Enterprise Resource Planning — What to look for

Enterprise resource planning (ERP) describes software that integrates departments and functions across your business onto a single computer system. The intended outcome is a system that improves operational visibility, streamlines decision-making, reduces costs, and generally allows you to manage your business to better profitability.

While there has been considerable hype (and some horror stories) about ERP systems, up until recently only large corporations have implemented comprehensive ERP solutions, mainly because they have been perceived as cost prohibitive for smaller companies.

In recent years however, many small and medium sized enterprises (SMEs) have begun to see the value of ERP solutions as a way to respond to both legislative compliance and industry mandates for electronic trading. The reality now is, companies with a turnover of more than $10 million should be considering implementing an ERP solution, if not actively planning for one.

When an SME Should Consider ERP

There are several things that you should consider before investing in an ERP solution:

· What business problem are you trying to solve?

· Can the company do more for less?

· Will the business be more effective with an ERP solution?

· Are your competitors doing this?

· Can you grow your business using your current tools and methods?

As you answer these questions you will be better placed to talk to ERP vendors. Understanding the business problem is critical, as ERP vendors cannot easily implement an effective solution if the objective is unclear. Fortunately, vendors can be the best resource to determine your business problems, as their staff should be intimate with the challenges of your industry. Presentations by their pre-sales staff will typically declare broad industry issues, then drill down into details of specific issues relevant to you. The best part is vendors usually do this for free as part of their opportunity qualification, potentially saving you from hiring consultants to discover and document basic business issues and limitations.

Choosing an ERP Solution

Traditionally, ERP implementations occur over a long period of time. In large corporations, this could take several years and require teams comprising hundreds of experts. This is not an option for SMEs, so many ERP vendors promote a 'one-size-fits-all' solution with the capability to customise the solution to better suit your organisation. This pre-configured solution is supposed to reduce implementation times and manage the 'scope creep' that adds costs to many projects.