ERP`s intangible benefits will save costs

A few months back, we discussed the changing role of ERP and that its success is ultimately dominated by end-user experience as it becomes more of a commodity. This month, thanks to *Dr Scott Hamilton, we delve into the intangible benefits of ERP and how far it reaches within an organisation, driving user convenience and efficiency.

As a Certified Professional Services Provider by Technology Evaluation Centres (TEC) - the first web-native technology research enterprise, EOH Technology Consulting believes that the intangible effects of ERP can be quantified in terms of cost savings.

Counting the beans - with a common database from ERP, accounting no longer requires duplicate files and redundant data entry. As manufacturing transactions are recorded, the financial equivalents are automatically generated for updating the general ledger. This provides a complete audit trail from account totals to source documents, ensures accurate and up to date financial information, and permits tracking of actual versus budgeted expenses. Detailed transaction activity can also be easily accessed online for answering account inquiries.

Since manufacturing transactions automatically update the general ledger, time-consuming manual journal entries can be eliminated. Period end closing procedures can be performed in hours or days, rather than weeks. This reduces clerical accounting work, and improves the timeliness of financial reports.

Financial reports can be easily customised to meet the needs of various decision-makers. Financial projections can be based on detailed ERP calculations for future requirements.

Effects on product and process design - the product structure database offers engineering much greater control over product and process design, especially in terms of engineering change control. Planned changes can be phased in and emergency changes can be communicated immediately. ERP systems offer numerous analytical tools for the engineering function. When diagnosing the impact of changes to materials and resources, for example, engineers can check where used information to identify the affected products.

Effects on production and materials management - ERP systems help establish realistic schedules for production and communicate consistent priorities so that everyone knows the most important job to work on at all times. Visibility of future requirements helps production prepare for capacity problems, and also helps suppliers anticipate and meet your needs. As changes to demands or supplies do occur, ERP helps identify the impact on production and purchasing.

Effects on sales - Customer service can be improved by making valid delivery promises and then meeting those promises. Custom product quotations can be developed faster and more accurately, which improves job estimating. Delivery lead times can be shortened and customer inquiries on order status can be answered immediately.

Effects on the MIS function - An ERP system implemented as an integrated software package offers several advantages to the MIS function. The software package can offer a growth path from simple to comprehensive applications built on top of a database management system. It provides an upgrade path to technology and functional enhancements supported by the software vendor. It can reduce the development time and cost for software, documentation, and training classes. These costs would be incurred before the firm can start obtaining the benefits of an ERP system. It permits the MIS staff to focus their attention on organisational change and servicing user needs for customisation and professional assistance.

EOH Technology Consulting believes that companies are no longer buyers of ERP anymore, instead they are investors. Understanding the benefits of ERP, deep within an organisation, ensures that the investment is a long lasting and profitable one.

* Maximising Your ERP System by Dr Scott Hamilton - www.technologyevaluaion.com