All the ERP buzz

Posted on 26 Aug 2010 by The Manufacturer

In the second instalment of TM’s three-part series of ERP hot topics and tips, we cover Return on investment, leadership and training and virtualisation and the Cloud.

Return on investment: A full scale ERP implementation is going to be a significant investment; even for SMEs opting for downsized packages and cloud hosted application options. In the current economic climate it is more important than ever to justify that investment by defining and achieving meaningful business improvements. Despite this most companies are still letting 30% of the potential benefits in their systems slip though their fingers due to lack of clarity on how to measure ROI.

Important points to consider around ROI for ERP are:

• Don’t rely in your vendor to tell you what benefits should be realised and when. It is your responsibility to know what results your business needs to get. A consultant can help but make sure you are involved in the measurable identification process

• Be specific. Allocate expected results in key areas such as reduced cycle time for specific tasks and savings though better inventory management. Also measure impact on customer satisfaction and expectations.

• When defining targets beware of variable benchmarking standards. Ensure the targets you set are realistic in comparison to the change management and technical support you have planned for

• Run simulations to ensure your targets are realistic and regularly audit the progress being made towards them

Leadership and training: While organisational culture and clear business goals are critical to success in ERP implementations the influence and effectiveness of these can be made or broken by programme leadership. A good leader will reconcile conflicting demands from different departments and user types on the new system. This will make the implementation a smoother process for all involved and allowing time for proper user training will also reduce risk on go-live day.

Important points to consider around ERP programme leadership and training are:

• Pro-active engagement of all stakeholders. The programme leader should manage business partnerships with your solution provider and any consultants working on the implementation. Perhaps most importantly they should ensure strong and consistent communication with senior management end users in the organisation.
• The ERP programme leader should be dedicated to and focused on the programme
• The leader should gather information from all stakeholders about hiccups in the implementation process and collaborate on resolutions
• The leader should ensure that their actions and behaviours in leading the ERP implementation support and align with organisational culture and business goals
• Training should be an integral part of the implementation plan and its key stages. A stage should not be considered complete until there is confidence that associated training has been undertaken and understood

Virtualisation and the Cloud: Recent years have seen iterative advances in open source and virtual software solutions and in the last year organisations in all sectors have been bombarded with revelations about what cloud solutions can do to reduce IT operational costs and roll out time as well as allowing greater flexibility for remote access and mobile business.
Manufacturers have largely been wary of cloud solutions to date, partly due to security concerns but SMEs in particular are now returning to cloud possibilities.
Important points to consider around virtualised and cloud technologies are:
• Select which business processes you want to put in the cloud carefully and ensure web based applications can integrate easily with legacy on-site systems
• Understand whether your supplier is offering you a public or private cloud service
• Be sure your software as a service provider is reliable and responsive
• Ensure a secure development environment to protect company data and show due diligence on security and privacy standards.
Click here for part one, covering process re-engineering, organisational change and planning.

Covered next week will be security; social media and mobile devices; business continuity and confidence; upgrades; forecasting and flexibility.