The checklist before an ERP introduction

How to implement an ERP?

ERP stands for Enterprise Resource Planning. The most important company resources have always been finances, production capacities, customers and employees. The most effective use of these resources is essential for the long-term success of the company. An ERP system with qualitative data, combined with the knowledge of the employees, enables effective planning and implementation of various strategies. In the age of digitalization, however, one resource is becoming increasingly important to stay ahead of the competition – data. Every internal process, every transaction in the supply chain and every customer contact generates masses of data. These must be processed effectively in the ERP system so that they bring the greatest possible benefit for corporate management.

1. What can an ERP system do?

With its modules, the ERP system can structure and automate standard processes in the core areas of the company. The seamless integration of data flows between the modules ensures data integrity and transparency. Managers in the company receive clear and reliable figures at any time, e.g. in the area of operations on production costs, personnel costs, costs of procurement of materials and services, value of inventories, customers, sales, etc. The finance department automatically receives the data for controlling and to implement the legally required accounting rules.

1. 2. What an ERP system cannot do and how do I close the gaps?

   Scope of functions: No ERP system covers the specific processes of all industries with standard modules. For example, the various manufacturers have modules for the automotive industry, the chemical industry and the manufacturing industry. Some manufacturers have industry solutions for areas such as the textile industry or agriculture and viniculture. Although it is an important criterion whether the standard functionality covers the industry-specific requirements, other factors can be decisive in the decision-making process. If no software partner offers an industry solution either, the purchasing company must develop the missing functionality itself.Localization: Particularly in the financial sector, but also in human resources management, the individual countries have different regulations, which primarily affect data management and reporting. Since these regulations change regularly, the manufacturer cannot meet all localization requirements. This is where partners who develop integrated solutions come in.

   3. Which ERP system is the right one and how do I find it?

   There are many other decision criteria besides functionality. For example, the size of the company, the available skills and resources, the IT infrastructure and what role the ERP plays in the company’s strategy. For a well-founded and structured decision making, institutes and companies associated with universities offer matrices of criteria and consulting.

   4. Which processes do I want to make more efficient or automate?

   To limit the complexity of the ERP implementation project and the risk, start with the processes that are best defined and where the most time and resources can be saved on routine tasks.

   5. What are standard processes where I can adapt my processes and organization to the ERP system?

   It is often emphasized as an advantage of an ERP system that the predefined processes represent best practice. In such processes, which all companies carry out essentially the same, it makes sense to adapt the activities and roles of the users to the ERP.

   6. Which special processes distinguish my company from the competition and give me a competitive advantage?

   Since the standard system is also used in other companies, it is also common practice. In order to achieve the greatest possible benefit, the special processes must be implemented either by in-house developments in the ERP or by connecting so-called best-of-breed systems. Many manufacturers have integrated such leading special applications with their ERP packages to ensure a smooth flow of data.

   7. Is the ERP system flexible enough to map my special processes?

   In-house developments always pose a risk. It is therefore best if the system can be adapted flexibly through configuration options so that it maps the special processes to a high degree and only minimal programming is required.

   8. How much does the introduction of an ERP cost?

   The software package must be licensed according to the modules used. A problem is often that with most manufacturers a whole module must be licensed, even if only a few functions are used. In this case, one should make sure that the manufacturer offers flexible licensing models based on the use of individual functions. Other important cost factors are the required IT infrastructure and project costs including consultants and developers as well as internal resources.

   9. How much does ongoing operation cost?

   In addition to the licenses, support costs are also a decisive factor for ongoing operations. The manufacturer’s support is often limited to standard functionality. Own developments must be supported by a partner. If the system is heavily modified, a thorough analysis should be made to determine whether manufacturer support is worthwhile.

   10. How much benefit does it bring and in what period of time does it pay for itself?

   If the organization is restructured during an ERP implementation, personnel savings can result, which can be quantified concretely. However, a greater benefit can be achieved if qualified employees take over other, more valuable activities. A further goal should be that the company can position itself better in the competition through faster processes, better service and savings in process costs.

   11. Which partner(s) do I need for a successful implementation and smooth operation?

   Partners can support the company with competences that are not available internally or that are only needed temporarily. This is mainly in the areas of process optimization, project management, technical implementation, etc.  These competencies are a prerequisite for successful introduction and operation of the ERP system. ERP implementations are strategic initiatives that represent a great risk for any company but can also bring great benefits.

We hope that this article has given you an insight into the world of ERP implementation. There are many stumbling blocks on the way to a successful ERP implementation and qualified consultants can help you avoid them and become efficient faster. We would be happy to advise you personally and without obligation.