changes to the software. Of course, one or two minor changes to the code will lead to several other changes.

Competitive Advantage

The most important reason successful companies go for ERP customization is to have competitive advantage over their competitors. As most ERP clients don’t want to make necessary customization and updates, almost all the companies in an industry will be using non-customised, generic ERP solution. Whoever goes for necessary customisation gets a competitive advantage over competitors. If your organization doesn’t customise ERP solution, your competitors can take advantage of this and customise their ERP to have competitive advantage over your company. Then, your company will understand the need for making necessary customisation and updates.   

 

Change Management

Implementation of any ERP solution will certainly change the way your organization do its business. Similarly, every single update or customisation too will change several things and there will be strong necessity of efficient change management. Most ERP clients don’t want to go for any ERP customization or update mainly because of strong resistance from its employees. As ERP customization will give your company a competitive advantage, you need to be efficient in managing necessary changes.

It’s Costly, Complex and Risky

Every single change or customization to your company’s ERP software will need considerable amount of investment and effort. Even after taking necessary steps to customize  some companies stop upgrading their ERP system mainly for the fact that they don’t have enough budgets for the necessary customization.

So, to have a competitive advantage over your competitors and to reduce costs considerably, your company should be prepared to invest necessary amount of money and be patient to complete customization as it takes time and effort. If your company don’t have necessary budget, then your company will lose a chance of having a competitive advantage.

Whether to customize or not your company’s ERP solution is a decision which should not be taken lightly and one needs to consider a short and long term scenario.

Main Contributor TREVOR MERCIECA, ERP Consultant