www.cio.com/research/erp/edit/erpbasics.html
People in these different departments all see the same information and can update it. When one department finishes with the order it is automatically routed via the ERP system to the next department. To find out where the order is at any point, you need only log in to the ERP system and track it down. With luck, the order process moves like a bolt of lightning through the organization, and customers get their orders faster and with fewer errors than before. ERP can apply that same magic to the other major business processes, such as employee benefits or financial reporting. Finance did its job, the warehouse did its job, and if anything went wrong outside of the departments walls, it was somebody elses problem. With ERP, the customer service representatives are no longer just typists entering someones name into a computer and hitting the return key. It flickers with the customers credit rating from the finance department and the product inventory levels from the warehouse. These are decisions that customer service representatives have never had to make before, and the answers affect the customer and every other department in the company. But its not just the customer service representatives who have to wake up. People in the warehouse who used to keep inventory in their heads or on scraps of paper now need to put that information online. If they dont, customer service reps will see low inventory levels on their screens and tell customers that their requested item is not in stock. Accountability, responsibility and communication have never been tested like this before. People dont like to change, and ERP asks them to change how they do their jobs. The software is less important than the changes companies make in the ways they do business. If you use ERP to improve the ways your people take orders, manufacture goods, ship them and bill for them, you will see value from the software. If you simply install the software without changing the ways people do their jobs, you may not see any value at all&151indeed, the new software could slow you down by simply replacing the old software that everyone knew with new software that no one does. Dont be fooled when ERP vendors tell you about a three or six month average implementation time. To do ERP right, the ways you do business will need to change and the ways people do their jobs will need to change too. Unless, of course, your ways of doing business are working extremely well orders all shipped on time, productivity higher than all your competitors, customers completely satisfied, in which case there is no reason to even consider ERP. The important thing is not to focus on how long it will take&151real transformational ERP efforts usually run between one and three years, on average&151but rather to understand why you need it and how you will use it to improve your business. Integrate financial information &151As the CEO tries to understand the companys overall performance, he may find many different versions of the truth. Finance has its own set of revenue numbers, sales has another version, and the different business units may each have their own version of how much they contributed to revenues. ERP creates a single version of the truth that cannot be questioned because everyone is using the same system. Integrate customer order information &151ERP systems can become the place where the customer order lives from the time a customer service representative receives it until the loading dock ships the merchandise and finance sends an invoice. By having this information in one software system, rather than scattered among many different systems that cant communicate with one another, companies can keep track of orders more easily, and coordinate manufacturing, inventory and shipping among many different locations at the same time. Standardize and speed up manufacturing processes &151Manufacturing companies&151especially those with an appetite for mergers and acquisitions&151often find that multiple business units across the company make the same widget using different methods and computer systems. ERP systems come with standard methods for automating some of the steps of a manufacturing process. Standardizing those processes and using a single, integrated computer system can save time, increase productivity and reduce head count. Reduce inventory &151ERP helps the manufacturing process flow more smoothly, and it improves visibility of the order fulfillment process inside the company. That can lead to reduced inventories of the stuff used to make products work-in-progress inventory, and it can help users better plan deliveries to customers, reducing the finished good inventory at the warehouses and shipping docks. To really improve the flow of your supply chain, you need supply chain software, but ERP helps too. Standardize HR information &151Especially in companies with multiple business units, HR may not have a unified, simple method for tracking employees time and communicating with them about benefits and services. In the race to fix these problems, companies often lose sight of the fact that ERP packages are nothing more than generic representations of the ways a typical company does business. While most packages are exhaustively comprehensive, each industry has its quirks that make it unique. Most ERP systems were designed to be used by discrete manufacturing companies that make physical things that can be counted, which immediately left all the process manufacturers oil, chemical and utility companies that measure their products by flow rather than individual units out in the cold. Each of these industries has struggled with the different ERP vendors to modify core ERP programs to their needs. Its critical for companies to figure out if their ways of doing business will fit within a standard ERP package before the checks are signed and the implementation begins. The most common reason that companies walk away from multimillion-dollar ERP projects is that they discover the software does not support one of their important business processes. Or they can modify the software to fit the process, which will slow down the project, introduce dangerous bugs into the system and make upgrading the software to the ERP vendors next release excruciatingly difficult because the customizations will need to be torn apart and rewritten to fit with the new version. Needless to say, the move to ERP is a project of breathtaking scope, and the price tags on the front end are enough to make the most placid CFO a little twitchy. In addition to budgeting for software costs, financial executives should plan to write checks to cover consulting, process rework, integration testing and a long laundry list of other expenses before the benefits of ERP start to manifest themselves. Underestimating the price of teaching users their new job processes can lead to a rude shock down the line, and so can failure to consider data warehouse integration requirements and the cost of extra software to duplicate the old report formats. A few oversights in the budgeting and planning stage can send ERP costs spiraling out of control faster than oversights in planning almost any other information system undertaking. Meta Group recently did a study looking at the total cost of ownership TCO of ERP, including hardware, software, professional services and internal staff costs. The TCO numbers include getting the software installed and the two years afterward, which is when the real costs of maintaining, upgrading and optimizing the system for your business are felt. Among the 63 companies surveyed&151including small, medium and large companies in a range of industries&151the average TCO was $15 million the highest was $300 million and lowest was $400,000. While its hard to draw a solid number from that kind of range of companies and ERP efforts, Meta came up with one statistic that proves that ERP is expensive no matter what kind of company is using it. The TCO for a heads-down user over that period was a staggering $53,320. It is a navel-gazing exercise that focuses on optimizing the way things are done internally rather than with custom...
|
http://csua.com/feed/