ERP Benefits

In any discussion on implementing an ERP system, the question “What are the benefits of an ERP System?” appears early in most selection cycles. We have had to look up these benefits on more than one occasion, so we thought we would document them here for you.

A good reference on calculating the benefits and ROI for an ERP solution is the book: Show Me the Money: How to Determine ROI in People, Projects, and Programs

Benefits

Real time information throughout all entire company
Better visibility into the performance of operational areas
Data standardization and accuracy across the enterprise. Single version of “The Truth!”
Best-practices or proven methodologies are included in the applications
Creates organizational efficiencies.
Allows for analysis and reporting for long-term planning

Significant Features on an ERP System

Information entered once into system
Can allow for the use of the best practices
Can be further developed
Based on reliable file structure
Provides functionality to interact with other elements in the process
Provides report writers and other tools for data inquiries

ROI and Cost Savings
Here are some areas to look for possible ROI:

Reduce Inventory through better visibility and efficiency
Savings through the reduction in duplicated efforts
More efficient operations allowing for increase in ability to process transactions (added capacity)
Reduction in non-value added activities (lean processing)
Higher utilization of employees (less transactional, more analytical)
Improvement in decision making through more accurate and real-time data

We have more benefits listed on our ERP Benefits Page.

ERP Software Solution: A Closer Look at What It Is

ERP Software Solution: A Closer Look at What It Is
Mike Piotrowski
ERP Solution

Information technology has not only transformed the way we live in modern society, but also the way in which we do business. Enterprise Resource Planning, often referred to as ERP, is becoming one of the most commonly used software systems in several industries and organizations. The object of this article is to provide pertinent highlights about exactly what ERP is.

The definition of Enterprise Resource Planning refers to not only software but also the business strategies employed as part of the implementation of ERP systems. This implementation makes use of various software applications in order to improve the performances of organizations in resource planning, control of operations, and control of management.

ERP software contains several software modules that work to integrate vital activities across operating departments. An ERP System not only includes the ERP Software but also the business processes and hardware that make this system work. These systems are more than the sums of their parts as the many components work together in order to achieve one common objective-to provide an organization with a greatly improved and streamlined business process.

History of ERP

ERP has been well over 20 years in the making. This system is the result of the trial, error, and growth of Manufacturing Requirements Planning (MRP) during the 80’s. MRP was the evolution of Inventory Management and Control, which was conceived during the 1960’s. ERP has grown beyond the coordination of manufacturing processes into the integration of back end processing on very large scales. From its origins as a legacy implementation ERP has morphed into a new and improved client-server architecture.

Benefits of ERP

This software attempts to bring all aspects of the business into one single enterprise-wide database or information system. This allows instantaneous information and communications to be shared between multiple departments. The primary benefit of this is a greatly improved efficiency in business operations. Implementing this system will not only help communications between departments but in day-to-day management functions as well. ERP is an ambitious design that also supports the resource planning part of corporate planning as this is often the weakest link in strategic planning as the result of the inadequate integration of ERP software with Decision Support Systems.

ERP Failures

It would be quite rude to conclude without at least mentioning the fact that failures in this system are occasionally reported in one of the four components of an ERP System. These systems are: ERP software, Business processes supported by the ERP System, Users of the ERP Systems, and the hardware and/or operating systems upon which the ERP applications are actually run. The failure of one or more of these components has the potential to cause the entire ERP project to fail.
Ontech Systems of Milwaukee Wisconsin, is committed to making a difference in your business through the productive use of computers, networks, software and the vast array of products and services we offer. Contact Mike Piotrowski, President of Ontech Systems to discuss a new ERP business solution for your company today.
Provided By: Computers and Technology

ETO ERP: Making the Wrong Choice

ETO ERP: Making the Wrong Choice
Roger Meloy

Enterprise Resource Planning (ERP) systems offer great benefits to engineer-to-order (ETO) companies looking to increase productivity and decrease cost. According to TR Cutler, spokesperson for the ETO Institute, ‘These benefits come as a result of a successful implementation, but not every implementation is successful.’ Cutler asserts that, ‘One reason some implementations are not successful is the selection of the wrong system.’

The ETO Institute has just published a white paper, ‘Why Do Companies Choose the Wrong System?’ This document is written with engineer-to-order companies in mind. It highlights the problems facing ETO companies trying to find and evaluate a new ERP system. The while paper provides some time and simple steps companies can take to reduce the chances of making a critical mistake. (www.etoinstitute.org)

Cutler, who authors regular columns for Industrial Connection magazine (www.industrialconnection.net) and InMFG magazine (www.inmfg.com) is looking for case study profiles of ETO manufacturing companies and their ERP experiences. ‘The good, the bad, the ugly. I want to know what ETO manufacturers think about the ERP selection process, what companies have served them well and which have not. This will provide an interesting profile for the members of the ETO Institute.’

The ETO Institute specifically highlights some of the problems ETO manufacturers face when searching for an ERP system. Go to www.etoinsititute.org and learn more. Registration is free of charge and more than a thousand ETO manufacturers are expected to join in 2005.

Thomas R. Cutler ETO Institute 954-486-7562 www.etoinstitute.org e-mail protected from spam bots

ERP – Army Style

Stumbling around the web, we came across a great ERP reference site. This site is the US Army’s ERP/SOA Resource Center. Its own description is as follows:
As the Army embarks on transforming its warfighting capabilities, it is imperarive that the Business Capabilities / Enablers / Processes transform to support the warfighter. ERP systems provide an integrated suite of Information Techonology applications that support the end-to-end business operations of an entire organization. The ERP Resource Center is designed to provide Enterprise Process Owners, Program Executive Officers, Program Managers, and others involved in the Business Transformation of the Army with detailed information, supporting documents, and tools and techniques regarding the use of ERP systems.

This site is filled with useful information.Â It is not helpful if you are a small company looking for an ERP system other than to guide you in an overview of what ERP is and does.Â There is a glossary online there too, but it is government focused.Â If however you are implementing a Tier 1 package, then this gives a lot of good information.

Causes of ERP Failures

Here is an article that zooms right into the reasons for why ERP implementations fail:

Causes of ERP Failures
by: Bruce Zhang

ERP is the acronym of Enterprise Resource Planning. Multi-module ERP software integrates business activities across various functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking. ERP has transformed the way multi-billion dollar corporations conduct their businesses. Successful implementation of ERP systems could save tens of millions of dollars and increase employee satisfactions, customer satisfactions and sustain competitive advantages in every-changing marketplace. Corporate executives are often perplexed by the stories that how reputable corporations (Hershey Foods) have failed miserably and lost ten of millions of dollars in their ERP endures.

The failures of ERP projects are preventable if we can identify the common causes of the failures regardless the companies and industries that implement them.

An ERP system is the combination of ERP software, the business processes that the ERP transforms, the users of the ERP system, and the computer systems that run the ERP applications. The failures of a ERP project is often the result of the failures in one or more of those four components. The failures in computer systems (hardware and operating systems) are much easier to identify and to fix, so we’ll examine the failures in software implementation, business process and user acceptance.

Failure of ERP Software Implementation

Module-based ERP software is the core of ERP systems. Most ERP projects involve significant amount of customizations. Packaged ERP software modules have built-in functionality that work in a standard and simplified enterprise environment. However, every organization is unique in data requirements and business processes. It is the customizations that transform packaged ERP software into ERP software that meets organizations’ individual business processes and operations. Long and expensive customization efforts often result the pass of release deadline and budget overrun. Customizations may make the software more fragile and harder to maintain when it finally goes to production. Major changes may be required in the later stage of the implementation as a result of incomplete requirements and power struggles within organizations

Why New Systems Fail: An Insider’s Guide to Successful IT Projects

The integration of ERP systems (http://www.sysoptima.com/erp/erp_integration.php) with the IT infrastructures also challenges ERP project teams. The use of appropriate implementation methodologies can often make or break a ERP project. (http://www.sysoptima.com/erp/implementation_methodologies.php)

Failure of Accommodating Evolution of Business Processes

According to Anthony, R. A, business processes fall into three levels – strategic planning, management control and operational control. Organizations continuously realign their business processes of all levels in response to the ever-changing market environment. Many ERP systems aren’t flexible enough to accommodate evolution of business processes. many ERP system need a major overhaul in every a couple of years.

Failure of User Acceptance

The users of ERP systems are employees of the organizations at all levels. ERP projects usually modify the company’s business processes which create extra workload for employees who use them initially. They may not think that the workflow embedded in the software are better than the ones they currently use. Ongoing end-user involvement and training may ease the difficult in organization’s adaptation of new systems and new business processes.

About The Author

Bruce Zhang has over 10 years experiences in developing and implementing ecommerce and ebusiness systems in various industries.

He operates a website http://www.sysoptima.com that automatically aggregates the news and new articles in e-business (ERP, CRM,

Supply Chain Management and Knowledge Management) from over 50 sources daily (http://www.sysoptima.com/newsbot/) to help corporate executives, professionals and consultants to keep up with the latest development in enterprise software market. The website offers a knowledge base for understanding business software from a systems perspective.

How to Negotiate and Purchase Your ERP System

ERP Negotiations Explained

There are many sources of information on how to select and implement software, but there is little information on how to negotiate and make the purchase of the software. The uninformed can spend thousands of dollars more than they need too by walking into ERP negotiations unprepared. Those that know the “tricks” of the trade can save themselves enough to pay for several modules or a good chunk of the implementation costs.

The first thing in ERP Negotiations to keep in mind is timing. When you buy the system timing is key. As this article is being written, the clock is ticking down to the end of the year. This is an opportune time to purchase a system. Even more advantageous is making the purchase at the end of the software vendor’s fiscal year. Vendors are hungry for the deal. The need to make the numbers for the year. They want to do whatever it takes to boost their sales figures and show a successful quarter. Actually, any quarter end will do, but year end is the time when bonuses are given and certain sales incentives are taunting the software salesperson.

The next thing to do in ERP Negotiations is to keep your options open. Even if you find the best whizzbang system that does exactly what you need, there are probably several systems that will work for you. Keeping your options open and communicating that to the salesperson will only make them work harder for the deal. Even if you know you will buy their software, let them know how much better or cheaper the competition is. Give them a reason to work for the deal.

ERP Negotiations around software pricing

When negotiating software pricing, keep in mind that you may not need all of the licenses up front. You can delay purchasing the entire suite of user seats until you are ready to go live. Get enough to cover your testing and implementation phases and be sure to lock in the pricing for a year or for the planned duration of the implementation.

Don’t forget that the implementation and how it will occur is negotiable. The terms of payment are negotiable. Who will be on the project from the vendor’s side is also a point of discussion and can be changed. There are many things that you can plan out and ask of the software provider or reseller.

Considerations for ERP Negotiations

Remember that most everything is negotiable. Software price, implementation rates, duration, and sometimes even annual maintenance contracts (those these are usually the most difficult). Perhaps negotiating when the maintenance begins will be possible. If you are splitting the user seats, have the maintenance pro-rated during the implementation phase.

Unlike the year 2000 preparations, there usually isn’t an absolute deadline as to when you need to purchase, so if you must, hold off for a month or two, if it is to your advantage. Or, tell the salesperson that you plan on doing so, so what can he/she do now?

Properly planned, the negotiation will more than pay for the time spent doing it correctly. Following the vendor’s lead will lead you to an overpriced system. Keep the money in your company’s bank, not the software company’s. Some negotiation strategies will work and some will not. The key is to remember that you are driving the sale. Get what you want at the price and terms that is fair to you.

Additional resources:
http://www.managingautomation.com/maonline/channel/exclusive/read/4063236

http://dealarchitect.typepad.com/deal_architect/enterprise_software_negotiationsbest_practices/index.html

File as: ERP Negotiations

Causes of ERP Failures

by Bruce Zhang

The failures of ERP projects are preventable if we can identify the common causes of the failures regardless the companies and industries that implement them.

: Image by Behrooz Nobakht via Flickr

ERP Failures -Software Implementation

ERP Failures – Failure of Accommodating Evolution of Business Processes

According to Anthony, R. A, business processes fall into three levels – strategic planning, management control and operational control. Organizations continuously realign their business processes of all levels in response to the ever-changing market environment. Many ERP systems aren’t flexible enough to accommodate evolution of business processes. Many ERP system need a major overhaul in every a couple of years.

ERP Failures – Failure of User Acceptance

Bruce Zhang has over 10 years experiences in developing and implementing ecommerce and ebusiness systems in various industries. He operates a website www.sysoptima.com that automatically aggregates the news and new articles in e-business (ERP, CRM, Supply Chain Management and Knowledge Management) from over 50 sources daily (www.sysoptima.com/newsbot/) to help corporate executives, professionals and consultants to keep up with the latest development in enterprise software market. The website offers a knowledge base for understanding business software from a systems perspective.

Another Related ERP Failures post

Causes of ERP Failures

ERP is in the picture for midsize manufacturers

Small and midsize manufacturers are increasing IT investment because they don’t have the IT architecture needed to compete in a demand-driven world. For many, this means going back to the basics: an ERP system that standardizes business processes, extends the company’s reach, and reduces overhead.

In a 2005 study of more than 550 companies’ ERP investment plans, only 27 percent of small companies “those with fewer than 500 employees” currently …more… (requires registration)