If your company is experiencing issues with disparate data, operational inefficiencies and time lag, then it is a good time to consider purchasing an ERP system. Other telltale signs that a company needs ERP include an excessive need for manual labor and intervention with existing business processes; difficulty reconciling financials; hardships coordinating sales, inventory, manufacturing and order fulfillment; difficulty extracting meaningful business information out of your systems; and high demands on IT for maintenance and system integration.
Beyond the previously mentioned issues, there are other factors to consider when starting the ERP software selection process. This article presents several use cases that can help you determine if ERP is the right fit for your organization.
Finding the right ERP software
There are few areas of commercial software with more software variability than ERP. This gives businesses enormous flexibility in their ERP options, but it also makes ERP software selection more difficult, since there are so many ERP choices.
Knowing your company's product, IT and operational infrastructure and goals is paramount in deciding if ERP is right for it. Here are several common business scenarios that showcase how ERP could be the software a company is looking for.
Common use cases for ERP
A small company wants to improve its business processes, eliminate the cost of multiple systems and improve operational efficiencies, so it chooses a cloud-based ERP software that enables it to replace systems and avoid making new capital investments into ERP hardware and software for its data center. Instead, the cloud vendor has the ERP hardware and software that the company pays for in a monthly subscription.
A company in a highly specialized industry (e.g., food and beverage) wants ERP that is tailored to its specific business needs and pressures, so it uses an ERP system that is specifically designed for its industry. The specialized ERP saves the company time in adapting the ERP system to its business environment, and also provides operational best practices.
A large enterprise has an on-premises ERP system for its own internal processes but needs a quick way to onboard new global business offices and newly acquired subsidiaries to this system, so it uses a two-tier ERP approach that features a cloud-based ERP version of its system (or compatible software from a different vendor) with localization capability for the remote sites and new businesses in different countries. Over time, the company can elect whether to migrate these remote offices over to its on-premises version of ERP, or to migrate corporate over to the cloud-based version of the ERP.
A manufacturer seeks integration of its manufacturing processes, and starts with material requirements planning-style ERP that can solve its integration issues of tracking orders, beginning with order placement and origination and then processing these orders all the way through the operations of manufacturing, distribution/delivery and order fulfillment and payment. The company also wants to get rid of the data discrepancies and software licensing costs from using disparate systems for each function.
A company that does all of its work for customers on a per project basis wants an ERP system that can track all activities, resources and costs for every project, with additional ability to predict project overruns or resource constraints. This type of company would look for a project-oriented ERP that offers end-to-end visibility and tracking of all project activities.
A professional services organization wants to better coordinate its finance, sales and operations, and it also wants to reduce errors and operational miscues by ensuring that everyone is using the same data. The company opts for a service-oriented ERP system that can track service engagements and record activities, resource consumption and costs as they occur.
A medium-sized company wants to expand ERP for better analytics to improve its operational efficiencies, so it decides to add a business intelligence component to its ERP system.
Another midsize company wants to shorten its financial close cycles and improve accounting accuracy, so it chooses an ERP suite with strong financials.
A small company has a customer relationship management (CRM) system in place for its sales and marketing, but then decides that it also needs systems for functions like accounting and operations. The company looks for an ERP system that can address new business processes and is also compatible with its existing CRM system.
Another consideration is that a company's initial goal may be to start with only an individual component of ERP, like CRM. Some of these systems are easier to expand into a full ERP suite than others, should the company choose to cover more of its operations with ERP functionality at a later date. Because of this, the flexibility and scalability of an initial ERP software selection should be carefully considered, even if a company initially does not need all of the functions.
Finding the right vendor
ERP systems are complex, and complexity increases the risks for implementations. For this reason, getting the right business partners or integrators to help you with your ERP implementation is as important as selecting the right system.
ERP choices and vendors are varied, so it can be easy to be drawn off course from your goals. Make every effort to ensure that you keep sight of your company's goals and always be aware of how your company is structured and how it functions and you will be well on your way to a successful ERP implementation.
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