The ability of ERP to integrate company operations and therefore lead to improved ways of performing tasks makes installation of the software very enticing for business owners. Yet this is a major operation that immediately impacts all sectors of an organization and has huge financial implications. Knowing the software that is right for a business needs careful planning and it is therefore important to approach ERP software selection guided by facts and not pressure from vendors or the actions of the competition.
The first thing that a business should consider before installing ERP is whether the business really needs the software. While the software has the ability to improve operations, it is important to remember that improvements will not happen if the basic business processes and strategies have not been properly addressed. Given the massive financial input that ERP requires, much money could be lost where more cost-effective strategies could achieve equally good results. One of the low risk and cost effective ways that could help improve operations is organizational restructuring. Where ERP is installed in an operation that is already laden with flaws, you will simply be integrating those flaws.
Another important factor to take into account in ERP software selection is the Return on Investment (ROI). Is it easy to measure the exact benefits that installation of the software has on the organization in general? There are so many costs associated with ERP implementation and unless all these are taken into consideration a company could simply be deluding itself. Apart from the cost of the software, there are many hidden costs including lost man hours in the trial stage. Unless all factors are taken into consideration, costly mistakes could be made.
An equally critical factor to take into consideration before ERP implementation is the action a company will take should the software fail to perform as anticipated. In the installation process, there is always the possibility that something could go wrong and unless there is a contingency plan in place, an organization’s operations could be shut down for long periods of time. For some companies, shutting down for even one hour could mean business losses running into billions and for this reason the importance of a fall-back position cannot be over-emphasized.
Regardless of the expertise of the vendor who installs ERP in a company, the really important people in the successful operation of the software are the company’s employees. A system should therefore be in place to identify the exact employees who will be involved in ERP implementation long before contact is made with the vendor. An organization should therefore draw up a budget of the exact expenses that it will incur in employee training.
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