Enterprise Resource Planning

Archive for the ‘Resource Planning’ Category

The implementation of an ERP system is always a difficult process. It’s also a very long and tedious process.

Even a simple project takes up to 18 months to complete. Larger the ERP implementation projects can span many years.

Perhaps the most important issue you will need to consider (often selecting the ERP software package) is the vendor who will be providing the hardware. There is some room for individual preference but generally the hardware environment is determined by the software package chosen. These days most the ERP systems are installed on client server hardware. Vendors which provide this kind of equipment include IBM, Unisys, Sun Microsystems, HP and Compaq. These are generally UNIX based systems that do come in different ‘flavours’. So it’s important to establish whether or not you all preferred hardware platform is appropriate for the ERP software which you have selected. Most ERP vendors have ‘strategic alliances’ with hardware companies. For example, SAP has over 18 ‘preferred vendors’. By choosing one of these suppliers you will go a long way in minimising the implementation risk.

The other key decision to be made is where you will source personnel with the right skill set to implement the ERP package. Here you have three options: you can use your own staff, or you can use staff provided by the ERP vendor, or can engage the services of an established the ERP consulting firm which specialises in the implementation of such products. This is the preferred option – but it’s also the most expensive in the short term. Some of the major players include Accenture, Coopers & Lybrand, EDS, Ernst & Young and Deloitte & Touche. Again, checked with you ERP vendor as they may have an local arrangement with a consulting company in your area.

Using your own staff might seem like a good idea given the costs involved in outsourcing this to a third-party. This is ’false economy’ because it is highly unlikely that your staff and have the required skill sets. Training them costs money and time. A more effective use of their time is to get your staff to document your company’s business processes. This is a key task in the project and is best done by people who know your business. If you do use outside consultants, make sure that they transfer of skills to your staff so that they can maintain the product in the future.

Many software companies provide ERP solutions. On the surface it may seem as though there are a very few differences between various products.

Whilst it is true that functionally most products of similar, there are some key differences in the design and internal workings of the various products. Many companies select a particular select vendor for the wrong reasons. For a sample, they might make their choice on software costs alone or, were still, because that’s vendor dominates their industry. These reasons are not valid and should not be used in the evaluation process. In this article I am will highlight some of the key points I key managers need to consider while conducting an ERP evaluation.

Reduce budget overruns. ERP systems on notoriously difficult to implement. The human cost of installing and customising the software is often three to four times more than the software itself. This is the reason why many ERP vendor’s as well as the so-called top consulting companies offer consulting services focusing on implementing ERP packages. If possible try to negotiate a fixed-price contract. The vendor will therefore except the implementation risk and the possibility of cost overruns is dramatically diminished.

Inappropriate customisation. One reason why the ERP systems are so popular is that they are designed to automate well engineered business practices. Unfortunately, most businesses have practices which are not best of breed. The temptation is to modify the software so that it handles their poor business practices. This is one way of guaranteeing a failed implementation. A much better solution is to streamline your business processes before implementing the software. This way you get to customise the software less. This should improve the chances of a successful implementation.

Automate the mundane. There are some things unique about your business which give you a competitive advantage. These other things which should not be automated and your ERP solution should not address these functions. Your ERP package should only automate those functions which are common across all industries. These are what we call the mundane function. They don’t add any real value to your business, but must be handled efficiently for your business to survive.

Scope correctly. Your company’s view of the world might be quite different to that of the ERP vendor. ERP solutions come in modules. Each module would address one or more business function, and the modules are usually sold separately. You will need to work out which modules you require and only purchase those modules. This is well have the effect of reducing both the cost and the risk of implementation.

On a previous page (www.resource-planning.net/erp-vendors.html) we shortlisted some of the main ERP companies providing ERP solutions to the market. Each of these companies have strengths and weaknesses which we will discuss in this article.

One of the reasons why SAP is the market leader is that it can accommodate companies operating in most markets and most industries. Be in table driven, the SAP software is extremely flexible, and easily meets the functional requirements of all types of organisations including banks, retail, manufacturing companies, insurance companies and service bureaus.

One area where it is a key faces strong competition is that of Human Resources. PeopleSoft is the clear the ERP leader in this area. Companies which have a strong focus on their employees often choose the PeopleSoft HR module. It’s actually not uncommon for these companies to “mix and match”. ie. Use PeopleSoft for HR, and then another ERP vendor for other functions. Whilst this approach is not usually recommended, sometimes it might be necessary. The reason why it is not recommended is that the major benefit of the ERP systems is the integration of all business functions in a single software package. If your company chooses to do this, you will require additional configuration and possibly even custom programming.

The ERP companies invest heavily in their software but also have dedicated resources available to help their clients implement their product. Most of the companies listed on www.resource-planning.net/erp-vendors.html have over 50% of the staff dedicated to supporting their clients. Make sure that the ERP vendor you select has the resources necessary to support you in your ERP implementation. An alternative to using specialists from the ERP vendor, is to use consulting companies which specialise in implementing ERP solutions. Accenture is probably the best known consulting company working in this area. However, they are a large international company with a matching cost structure. The fees are therefore very expensive and you might do better by engaging a smaller company which is located in your area. If you go down this path, make sure that the company you select has the necessary skilled resources required to implement the ERP system and you choose.

All in modern ERP companies provide software solutions which can successfully run on various hardware platforms such as mainframes, UNIX, and windows-based PCs. These days it’s the very rare for a company to implement an ERP system on a mainframe. This hardware is very expensive, difficult to support, and no longer “leading-edge”. A better solution is almost always to go for a client-server implementation.

There are some companies that need a lot of improvement. There are also some companies who do not seem to need any improvements right now but still do.

The owners of these companies know that they need to do a lot of work to retain that way. So even if the company is number one right now, it does not remain that way because companies and industries evolve. That is why companies show the need for Enterprise Resource Planning because it helps in the back room processes which usually take so much of the employees’ time because they do the tasks manually.

What Enterprise Resource Planning does is it connects all the functions of the different departments together. It connects and it improves the processes. It automates processes that used to be done manually before. When automation is successful, expect major changes per position because there are some positions that will be unified and made as one. So if there used to be 3 employees who did the task before, expect it to be done by only one employee now. That is how efficient ERP is. It saves up on manpower cost, saves time and energy and it simplifies everything. No wonder owners look at ERP for solutions to existing company problems.

How To Manage Enterprise Resource Planning Some employees do not look upon change kindly. It is fear of the unknown. And some are not acquainted with ERP, especially not in the lower ranks of the organization.

So to prevent employee apprehensions and therefore low morale, management installs ERP in parts. The thing with ERP is change is inevitable. And management should be able to manage that. It may even come to the point when management hires a consultant to help out with the implementation of ERP because of employee resistance. And some may even let go of employees and hire new ones to handle the changes brought upon by the changes. With or without a consultant, what helps is for management to be able to manage the employees.

Implementation of ERP entails risk but once you get past employees’ angst and negative attitude towards it, your company will soar. Some companies have testified how everything is worth it. It just needs to be done right. Do not leave anything to chance. And let ERP do it’s work. Although before implementation of ERP, management needs to do a lot of planning prior to it’s implementation and if you can train your employees for them to become skilled and equipped to handle the changes, that would better because what you have are employees who will be welcoming changes that will be brought upon them by ERP.

Employees will feel that management cares for them. Thus, employees will care for their company and clients. Happy employees mean happy clients and vice versa.

Baan takes its name from its founder Jan Baan, who founded the company in 1978. As with the other major European ERP vendor, Baan started out as a small software company specialising in integrated company software initially for its home market.

In the case of Baan this was the Netherlands. Baan is best known for its close ties with the Dutch Reformed Church, a conservative Protestant church in Holland. They were a conservative company, employees were not encouraged to be away from the homes on Sundays and women were required to dress conservatively.

At its peak in the early 1980′s, BAAN the ERP system was considered to be the best of its kind and was the ERP system of choice for most European companies. However, numerous scandals which rocketed the company resulted in a loss of confidence and an associated decline in its market share in the ERP market. Eventually in June 2000, Baan was sold to Invensys and subsequently sold to SSA Global Technologies for $135 million. Their ERP offering is no longer promoted as BAAN, but now known as SSA Baan.

Their tagline is ‘Forward Faster’ because they believe your enterprise cannot wait. In addition, SSA global develops and implements software solutions in shorter timeframes helping you with this goal.

SSA Baan offers an open-ended technology solution works application breadth and can be used by multinational organizations. It has the range of modules expected from a major ERP vendor such as enterprise resource planning, global financial management, human capital management, corporate performance management, customer relationship management, product lifecycle management, business intelligence, supply chain management and supplier relationship management.

SSA Baan helps companies by increasing use of productivity and reducing costs. It claims to offer comprehensive support for manufacturing operations by extending functionality for Finance, Sales, Purchasing, Manufacturing, Freight and Warehouse management. As far as ERP systems go, SSA Baan is considered easy to implement and maintain. It has a dynamic modular architecture which lends itself to implementation on a range of hardware platforms including traditional client/server systems.

The company has grown dramatically over the last 30 years and now has subsidiaries in well over 50 countries. They on the third largest software developer in the world employing 27,000 people and have almost 20,000 customers. The annual revenue is almost $8 billion. One final interesting statistic is that there are almost 55,000 installations with more than 10 million users!

SAP R/3 is the ERP software product which put SAP on the map. Their earlier product (SAP R/2) was the first integrated enterprise wide application designed to run on mainframe computers. This product was primarily sold in the German market. In fact, almost every large German company had an installation of SAP R/2.

By the late 1980s mainframe computer architecture had become almost obsolete, with client-server system is gaining in popularity. In 1992 SAP introduced SAP R/3. This ERP application was specifically designed to operate on client-server architecture. It also has the depth of functionality and robustness of R/2.

SAP R/3 is extremely customisable. It ships with the standard processes switched on, but thousands of other optional features switched off. There are about 10,000 tables which allow for thousands and thousands of configurations of the various processes and how they can be executed. By adjusting the values of these tables, if SAP can be configured to perform exactly the way you will need to be. This is the true benefit of the product.

SAP offers true enterprise functionality. Key modules include Financial Accounting, Management Accounting, Sales, Distribution, Manufacturing, Production Planning, Purchasing, Human Resources, and Payroll. Furthermore, these modules of highly integrated.

Unfortunately, the learning curve to master SAP is very steep. To ensure a successful implementation, you will need to get skilled resources. These resources can be supplied by SAP or any of the so-called ‘top 8′ consultanting companies. Don’t underestimate the cost of implementation – it can be four or five times more than the software costs!

SAP also offer a comprehensive training program for its customers. Again, this doesn’t come cheap. But it makes sense to invest in training who owns staff as this will offer your company better long-term value and you will be less reliance on expensive external resources.

What do businesses need these days? Aside from the sales that is. Businesses need ERP or Enterprise Resource Planning to be able to move forward.

Always work for a company that is moving forward and never at a standstill or worse a company that moves backward. Always strive to improve yourself and if you are an owner of a company, do not aim for the improvement of the company only but strive to improve the businesses processes, attitude and sales of the company. In sort, improve all aspects of the business.

Where does ERP come in all of this? Well, ERP makes this all possible. It creates changes for the better. It encompasses improvements in all areas of the business. Be it supplies, employees, clients. In other words, everything and anything.

So if you are a company owner and you want to make changes for the better and do not know where to start, know ERP. Learn about it and put some people on it to learn about it and interview other companies who are in the same industry who have incorporated ERP into their system. In that way, you will know what ERP can do for you, your people and your business.

Companies are implementing ERP systems at a record pace. With this, comes the growing demand for people who have the skills necessary to implement Enterprise Resource Planning software.

This demand has created a severe shortage of ERP staff, so there are on now opportunities for qualified professionals to consider a career in ERP. In addition to the generic positions available in any IT project such as database administration, testing, network administration; ERP implementation has two primary job options. These are Functional and Technical consultants.

FUNCTIONAL CONSULTANTS

Functional Consultants are experts in specific business processes. The consultant needs to be able to analyse the business processes of an organisation after the ERP system has been implemented. He or she would then design the new process for that particular function.

Ideally, a functional consultant would have a degree in business, possibly even an MBA. Furthermore the consultant will need additional training in the ERP software he is implementing. This training is best sourced from the vendor of the software.

Once the consultant has demonstrated his ability is, he many takes on more of an architectural and be responsible for the design of the entire ERP system – not just one business function.

TECHNICAL CONSULTANTS

Technical Consultants developed the reports, screens and forums as specified by the Functional Consultants. They are essentially software developers and code software to accommodate business requirements.

Technical Consultants should have a degree in Information Technology (IT). As in the case of Functional Consultants, they will need specialised training from the software vendor. Companies often prefer to train their own staff in the nuances of their software environment so there is no need for you to invest in this training prior to applying for these jobs at an entry-level. You will probably need at least eight years experience in traditional IT applications to be considered for roles.

As you get more senior, you will probably end up working as a typical architect being responsible for the overall technical design of the implementation.

ERP staff are very well paid. In general, they will receive 50 to 60% more than the equivalent traditional IT role. In addition, there are always opportunities for the excitement of international travel. Benefits always come at a price. These roles are very demanding and challenging. It is not uncommon for ERP consultants to 18 hour days for periods of weeks at a time in a high-pressure environment.

SAP customers always fear software upgrades. This fear is usually unwarranted and based more on lack of understanding than anything else.

One fact which should put your mind at rest is that SAP actually intended the customer to perform the upgrade themselves. It is true that upgrading SAP modules and components is not as simple as running an upgrade.exe file to magically run the process automatically. But, it is not that complicated. The purpose of this article is to take the mystery out of upgrading your SAP ERP system.

Before discussing the upgrade, we should mention some key success factors. It is important to take a disciplined methodical approach is to the upgrade. Try not to deviate from the plan. The plan is your roadmap and will provide guidance throughout the process. Upgrading is a team effort and is important to define the roles and responsibilities before the upgrade begins. Key members of the team are technical staff (including specialised external consultants), business process staff and to the users.

During the upgrade you will need to reference documentation including the SAP upgrade roadmap, upgrade manuals, and of course the upgrade script.

You will also need to plan for system downtime. This is the time when your SAP is not available for use. It is best therefore to schedule an upgrade during a quiet period, possibly over a long weekend. Upgrades can take three or four days.

There are also some long lead items which need to be addressed prior to scheduling the upgrade. These items include the availability of key personnel, new hardware (if required), upgrading your database and upgrading the operating system. Murphy’s Law certainly applies to upgrades: If anything can go wrong it usually does! Hopefully your upgrade will proceed with out any major issue, but it is prudent to have a plan to follow if things do go wrong. This contingency plan should comprise of a series of go/no-go decision points. These are critical stages in the upgrade process and you need to be able to roll back to you all original configuration if a critical point is not negotiated successfully.

Finally, be aware that some third-party applications might be impacted as a result of the upgrade. These products include programs to copulate sales tax, credit card authorisation modules, job schedulers, system monitoring programs and print management systems.