Top things you should know about ERP

By Sheila Shanker
Updated: August 19, 2011

An Enterprise Resource Planning (ERP) system is great at centralizing data and operations. Information entered once in the system can be used by other areas, decreasing duplication of effort, time and money. Usually, companies consider acquiring an ERP setup when they experience complex and interrelated business problems. The idea is to use the new system to correct the issues, which are often generated by common processes that are disorganized and inefficient.

ERP programs can be expensive, and before investing in one take a look at the following issues:

1. Be prepared to make changes to your processes and procedures. In most cases, it makes more sense to change internal processes, rather than to customize the system to meet current processes. The workflow included in an ERP system is industry standard and has been proven to be effective in most situations. Note that your policies and procedures manual will probably need to be modified to accommodate the way the ERP system works.

2. No ERP system is perfect. Expect a few issues and problems along the way. To avoid bugs and other problems, select a program that has been around for awhile and has been “cleaned up” in previous versions.

3. You must decide not only on which modules to implement, but also on which one should go first and which one would go next. Become knowledgeable on the functions of each module and take notes as needed. Many times the Human Resources module is set up first because it includes all employee names and passwords.

4. Request modules and features that are applicable to your business and industry. Accounting is a commonly used module along with inventory and sales. Add-on features are the driving force behind ERP implementations these days and should not be considered extraordinary items. In the past, the expectation was for a firm to buy into the “vanilla” program, but these days the expectation is to offer a more customized product.

5. Costs of an ERP system implementation can increase little by little as you add up the cost of data migration, recurring costs of training and maintaining parallel systems. Be ready for unexpected customizations or other hardware and software issues.

On a final note, you may also consider ERP systems on the cloud, which has been growing lately. In this situation, you don’t own the system or maintain it; rather, you pay a monthly “rent” to use the ERP. This setup is also known as SaaS ERP systems, and it can save you money in upfront fees and annual maintenance costs.

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