Implementing an enterprise resource planning (ERP) solution won't solve underlying company problems, says Immo B"ohm, MD of Afresh Consult. “There are two major decisions to make when looking at ERP: the first is deciding that you need it, and the second is selecting the right system.”
What drives that first decision is quite straightforward, he continues. “There comes a point at which it is exponentially difficult to control the business, owing to growth and scale. If you don't go ERP, your cost of management escalates. Either you become uncompetitive or you limit yourself to being a smaller operator.”
ERP, he says, requires a new mindset. “That mindset has to run all the way from top management through to all users of the system. The point of ERP is to connect all areas of the business and provide a greater level of control and predictability for all processes.”
The crucial implication is that ERP is not just about buying software licences; perhaps even more essential is training and change control, since especially the 'first-time ERP' users must get used to doing things differently. “Differently may seem not as good as the old way; that points to a misunderstanding of why things are done in a certain way in the ERP system. There is a reason for that, and it is a good one: the processes introduced by ERP scale very well to cope with future growth,” B"ohm stresses.
But, he says, SME owners are routinely reluctant to spend on training and, particularly, change management. “The view is that the software is the investment. It is, but only to an extent. If it's not used properly or fully, the full value can't be exposed.”
Combating this issue, B"ohm says Afresh Consult is introducing 'pre-packaged' training and change management approaches, which reduce cost and demonstrate the value of such initiatives. “Once the SME sees the results of putting some money into training and change management, it becomes easier for them to keep investing in it.”
Cost remains an essential determinant of value, he says, for any scale of ERP deployment. “That cost consists of the licences, training and change management, the implementation itself and the time taken to get the system configured and installed. But what also contributes to cost is the underlying software stack; for example, those which operate on a Microsoft stack have additional implications in terms of configuration and services of that stack before the ERP can be deployed.”
The cost of support and the SLA should also be evaluated, along with the cost of upgrades in future. “Choose a system and service provider that can guarantee a timeframe and cost of deployment. Look for one that can upgrade automatically, without having to visit each site to bring the underlying stack up to date first,” he says. “These are all considerations to evaluate the total cost of ownership of the system.”
An eye on the future is also advisable, B"ohm says. “When you're implementing ERP, you should be anticipating growth for your company. Therefore, seek a system that not only meets immediate requirements, but offers flexibility to cater for more advanced functionality and can be easily customised, too.”
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