how to optimize your erp system (and avoid implementation mistakes)

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  • How to Optimize Your ERP System (and avoid implementation mistakes)

  • Page 2

    Table of Contents

    Introduction: Optimizing ERP 3

    Focusing on Process Improvements 4

    Securing Organizational Commitment 5

    ERP Selection 6

    ERP Selection: Questions to ask about the Vendor 7

    Project Management Strategies 9

    Ensuring Data Accuracy 10

    Investing in Change Management 11

    Implementing Education and Training 13

    Focusing on ROI 14

    The Litcom Approach 16

  • More and more organizations have turned to Enterprise Resource Planning (ERP) to provide their decision makers with fast, accurate access to a unified view of their operational and financial information. ERP solutions offer proven, best-practice processes for business functions; including business planning, product development, sales, manufacturing, logistics, finance, and human resources. Properly implemented, ERP delivers optimal efficiency and productivity, while reducing information management system costs. An ERP system selection and implementation must maximize your return on investment (ROI) by focusing on the challenges that are most relevant to your business, such as:

    Forming collaborative relationships with partners

    and clients

    Reducing cost of goods sold

    Cutting inventory, lead times, and order-to-cash

    cycle time

    Improving response time and client satisfaction

    Increasing revenue, reducing expenses and accelerating

    earnings growth

    Page 3

    Introduction: Optimizing ERP

  • Page 4

    Focusing on Process Improvements

    It is not difficult to overlook process analysis in the course of an ERP implementation. Nevertheless, the key focus should be optimizing existing processes and customizing the system functionality to complement them. Organizations should be cautious not to automate non- value-added processes in the new system. It is also vital to measure process effectiveness and efficiency on a regular basis and to embrace and enhance best practices at length.

    Avoid: Neglecting the real reason behind implementation

    Organizations can focus too much on replacing the systems and functionality they currently have and neglect to learn enough about the proficiencies the new ERP system can deliver. Likewise, numerous organizations experience ERP implementations without a step by step roadmap, making it troublesome to accomplish continuous improvement. Organizations should not neglect to analyze existing business processes and identify opportunities for organizational improvement (presuming the software will cover up weaknesses).

  • Securing Organizational Commitment

    Before an ERP implementation project gets underway, key management must outline clear goals and objectives to achieve their vision for how the organization will function with the new technology in place. These expectations must be clearly communicated throughout all levels of the enterprise. Without commitment from the entire organization, the capabilities of the ERP system will never be fully utilized. It is vital to secure buy-in from users of the new system and increase their stake in the success of the program. One of the simplest ways to achieve this is to have those who will use the system most, be a part of the core design team. This helps break down barriers to change by making employees more comfortable with the application and workflows.

    Avoid: Lack of commitment from top management

    If company executives are not fully committed to the system, or do not actively engage in the implementation, the implementation has a high probability of failure. Top management often tends to delegate the implementation to lower management levels, which can lead to their being out of touch with critical events or lack the understanding of the scope, size, and technical aspects of the project. Top management must consider the ERP implementation as a transformation in the way the company does business.

  • Page 6

    ERP Selection

    Organizations have various choices when selecting an ERP system. While most bundles have similarities, extensive contrasts do exist. Since an ERP system may impose its own rationale on an organization's strategy and courses of action, the companys system choice must be an educated one. The business must feel good with the vendor's perspective of best practices and how they will affect the organization's business processes.

    Every organization should choose and actualize a system that goes with its remarkable competitive qualities while serving to overcome competitive shortcomings. It's imperative for the organization to focus the basic needs it is attempting to address and distinguish the desired features and aspects of the chosen system.

    The organization should check the vendor's references thoroughly. When speaking to a reference, the individual should establish what role the contact performs at the organization, what parts of the product he or she utilizes specifically, and whether the individual was included in the initial implementation process.

  • Page 7

    ERP Selection: Questions to ask about the vendor

    Questions to ask might include:

    How much training and implementation services were required from the vendor to get the system up and running? Was this correctly indicated in the vendors proposal?

    What modules were obtained, and have they all been executed or scheduled? What else do they plan to implement?

    Does the vendor offer periodic updates to the software? If so, has the user received any updates?

    Does the vendor offer accessible customer care for inquiries or concerns? What type of response time does it afford?

    Has the software functioned as promised? Are other divisions utilizing it as expected and obtaining the information they need on a timely basis?

    If they had it to do over, would they buy again from this vendor?

  • ERP Selection

    Page 8

    Avoid: Inadequate ERP system selection.

    A large percentage of the biggest ERP system implementation disappointments happen on the grounds that the new system's competencies and needs are not appropriately aligned to the organization's current business processes and methods. Inadequate selection happens when an organization hasn't sufficiently created practical requirement definitions or when the ERP team doesn't take the time to go through the system's screens as they would throughout the course of their day to determine if the software's features will accommodate their needs.

    Numerous ERP selection teams find it enticing to choose a

    well-known ERP provider. Perhaps they feel comfortable with

    the softwares brand name and the vendors reputation. But

    ERP implementation success means more than a prominent

    name. It also means a vendor who offers strong experience in

    installing the new software, one who knows the issues that

    could emerge and how to oversee them adequately.

  • Project Management Strategies

    Page 9

    To understand the true ability of an ERP system, the technological parts of the implementation must be overseen as a component of the bigger project. The implementation group should incorporate exceptionally talented representatives from all offices and capacities. Directed by executive level input, the group should have the responsibility to distinguish and look at existing business processes. With full backing from top management, they should additionally have the power to reengineer existing business processes or create new business methods to help the organizations objective.

    Avoid: Poor project managementManagers may be amazed by the degree, size, and multifaceted nature of an ERP implementation. Accordingly, management may not initiate the essential level of detailed project management planning and control. Short-cutting important milestones in the task plansuch as time for documentation, reclassifying and incorporating methodologies, or testing before going liveis a major error.

    The implementation team should take a discipline methodology to

    project management, including a clear meaning of objectives,

    development of a work plan, and foundation of a resource

    requirement plan. Points of reference should to be made, and

    advancement against those developments or milestones should be

    followed.

  • Ensuring Data Accuracy

    For the ERP system to function properly, accurate business data is needed. Methodologies to guarantee data accuracy should be set up before the implementation process starts, and they must be a top necessity throughout the execution. Educating users about the difficulties that data errors and mistakes can cause throughout the organization can help in this manner.

    Avoid: Incorrect DataDue to the coordinated nature of ERP, inaccurate data entered into the common database will have a negative impact throughout the organization. Erroneous data can prompt failures in market planning, production planning, material acquisition, capacity acquisition, and so forth. Inability to guarantee precise data is entered into the ERP system will cause the system to lose reliability, and employees will become frustrated and disappointed by the new system.

    Page 10

  • Investing in Change Management

    Page 11

    An ERP system will change the current mode of operation within and between functions. Organizations that have effectively implemented ERP systems typically approach the execution as an activity in change management.

    To support this process, they will choose an experienced leader to head the activity, backed by a solid project team and the resolute support of top management. To be effective, the organization must acq