While it's true that enterprise resource planning (ERP) systems can level the competitive playing field for small- and mid-sized companies, implementation can be daunting. Such companies have neither the deep pockets, nor the internal resources to cope with such a complex process. Let's face it, implementing ERP is a life-changing event. Challenges range from software selection and scalability, to methodology, mind-set, people, and personalities. Yet, for smaller companies, rapid implementation and return on investment (ROI) are essential to survival. The following are a few guidelines for success.
Select a scalable solution. When it comes to enterprise-wide software, one size does not fit all. Software designed for Global 2000 firms has capabilities that smaller firms may never need, and technology overkill is costly, in terms of licensing, maintenance, and upgrades. Sourcing a solution scaled to your company's specific needs, with flexibility to expand in size and functionality, makes a lot more sense.
Streamline implementation. Small- to mid-sized businesses cannot afford lengthy implementations. To get the job done quickly, find a vendor that provides implementation tools and templates to enable easy configuration without customized code. This approach will simplify implementation processes and speed up the ROI.
Overcome the fear of change. Fear of change can be rampant in smaller organizations. A new ERP system threatens to change everything familiar — how reports look, how data is entered and accessed, and how people perform day-to-day tasks. Some employees may feel insecure and become more devoted to "the way we've always done things." Others may believe sharing information that was once solely theirs is a threat to both their authority and their job security. These issues are best managed up front by an experienced project manager who knows how to defuse them.
Map business processes. Mapping process flow is critical in an ERP implementation. Process flow is the sequencing of discrete tasks and procedures required to perform an operational function (e.g., order entry, order processing). In configuring the software, it is important to select the embedded templates most closely aligned with the business. Technology partners can make recommendations based on industry experience and best practices.
Allow ample time. With enterprise software, it is essential to take time to model the processes, develop the pilot, perform parallel testing, and make adjustments. Customers must resist the temptation to go live before everything is working properly. Having to go back and fix an application or having to do it over is always a daunting task. Sometimes it's impossible.
Convert data carefully. Smaller companies may have less data, but their data is seldom organized in a single repository to allow streamlined data conversion. In some cases, processes were performed manually, and the current and historical data needs to be entered into the system. Or, there may be discrete functional systems (e.g. accounts payable, accounts receivable, payroll, inventory control, order entry) from which data has to be extracted, cleansed, and converted. Time and care must be taken to be sure the data is accurate.
Budget for training. When setting budgets, don't forget to allocate sufficient funds for user training. Unlike out-of-the-box software, an ERP solution affects the entire company – training is critical. Adequate training will pay huge dividends in terms of maximizing the software's functionality, as well as generating a high level of user confidence and a faster ROI.
ERP's Big Payoff
ERP is a big commitment and a lot of work. But, the payoff can be huge in terms of higher productivity, more efficient workflow, enhanced agility, reduced lead times, lower inventory and operating expenses, and ultimately, higher employee morale, and improved customer satisfaction.
Achieving these goals can help a small- to mid-sized company lay a solid foundation for sustainable growth through expanded markets, bigger market share, higher profit margins, and greater shareholder value. That's good news for a company of any size.
[Editor's note: Jay Taylor is the director of professional services for Macola Software of Marion, OH].
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