All on the same page: A good ERP system that integrates your key business functions can free your employees from manual work considerably. Photo credit: Unsplash
This brings to mind the question: How then, can you select the right Enterprise Resource Planning (ERP) software for your company and familiarize your employees with it?
The main point to note is that how much and just how far your ERP investment will pay off for you depends on the scale that you implement it at your company. That in turn will determine your ROI.
Your ROI will in turn be determined by how much time your employees spend chasing up on unpaid invoices, tracking the status of an order, checking stock levels manually and churning out customized reports.
A good ERP system should be able to do all this for you more quickly, saving man hours that can be spent in better ways, for instance, building new client relationships.
SME owners may tend to put off the decision to get an ERP system up and running because of the costs involved.
Depending on the scale of implementation and functionalities, it can cost a company between $75,000 to $100,000.
Apart from the costs of implementation and training (this is usually chargeable at a standard hourly rate for most ERP vendors), you will need to also factor in costs related to redesigned processes, customized reports, maintenance, consultations, upgrades, and tech or security support.
Ask your vendor if the licensing fee that you pay for implementing the ERP software also includes tech support, or if it is an additional cost.
If it is the latter, you should keep an eye on such costs so you don’t end up paying your vendor too much just to fix bugs.
You can read more about the process of ERP implementation here.
In general, there are three options for SME owners when it comes to ERP.
The first option is perpetual licensing, where a company hosts ERP software on its premises and pays a licensing fee that is determined by the number of users and level of customization required. This fee usually does not include upgrades, maintenance and support.
The second option entails a subscription or software-as-a-service (SaaS) model, where a company pays a subscription fee in order to use cloud ERP software that is hosted and maintained by the vendor on a third-party server.
Fees for the SaaS model are determined by the number of users, and are paid monthly or annually. Most of such subscription plans offer various tiers of functionalities and modules, and require a minimum contract period.
The third option would be open-source ERP software. By accessing an open source code, a company can customize the software to its own preferences and needs – for free. You won’t need to pay a licensing fee, but you will need a good tech team on hand to help you implement and maintain the software.
As mentioned previously, there is no one-size-fits-all solution as the business objectives and organizational make-ups of every company are different.
But it would help if you knew what not to do, as well as look out for during the implementation process.
Here’s a quick guide.
There is no doubt that getting a ERP system for your company is a big decision. As mentioned, it can cost a considerable amount of money (assuming you are not using a subscription model), so there is no need to rush into making a decision.
Take as much time as you need to review your options and shop around. You can even ask your business partners who are also SME owners if they know of any good ERP software vendors to recommend.
Even better if they are already using a good ERP platform!
As mentioned, good ERP systems do not come cheap. But as the saying goes, you get what you pay for.
Try to be discerning. For instance, if an ERP platform is suspiciously cheap, there may be more than a few things wrong with it. So proceed with caution.
Also, while the price point should certainly be one of the deciding factors, other criteria also count. These include how user-friendly the system is, how customizable it is, how sector-specific it is, and how well it works.
You may be the boss, but it’s okay to admit you don’t know everything – for instance, the specific ways that each department operates.
If time allows, sit down with your department heads and find out about the various challenges faced by your employees with regard to work processes.
That will help you make a more informed decision when choosing an ERP software provider. It will also help you to be aware of what to look out for, as well as any potential blind spots.
Some ERP software providers may even offer free trials of their offerings. If so, you should definitely make use of these trials.
Even if they don’t last for long, they will help you get acquainted with what you like or dislike about the system, as well as how smoothly it works. More importantly, you can decide if it suits your business functionalities.
Yes, you can certainly rely on your tech head to do this – but as the boss, you should be proactive too.
Remember, the best bosses are able to employ both a micro and macro approach to doing things.
Whether it’s through a free trial or a detailed product walkthrough by a product manager, it pays to take time from your busy schedule to understand how the ERP software you are thinking of getting works.
After all, you will have to learn how to use it at some point. So why not begin now?
For starters, ask all the questions you need to. A good way to tell if you understand how an ERP software works is if you can explain it to your tech team or other staff.
Above all, don’t forget why you decided you need ERP software for your company in the first place.
It should never be because everyone else is doing it. It should be because you want to make your business more scalable, or increase business efficiencies to enable various departments to work more seamlessly.
Always ensure that the eventual ERP product you choose aligns with your business objectives.
Don’t assume that everything will magically fall into place once you have made a decision and gotten the ERP system up and running.
In order for the ERP software to work well for your company, your employees need to get acquainted with how it works so they can make full use of its benefits.
Here are a few ways you can do this.
This is probably the most important step. Organize training sessions that include live demonstrations of how the ERP system works to help your employees get familiarized with it.
Even better if a representative from the ERP software company can be on hand to help or answer questions (this is usually chargeable).
It would be good if you can set up a test environment from which you can try out the ERP system without affecting your company’s data and operations.
About a month or two after implementation, ask your staff how well the system has been working for them.
Find out if they have any difficulties in operating the platform, and look for areas of improvement.
More importantly, check if your employees are able to do their work more quickly and effortlessly after the implementation.
How has the new system helped to increase efficiency and reduce grunt work? How intuitive is it? Are there are bugs or kinks that need to be ironed out?
It’s not the end of the world if you are unable to detect or track any return on investment immediately after implementing the ERP software.
It takes at least six months to a year for your employees to be completely used to the system. Once they are, you should start seeing a difference in the way they do their work and how various business functions are performed now with more automation on board.
Next, determine how this translates into cost savings or even profits for the company.
No system is perfect. Even if it were, your business is constantly evolving. A good ERP system should be adaptable to new demands and needs.
Determine the metrics of success, and be sure to review your objectives against what has been achieved so far.
The great thing about working with an ERP provider is that its modular nature allows for a good degree of customization. Don’t be afraid to check with your vendor how you can tweak the system constantly so that it can align more closely with your business goals.
Belinda loves thinking about random stuff, and collecting useless bits of facts and trivia. She often roots for the underdog, and believes the world needs more happy endings.