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Important tips to implement ERP successfully.  ERP Tips for ERP projects.


Management Guru Late Mr. PETER DRUCKER was asked: “What is the most important impact of Information Technology on business?”

He replied: “Information technology forces you to organize your business processes more logically.  The computer can handle only things to which the answer is yes or no.  It cannot handle maybe.  It is not the computerization that is important; it is the discipline that it brings to your business processes.”


ERP is actually "E" only:

Enterprise resource planning software, most of the times does not live up to its acronym.  Few companies have been able to achieve online inventory that is necessary for true planning.  The enterprise part is the most important part of ERP. This is ERP's true ambition. It attempts to integrate all departments and functions across a company onto a single computer system (called ERP Server) that can serve all those different departments' particular needs. That integrated approach can have a tremendous payback if companies install the software correctly.

Take a customer order, for example. Typically, when a customer places an order, that order begins a mostly paper-based journey from in-basket to out-basket around the company, often being keyed and re-keyed into different departments' computer systems along the way. All that lounging around in in-baskets causes delays and lost orders and all the keying into different computer systems invites errors. Meanwhile, no one in the company truly knows what the status of the order is at any given point because there is no way for the finance department, for example, to get into the Finished Goods Stores computer system to see whether the item has been shipped. "You'll have to call the F. G. Stores," is the familiar refrain heard by frustrated customers.

Dream of ERP. The reality is much harsher:

ERP automates the tasks involved in performing a business process such as order fulfillment, which involves taking an order from a customer, shipping it and billing for it. With ERP, when a customer service representative takes an order from a customer, he or she has all the information necessary to complete the order.  This document is called 'ORI' or Order Receipt Information.  Everyone else in the company sees the same computer screen and has access to the single database that holds the customer's new ORI.  Also known as Dispatch Order or Sales Order.  The ORI register will automatically show whether the sales invoice is prepared or not.  The order process moves like a bolt of lightning through the organization, and customers get their orders faster and with fewer errors than before. ERP can apply that same magic to the other major business processes, such as purchase order processing or financial reporting.


Let us go back to those inboxes for a minute. That process may not have been efficient, but it was simple. Finance did its job, the stores did its job, and if anything went wrong outside of the department's walls, it was somebody else's problem. Not anymore. With ERP, the sales person is no longer just typists entering someone's name into a computer and hitting the return key. The ERP screen makes them business people. It flickers with the customer's debtor's position from the finance department and the product inventory levels from the F. G. Stores. Will we be able to ship the order on time?  Is the invoice prepared correctly?  These are decisions that customer service representatives have never had to make before and which affect the customer and every other department in the company. However, it is not just the customer service representatives who have to wake up. People in the stores who used to keep inventory in their heads or on scraps of paper now need to put that information online. If they do not, customer service will see low inventory levels on their screens and tell customers that their requested item is not in stock.

Unfortunately popular 'finance-centric' software packages available in the market allows even editing of an entry or even allow back dated entry.

Accountability, responsibility and communication have never been tested like this before: In other words there is NO NO to 'Chalega' attitude !!

How long will an ERP project take?

Companies that install ERP do not have an easy time of it. Do not get  carried away when ERP vendors tell you about a five or six-month average implementation time. Those short (that's right, six months is short) implementations all have a catch of one kind or another.   ERP implementers may actually do their job in six months time, but users may take even longer to adapt to the new way of working.

To do ERP right, the ways you do business will need to change and the ways people do their jobs will need to change too. And that kind of change doesn't come without pain. Unless, of course, your ways of doing business are working extremely well (orders all shipped on time, productivity higher than all your competitors, customers completely satisfied), in which case there is no reason to even consider ERP.  Click here to see a note on Business Process Reengineering or BPR.  

The important thing is not to worry about on how long it will take real transformational,  but rather to understand why you need it and how you will use it to improve your business.  ERP efforts usually run between one to three years on average.  Too much customization also delays the ERP implementation.

Will ERP fit the ways I do business?

It is critical for companies to figure out if their ways of doing business will fit within ERP package before the checks are signed and the implementation begins. If in doubt, ask your IT consultant. It is wiser to pay his / her consultancy fees.

The most common reason that companies walk away from expensive (sometimes in Lacs of Rupees) ERP projects is that they discover that the software does not support one of their important business processes. At that point there are two things they can do: They can change the business process to accommodate the software, which will mean deep changes in long-established ways of doing business (that often provide competitive advantage) and shake up important peoples' roles and responsibilities (something that few companies have the stomach for). Or they can modify the software to fit the process, which will slow down the project, introduce dangerous bugs into the system and make upgrading the software to the ERP vendor's next release excruciatingly difficult, because the customizations will need to be torn apart and rewritten to fit with the new avatar (version).

The move to ERP, is a project of breathtaking scope.  In addition to budgeting for software costs, financial executives should plan to write checks to cover consulting, process rework, integration testing and a long laundry list of other expenses before the benefits of ERP start to manifest themselves.  Click here to get a checklist of TCO.  Underestimate the cost of ERP can lead to a rude shock down the line.  A few oversights in the budgeting and planning stage can send ERP costs spiraling out of control faster than oversights in planning almost any other information system undertaking.

The Hidden Costs of ERP: 

Although different companies will find different land mines in the budgeting process, those who have implemented ERP packages agree that certain costs are more commonly overlooked or underestimated than others. I think the following areas as most likely to result in budget overrun.


Training is the near-unanimous choice of experienced ERP implementers as the most elusive budget item.

It is not so much that this cost is completely overlooked, as it is consistently underestimated. Training expenses are high because users almost invariably have to learn a new set of processes, not just a new software interface.

Integration and Testing

As with training, testing ERP integration has to be done from a process-oriented perspective. Instead of plugging in dummy data and moving it from one application to the next, veterans recommend running a real purchase order through the system, from sales order entry through shipping and receipt of payment- the whole order-to-money receipt processes.  Preferably with the participation of the actual users who will eventually do those tasks in ERP.

Master Data Preparation

It costs money to enter corporate information, such as customer and supplier records, BOM (Bill of Material) data and the like, from old systems to new ERP homes. Although few EDP managers will admit it, most data in most legacy systems is of little use. Companies often deny their data is dirty until they actually have to move it to the new client / server setups, that true ERP packages require. Consequently, those companies are more likely to underestimate the cost of the move. Nevertheless, even clean data may demand some overhaul to match process modifications necessitated or inspired by the ERP implementation.


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