A Dozen Ways to Get the Most out of Your ERP System
Experts share their tips on leveraging enterprise resource planning (ERP) software to get a better return on investment (ROI).
Whether you are looking to purchase a new enterprise resource planning (ERP) system or leverage a legacy system, the following tips and advice can help you improve your ROI.
Choose your ERP system carefully. "Selecting an ERP solution that best suits organizational needs can be an overwhelming task," noted Shawn Casemore, the founder of Casemore & Co. and an expert on supply chain and operational excellence. As a result, many IT executives jump at the first solution they see – and wind up disappointed (or worse).
That's why Casemore strongly advises doing some online research. "There are numerous websites which offer software comparisons and ratings, which can make this daunting task more manageable," he said. And not every ERP solution may be right for your business – or business processes. "Remember, 'best in class' is not always the best solution."
Define "success" for your ERP system. "Instead of the traditional 'on-time, on-budget' delivery of systems, success should be defined in terms of specific, measurable business benefits that the system delivers once it is actually used," said Jason Whitehead, founder and president of Tri Tuns LLC, an IT effectiveness and user adoption consulting company.
Assign executive ownership for user adoption and ROI. "Organizations need to assign a senior executive to be accountable for ensuring the [ERP] system is used effectively and delivering measurable benefits to the organization," added Whitehead. Moreover, he suggested tying ERP performance – adoption and ROI – to the executive's performance and compensation plan. "Quite simply, the executive needs a vested interest in ensuring the system delivers the benefits the organization needs."
Make data quality a priority. "While an ERP system will help you coordinate the where, when, why and how of your data flow, the value of the system is largely determined by the quality of the data moving through it," said Christina Shaw, director of marketing at helpIT systems. To make the most of your chosen ERP system, Shaw suggested organizations: a) perform a data quality audit (and perhaps a batch cleanse) before ERP implementation; b) identify business intelligence rules that can be integrated into your ERP as you implement; and c) invest in an ongoing data quality solution, "be that a third-party data cleansing software package that can work with your ERP or by purchasing a data quality module provided through the ERP itself."
Define business rules and processes. "To get the most out of your ERP system, define business rules guiding business processes and turn these rules into system settings," said Alex Korban, director of Aotea Studios. That way, "the system will enable near-real time reporting on transactions (operational, financial and inventory) and an audit trail will be maintained over time when business documents (orders, invoices, payments and packing slips) are reconciled in a timely manner."
Customize the platform to suit your business needs. "ERP software is typically developed as a one-size-fits-all solution," said Casemore. "However, implementing a solution out of the box in this manner can lead to reduced user productivity, poor quality reporting and user sabotage with the intent to prove the ineffectiveness of the system."
To get the most out of your ERP system, Casemore advises working with the software manufacturer or a certified professional services partner to help you customize the software, such as hiding unnecessary fields, adding additional fields and turning specific features on or off. "Customization is the key to a successful and efficient ERP solution, and the degree of customization possible should be part of the software decision criteria."
Evolve your ERP system in little bites (and bytes). "It's important to plan on regularly expanding, updating and changing your ERP system, but to do so at a reasonable clip," advised David Gelula, Sage ERP Accpac certified consultant and practice czar/consigliore at Azamba Consulting Group. "Adding EDI processing, online customer order entry and just-in-time automated purchase order generation may make your business more efficient in the long run, but too much new functionality may cripple productivity right out of the gates."
Invest in ongoing ERP software training. One of the biggest mistakes organizations make in terms of leveraging their ERP systems is "they do not provide ongoing training on how to integrate and use the ERP system," said Robert Nitschke, managing partner at Arago Partners. "Organizations do initial training, but once implemented, employees move on and their replacements must be trained and existing employees must be cross-trained on related functionality."
Leverage mobile apps. Take advantage of mobile apps that "provide visibility into metrics or allow data to be fed in," said Eric Sikola, CEO and founder of ExpenseCloud. For example, find an app that will allow you to take pictures of receipts, "entering in mileage and expenses and populating these into the general ledger." And if your ERP vendor doesn't provide basic mobile applications, look into third-party tools.
Make sure your ERP software is current. "Many companies assume that their ERP system isn't meeting their needs," said James Mallory of e2b Software. "Meanwhile, they are four versions back of the current release," and a simple upgrade will solve the problem – and often provide additional functionality.
Measure the ROI of your IT investment over the life of the ERP system. "Technology investments are like your financial investments," said Whitehead. "The ROI you get fluctuates over time and you need to constantly monitor and adjust your goals."
Don't be afraid of business intelligence (BI). "Business intelligence is just a fancy term for 'getting information out of your ERP system,'" said Erik Kaas, senior director of product management at Sage ERP. Rather than fearing BI, organizations should embrace it, especially as most ERP software packages now include intuitive, easy-to-use BI capabilities. And by using these value-added BI capabilities, "you can more easily query information stored in your ERP system, analyze trends and make informed business decisions."
Jennifer Lonoff Schiff is a regular contributor to EnterpriseAppsToday.com and runs a marketing communications firm focused on helping small and mid-sized businesses.