The 4 Rules of ERP Implementation and Operation
In today’s fast-paced business landscape, ERP systems play a pivotal role in streamlining operations, enhancing productivity, and maintaining a competitive edge. We understand that ERPs are the backbone of modern organizations. However, we also recognize the critical importance of strategic planning to prevent ERP implementations from negatively impacting your business. In this article, we present four essential rules for achieving a seamless ERP implementation while keeping the total cost of ownership as low as possible.
Rule #1: ERP Is Core, But Not the Whole Story
Your ERP system is undeniably central to your business operations, but it should not constitute 100% of your business processes. Relying solely on your ERP for all operations can lead to rigidity and inefficiency. While ERPs excel at automating core transactional processes, remember that they may not be the best fit for all aspects of your business. To maintain flexibility and agility, consider integrating other specialized software solutions that complement your ERP. This approach ensures that your ERP system is not overloaded with non-core functions and remains responsive.
Rule #2: Avoid Custom Code Development
Custom code development by your ERP vendor might seem like a quick fix to address specific needs. However, this approach can lead to several issues:
- Limited Automation: Vendors can only automate transactional processes that are core to ERP. Custom code for non-core functions can be inefficient.
- Declining Responsiveness: After the initial implementation, vendor responsiveness for future development often diminishes.
- Upgrade Costs: Custom code necessitates dedicated testing whenever your ERP undergoes an upgrade, incurring additional expenses.
- Maintenance Challenges: Features and options that are adjusted or deprecated during ERP updates can negatively impact custom code, requiring frequent revisions.
Instead, embrace the principle of minimal customization. Rely on your ERP’s existing capabilities and fields creatively to meet unique business needs, reducing long-term complications and costs.
Below are 2 examples of minimal customization:
- 3rd Party Billing for Trucks: Store third-party billing information in a dedicated field like “Ship to Code” with a designated code (e.g., “BOL”). Use this field to indicate third-party billing when necessary.
- Transfer Orders: If the software lacks a standard function for intercompany transfers, utilize the Inventory Movement function and modify the Comments field. This way, you can specify the trucking company and customize reports accordingly.
Rule #3: Embrace Change and Agility
In today’s dynamic business environment, change is inevitable. Your business model will evolve due to acquisitions, external forces, or the need for ongoing agility. To adapt effectively:
- Be prepared for changes in business processes resulting from acquisitions or external factors.
- Continuously update your business processes, workflows, and automation to remain agile.
Rule #4: Keep ERP Total Cost of Ownership Low
ERP systems often represent the most substantial budget line item in an IT budget. To minimize costs:
- Avoid forcing acquired ventures onto your existing ERP when it’s expensive and unnecessary.
- Delay major ERP upgrades until system functionality becomes a critical concern.
Implementing an ERP system successfully is not just about the technology; it’s about aligning your strategy, processes, and resources effectively. By following these four rules – recognizing that ERP isn’t everything, avoiding custom code development, embracing change and agility, and keeping total cost of ownership in check – your organization can harness the full potential of ERP while maintaining flexibility, cost-efficiency, and adaptability. At our technology consulting firm, we stand ready to guide you through the intricacies of ERP implementation, ensuring your success in today’s ever-evolving business landscape.