Enterprise resource planning (ERP) is the integrated management of core business processes via software and technology. ERP is usually referred to as a category of business management software that is comprised of a suite of integrated applications that an organization can use to collect, store, manage, and interpret data from across the organization’s varied activities. ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources such as cash, raw materials, production capacity, and inventory, along with the business office processes such as orders, receivables and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions and manages connections to outside stakeholders.

Enterprise Resource Planning (ERP) systems are the backbone of your organization. Enterprise systems connect every department and business process, so picking the right system can greatly increase productivity and be a behind the scenes competitive advantage to companies in any industry. A company’s long term strategic plan will be the backbone behind selecting the appropriate system.Knowing the key criteria for selecting an enterprise system will be a good starting point for your evaluation process.

Look for agility and flexibility to adapt to current and future market leads. Businesses and technologies are changing all the time. Technological innovations enter the marketplace at accelerating rates and customer expectations are continually increasing. An enterprise system needs to be adaptable to both of these factors.

Make sure that ERP software features add value and are not merely pretty bells and whistles. The critical processes of your business and future business need to be addressed first when looking at the robust features of enterprise solutions. These critical features must also be able to be integrated company wide, to every department, not just to a few of critical departments. As an enterprise system grows, and helps your company grow, it is important to make sure that it will be able to synch with all departments down the road because it is inevitable that they will be if not already.

Look for an ERP vendor that has a long history and experience with system replacements as this will be critical to your organization if you currently have an ERP system that is in need of being replaced. If you don’t have an ERP system on board, this criteria still holds true as you will inevitably need to replace, upgrade or enhance your enterprise system down the road.

Lock in on the implementation time and get a detailed implementation scope of work and deliverables before selecting your ERP system. You have heard the horror stories, or may have even been involved first had with enterprise resource planning projects and implementations that never got implemented. Most large scale implementation projects take six months if all goes well. Others can take years and never get fully implemented.

Make sure your system will fit your business. What many companies found out in the old “big” enterprise systems is that they were originally developed for a particular industry or vertical. Trying to customize these rigid systems to fit other industries was like forcing a square peg in a round hole. Enterprise solutions today are much more customizable than a decade ago, but some are more adaptable and easily integrated to your business than others. Find out who they are and make sure that they are the right ERP solution for you.

SYSPRO and the other large players are creating modular solutions, and the other open source, SaaS (software as a service) products are underscoring this positive development. The lower capital outlay for these modular and SaaS solutions are also making it easier for companies to test drive solutions and achieve a shorter term ROI on their investment.

Phoenix Systems highly recommends the use of an internal Project Manager during all phases of the selection process and implementation to ensure success. 
An important first step to selecting an ERP system is to select a project manager to manage the selection process. In addition to coordinating the internal needs assessment and vendor evaluation process, the selection project manager will serve as the liaison with vendors. The project manager will also create a selection team representing every area of the company (finance, sales, manufacturing, human resources, etc.). If your company decides to hire an ERP consulting firm to manage the selection project, the role of the in-house project manager will shift toward overseeing the firm's work, coordinating interviews and meetings with key users and managers, and ensuring that each department's needs are adequately addressed. 
We can make recommendations of Project Managers that are experienced in successful ERP projects. The choice is always yours!

Absolutely! It is important to include key users in the selection and needs analysis phases. Without their involvement, the ERP Project is likely to fail or go over budget.

Total Cost of Ownership (TCO) includes all costs related to an ERP system during its lifecycle. A TCO analysis can be extremely useful for budgeting or for choosing between alternative technologies. It is a standard process used to minimize risks, especially when budgets are tight. TCO must be compared to the total advantage or benefit of ownership in order to determine the feasibility of the purchase.

TCO can be categorized into direct costs like fees for software licensing, hardware costs, cost of professional services, cost of internal staff, integration, costs for maintenance of software, and indirect costs like system downtime and the corresponding troubleshooting, cost of delays, cost of under productivity at the user end.

Phoenix Systems uses a tried and tested methodology to implement ERP solutions. This methodology has been adjusted over the past twenty five years as our customer’s sophistication has dictated and as products and technology have evolved. We have remained ahead of the curve by incorporating new approaches and ideas whether it be the Project Management Book of Knowledge (PMBOK) or the new SYSPRO tools such as the SYSPRO Process Modeling module, taking the best of these technologies and honing our techniques.

Additionally, we are aware that the “One methodology fits all” approach is not always appropriate therefore we further adjust our methodology to match the project, customer culture and needs without compromising the project goals or objectives.

While organizations continue to implement ERP solutions to improve efficiencies, many ERP implementations have a long history of unsatisfactory results. A view of ERP implementation outcomes shows that 52% projects faced the situation of cost overruns. Organizations also have to understand that ERP implementations are not just technical implementations of software but are transformations that invariably impact business process and organizational design. For ensuring the success of an ERP implementation, it is evident that ERP technologies must be coupled with Process Optimization to realize its complete value. Integrating processes, technology and human resources with productivity improvements to match can result in significant cost savings.

Business Process Optimization involves redesigning processes to achieve increased efficiencies. Process Optimization means gaining an understanding of the current state of processes, evaluating them for non-value adding steps, gauging the potential for standardization of similar processes all over the organization, identifying technology and process integration points and determining how best to take advantage of system features to achieve the desired functionality.

These projects require top down support besides financial and resource commitments. Proactive application helps achieve significant cost reduction while creating an effective and result driven workforce. This leads to maximizing the capabilities of an ERP system. Implementation of an ERP system with this approach gives the maximum ROI as it addresses process, people, information and technology simultaneously. Using this approach helps organizations in achieving a synergistic relationship between technology and process. Usually, unhappiness with ERP projects can be traced to the absence of strategic identification of business processes, which further must be designed and put in place before the purchase of the new technology.

In a recent study, the Aberdeen Group found that companies that automate and streamline workflows across multiple sites including suppliers, partners and manufacturing sites, produced 66% greater improvement in reducing total time to delivery and achieved a more than 10% gain in global market share. Dynamic supply chains such as this are rarely achieved using, as many SMMs do, disparate spread-sheet based applications and single-point production management systems that do not share critical business data.

By its very nature, ERP is supposed to ease complexity and provide timely access to business information for better collaboration up and down the supply chain. Best-choice ERP for SMMs expands this concept to embrace the unique and varied requirements of industry-specific manufacturers. While finding the best fit in ERP is an individual process for every business, several key factors make some ERP choices better for SMMs. These include: manufacturing and industry-specific capabilities; true shop-floor integration; cost-efficient comprehensive functionality that scales to support growth and evolves as technology evolves; a centralized database that makes real-time information accessible to everyone who needs it; and a single source vendor that delivers a long-term competitive advantage with measurable results.

As a result of the benefits that ERP can bring, and the long period during which those benefits may manifest themselves, ERP implementation is always a strategic investment for an organization. Increased productivity, reduced operating expenses, improved information flow and enhanced performance management are some of the benefits that an organization can realize by implementing an appropriate ERP solution. On the other hand, huge unanticipated costs, enormous opportunity costs due to extended project timelines, and minimal ROI are some of the tribulations that an organization can get into without informed selection and well-planned implementation. Thus, the first and foremost thing is to identify whether your organization needs an ERP solution at all. We have listed below some of the business conditions that can help you make the decision. If an organization is experiencing one or more of the following business conditions, it is time to seriously consider implementing an ERP solution or replacing the current one:

1. Fast and uncontrolled growth: Is your organization growing at a very fast pace? Your organization has recently opened multiple operational units/offices in multiple locations. There is significant increase in volumes of production, processes, and workforce.
2. Lack of sufficient and accurate information on your company’s performance: You are facing problems in capturing exact figures or are receiving mismatched data on your company’s performance indicators.
3. Consistent mismatch between inventories and production management: There is a lack of coordination between sales order processing and inventory management in your organization.
4. Duplication of effort: The finance and HR departments store and maintain employee details separately. Similar other instances of duplication exist in your company.
5. The right information is not accessible at the right time: You are not able to access accurate data on stock in inventory, month-end sales figures, orders in transit and other required information on time.
6. Little or no ability to forecast and plan: Your organization’s strategic and planning division is not equipped to forecast and often relies on conventional methods for future projections.
7. Your current system is becoming obsolete: The existing enterprise system in your organization is no longer efficiently supporting your day-to-day processes and is negatively impacting the organization’s growth.

New digital technologies are paving the way for new ways of doing business. But, as they are transformative, they introduce their own set of challenges. To take advantage of the opportunities that digital transformation will afford. In fact, to ignore them is to ignore the future. Manufacturers and distributors should instead look at the digitization as an opportunity to review business processes to determine where to invest in technology in order to be prepared for that future. Digital transformation includes concepts such as Artificial Intelligence, the use of Bots, Cloud Computing, Big Data, the Internet of Things and Mobile ERP. Even social media is part of the digital transformation. Read here for more on digital transformation.