What is an ERP system software and do I need one?
We receive this question a lot from our current and prospective ERP system clients. First let's define ERP and then let's discuss the key issues overlooked and the social issues surrounding ERP implementation.
The term ERP (enterprise resource planning) applications used to refer to the manufacturing industry. Currently, ERP systems cover the core functions of a business whether they are manufacturing, non-manufacturing, not-for-profit or government. ERP system software can apply to a broad spectrum of industry segments.
ERP packages usually encompass accounting (or financial functions), payroll and production functions (manufacturing, supply chain, job cost, warehouse management, inventory management, estimates, human resources, service fees, sales order, CRM, etc.). Ideally, an ERP system delivers a single database for the data in all of the software modules. There are many free web site services out there that will evaluate various ERP systems for you. Remember, those services also receive advertisement dollars. DataCraft has performed an evaluation within our software selection guide.
Some key issues companies or executive committees overlook when evaluating an ERP implementation:
- What is the skill level of my existing team in regards to software?
- What resources will be required from my team for the implementation?
- What are our expectations for testing and going live with the new software?
- Is it cost effective to perform a data conversion? Options -- only bring over critical customer data and open transactions. Refer to all history in the old database.
- ERP systems do not have to be expensive. There are plenty of economical ERP software systems out there that range in price from $3,000 - $25,000.
Social issues (yes, I said social issues) uncovered when implementing an ERP system:
- There is no "magical" software. If you have problems with your current team members or departments working in harmony, you will continue to have those problems. Fierce conversations are needed here.
- Set up of work flow in the software is critical, but don't make it too complicated!! Keep it simple!
- Don't spend a lot of money on a customization because that is the way you've always done it and even though it's inefficient you are going to keep on doing it that way. Nuts!