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Tag: implementation
Open Source ERP or Managed Services? Finding the right solution for your business needs
Enterprise Resource Planning (ERP) software is an essential component for any businesses, irrespective of the size or industry. An ERP solution enables a business to automate, integrate, and streamline business processes, thereby making operations more efficient. A business may choose to implement either an Open Source ERP or go with a managed services provider, depending on the resources that are at their disposal.
Below is a brief comparison showing the pros and cons of the two options.
The Pros of Open Source ERP vs. Managed ERP Services
Accessibility:
Open Source ERP software is easily accessible, since you can download from the internet, at no cost. For this reason, even the small and medium sized business that had no access previously, have a chance to try out ERP software.
Commercial ERP software must be purchased from the vendor. The vendor will then issue licenses and terms for its use, normally forbidding any form of distribution. For this reason, the software is only made available to those companies that are able to pay, in order to use it.
Cost:
Open source ERP software is available online, free of charge. Therefore, no acquisition, implementation, or licensing costs are necessary. In addition, the developers or third parties make every effort to have documentation and training tutorials, which users can download and use for implementing the system, as well as training their employees. However, third parties may charge a small fee, in order to access their documentation and tutorials.
On the other hand, managed ERP services are quite costly, thus making them out of reach for most small and medium-sized enterprises. Some of these costs include the software acquisition costs, licensing costs, employee training costs, and professional fees.
Scalability:
Open Source ERP is scalable. For this reason, the solution caters for the needs of both small and medium businesses, as well as large enterprises.
Commercial ERP solutions, on the other hand, are designed with the large businesses in mind. Therefore, they will tend to be more complex and have features that cannot be implemented or be applicable for the small business.
Flexibility:
With Open Source software, everyone has access to the source code. In addition, anyone has the right to modify or tamper with the code, provided it is done in accordance with the software agreement. As such, a business has the opportunity to implement some features, or customize the system to meet individual needs of the business.
Commercial ERP software does not allow for any modifications. The license agreement strictly prohibits tampering with the code, and gives all the rights to the respective vendors. Therefore, the vendor must be contacted to undertake any modifications that may be required.
The Cons of Open Source ERP vs. Managed ERP Services
Support:
The greatest disadvantage of using Open Source ERP is the fact that the business has to independently, manage its ERP system. Therefore, no technical or professional support is available. As such, a business is forced to manage, backup, and even troubleshoot their system. In extreme cases, a business might need to hire the services of a competent professional to manage the system internally.
With managed services, the business gets to enjoy various additional services from the vendor. These services may include hosting, backup and recovery, troubleshooting, and regular updates.
Features:
In as much as the developers of Open Source ERP will make every effort to include all the major features that are found in the commercial ERP systems, it is common to find some important features missing. Usually, Open Source software is developed, as a result team effort, relying on the input of volunteers with specialized skill in the various areas involved. Therefore, lack of such skilled personnel results in certain features being left out. Apart from this, the funds that are required to develop and test some the features may lack.
On the other hand, companies that have sufficient resources, in terms of funds and skilled manpower, develop the commercially managed systems. This ensures that all the required features are included.
Overall, the Open Source ERP system has its advantages and disadvantages over the managed service. However, the fact that the commercial solution is out of reach for many small and medium-sized businesses makes the Open Source ERP a viable solution to streamline their business processes.
Top 7 tips for getting an ERP Software Selection on Track
Top 7 tips for getting an ERP Software Selection on Track
You’re looking to find out how to get an ERP Software Selection back on track. This means that you probably have an evaluation that is going poorly and you are being led by the ERP software vendors, right? The ERP Software Selection process can be a struggle, but they don’t really have to be. If the ERP Software Selection follows a clear process, then things will run smoother. The trick is to not let the software vendors drive ERP Software Selection process.
Key ERP Software Selection Tips
1. Get Senior Management on board now
2. Be sure you have clear goals
3. Define your both your technical requirements and business requirements
4. Have a neutral third party manage the process.
5. Eliminate vendors early, and without regrets
6. Be sure you are working with the right software providers
7. Reassess your internal team
One of the top things you can do to ensure success of any Enterprise Software Selection project is to ensure that senior management is on-board with the project and that they fully support the goals of the project. If top-line management is not supportive of the project, there will be departmental and division contentions during the implementation. Often these arise during the selection process. Usually it is the case of one department competing for the same resources as another department. This often will show up on conflicting requirements for the system. Senior management must be the tie-breaker and define the future path the system should take.
If the project does not have clear goals, it is bound to flounder. Goals should not be general such as replace our system by next January. The goals should have significant business impact. A goal like “Reducing inventory by 25% while increasing sales throughput by 15% one year after implementation” is a clear goal that benefits the business and lays a stake in the ground that the system must achieve. You may find that the system can help you exceed that goal, but if you do not measure in a clear goal such as this, how will you know you have succeeded? The pain and inconvenience of an implementation will create a lot of problems within the company, but a clear goal is a great focus agent to get past the disagreements and personality conflicts.
ERP Software Selection Requirements
Often a company will define a set of requirements for a system and these requirements will have no impact on the decision of the system. Requirements need to be business driven and be tied to the factors that make your company successful. Look at the following two requirements and see which one makes it easier to help in a selection:
1. System must have serial and lot tracking.
2. System must be able to report on all shipments by a particular lot with traceability back to the original batch or incoming receiving document.
These two statements are essentially asking for the same thing, but when it comes time to solve a problem, the second requirement will distinguish of the system can solve the problem. Define your requirements around business processes, not about system features.
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Maximizing Business Performance through Software Packages: Best Practices for Justification, Selection, and Implementation |
Additionally, most systems nowadays can handle most of the key things you need. They all do General Ledger, Accounts Receivable, Inventory, etc. The question is, what are their strengths and what are their weaknesses. Defining specific business process requirements around the things that you do frequently is the best way to ensure that you get a system that matches your needs.
Many times when companies get in trouble with an ERP Software Selection, it is because they tried to manage it on their own. Often the IT manager or even the Controller will get the task of defining requirements and shepherding the system selection and all the vendors, value-added-resellers, and reference clients. Since they already have a key role in the company, it often a daunting task to get them to manage the selection process and do their day job. Because of this, it is often advisable to get a third party consultant involved to manage the process. The key thing about this consultant is that they should not have any financial ties to any vendors. They need to be non-biased and have experience in many ERP Software Selection projects.
Why does this help? There are a few reasons, but the key reason is that they can supplement your time and handle all of the details around gathering requirements, building scripts, arranging demos, and being the one to have to tell the vendors “no” at the end. Further, they usually come with a broader vision of how the end result can be achieved. They also make a living out of doing these selections and they know the pitfalls and can help you avoid many of the vendor “tricks” that are often played to ensure that the salesperson wins the sale. If your selection is already off track, bringing in a consultant can often help realign the various team members and refocus the selection.
As you move into the ERP Software Selection process, it is important that you eliminate as many potential candidate software systems early on, so you are not wasting your time and efforts looking at a broad range of systems. Ideally, you start with a long list of 10 and whittle that down to the top two or three. Get the software vendors that are clearly not matching your requirements out of the running as soon as possible. Use resources to help you define the best fit for your company. Many times, the vendor will bow out if they see they are not a clear fit to your requirements. But with each elimination, document why they were eliminated, so that at the end, when someone asks, “What happened to XYZ software, I thought they were a good fit”, you will have the answer as to why they are no longer being considered.
Once you have chosen the two or three candidate software systems, you want to make sure that you are working with the right provider. Software is sold either direct or through indirect channel partners. The channel partners, or value-added-resellers (VARs) each come with their own specialties. You need to find out are you dealing with a VAR or with the Software company itself. If you are dealing with a VAR, you need to make sure that they are the best VAR to help you implement the software. Do your research early, because the last thing you want to do is to change VARs late in the process. This causes all sorts of problems, most of all it delays the selection by weeks or months.
When dealing with VARs, talk to the Software Developer (see our directory of ERP software vendors here) and get their take on the VARs strengths and weaknesses and see if there may be another company you can speak with. Interview the two implementers (VARs) and see which company is a best fit to work with your company. Often it comes down to personality, one group was too arrogant, one group just didn’t get us, or even that VAR’s sales rep had a horrible personality. Find the fit because if you select their ERP software, you will be living with these people for 6-9 months or more. You want to make sure that you can work through the implementation with them as well as later rely on them for ongoing support.
If you are dealing with the software company direct, the same questions apply, but in a sense of is this the software to get married to? You need to be sure that not only the software works for you, but also that the people and company are a good fit to work with your company.
Lastly, take a good, hard look at your team. Do you have functional members from each department? Do they each bring a wealth of experience about their area? Often the hardest thing about the ERP Software Selection process is getting the best people in your company and pulling them out of their jobs to take part in the critical task of selecting a new system. They are usually the person most in demand. They need to be the one to help select the system as they know the current system and business processes inside-out.
Often an ERP Software Selection will go badly because the best people can’t give the time to make the process happen. This is why it is so important to have senior management involved and have a clearly stated set of goals for the project. Having a third party to help move things along and to look at your business objectively will aid tremendously in making the ERP selection process easier. Most of all, by putting all seven of these tips together, you will ensure that you have a successful ERP Software Selection process and that you end up with the best software for the success of your company.
ERP Software Selection
Adding Value to your ERP Requirements
ERP Requirements Refinement
When you start a system selection, you first need to determine which business process are the “value add” processes. In other words, which processes in the business add to the value of the service or product you are providing to the market. The customer is only willing to pay for those activities that help you produce, ensure quality, or account for your product or service. All other activities are waste.
When defining your ERP requirements, you need to be cognizant of these “value add” activities. These are the activities that should be captured in your requirements. Non-value-add activities should not be included in your ERP requirements. These do not produce results that create additional value to the product/service and these are only distractions when it comes down to the actual implementation.
ERP Requirements and Lean
All of this comes from Lean Manufacturing or the Toyota Production method. Essentially, as stated above, you want to eliminate “Muda” or waste in the process. Many firms have successfully implemented this in their manufacturing processes, but a smaller group have implemented this Lean system in their business office processes.
Consider this example. When defining your ERP Requirements you determine that there is an accounting process that has people spending 2 man days per month reconciling the cost of keeping track of the tools used in manufacturing. Does this process add any value to the actual production of the product? Possibly, but it sounds like this process can be reworked and possibly using the new ERP system you can eliminate this process and drive the data down to the actual transactions on the shop floor. You don’t need accountants researching the transactions. What you might need is a system that tracks the tools and their usage as part of the production process and can give a report on what these transactions cost. These transaction costs can then be factored into the pricing of the product, without the overhead of 2 man days of reconciliation.
The time when you are defining your new ERP Requirements is the perfect time to start looking critically at your processes and keying in on what brings value to the process. Then you can design your new system (both process and software) around those items that bring value to not only the customer but also the bottom line.
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Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and Updated |
Mapping your ERP requirements
When you are cataloging all of your ERP Requirements, you should write down all of your requirements (perhaps on a spreadsheet) and then give them an identifying number (such as R1, R2, R3, etc.) You can then evaluate each of these requirements with the business team to determine if the requirement is one that you want to carry forward into your deliverable of requirements that will be provided to the ERP software vendors. There is an excellent article on how to do this mapping, by author Brett Beaubouef, that describes this process.
He advocates that “Starting with the desired business results ensures that we drive to only those requirements that directly support true business value. First, it is an exercise that really puts into perspective the purpose of a business model (results). This exercise is not only useful to the project team but also the business stakeholders. Second, it is an approach that can help you justify why certain existing business activities are not being carried forward in the new business solution. Third, taking a business results oriented approach enables your project team to be more successful at focusing on the right business requirements and not wasting time on capturing requirements for non-value-add activities. ”
Another useful article that you may want to examine is the article 7 Ways to Fail in an ERP Selection
Keep in mind that some ERP Requirements that you identify may not seem valuable at first, but you need to review these requirements with the functional user team to ensure that key processes are not eliminated by mistake. There may be requirements that are a requirement because of a legal concern or perhaps a health and safety issue.
In the end, if you have successfully mapped out your business processes and defined these in your ERP Requirement list, then you will be a lot closer to selecting a system that actually functions in a way that brings value to everyone.
We hope that this will aid you in better defining your ERP Requirements.
12 Steps to a Better ERP Launch
12 Steps to a Better ERP Launch
ERP implementations can turn a young project into a grey haired war veteran in no time. The stress of the implementation from Kick-off, configuration, data conversion, training, and all the other component parts up through Go-Live are no easy task.
If you have done everything right, then the Go-live should be a non-event. But in order to ensure that there is no catastrophic fallout from the cut-over, you need to prepare.
There is a good list of items that will help you to plan and prepare for the day that all eyes are on you and your launch. These steps are items that should be planned for early in the project, allowing for a smooth transition and a better ERP Launch.
These 12 items include such things as planning the ROI, Utilizing outside help if needed, getting buy-in from all levels of the organization and several other key planning topics. Take a look at this list and use it the next time you are planning an implementation, You might just save a few grey hairs.
You can find the 12 Steps to a Better ERP Launch listing here.
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Modern ERP: Select, Implement & Use Today’s Advanced Business Systems |
