Ten Tips for Changing ERP (Enterprise Resource Planning) Systems
As a manufacturing business grows, there will come a point in time when you need to upgrade your ERP system to improve your reporting capability and insight to enable you to make smarter business decisions.
Companies use ERP (Enterprise Resource Planning) Systems to manage day-to-day activities such as accounting and compliance, procurement, risk management, and supply chain operations.
Changing systems can fill most business owners or directors with dread, but you can take steps to make the process as seamless as possible. HLB Ireland Partner John Duffy outlines his top 10 tips for getting a system change right.
1. Agree why you need to change
Once you've decided that a change is required, we'd recommend you take the opportunity to pool ideas from across the business. A period of 'consultation' to obtain everyone's thoughts at a micro level will assist with writing a detailed dossier. This specification should be a stand-alone document that contains the 'must haves,' 'needs', and 'wants' from all facets of the business, i.e. procurement, production, finance, sales and admin.
2. Prepare a detailed specification
Often the directors may feel they have outgrown their current system or that there will be limitations as the business grows. A change in ERP system impacts a number of different business areas so all views should be considered. Agreeing as a team on what the existing limitations are and the business impact they are having is crucial to get to the 'must haves' from a new offering.
Consider where the business is now and what the lifespan of a new system might be. This will impact the cost but if your 'must haves' are likely to change in a short timeframe, then a higher capability product could be worth the investment now, especially where changes in product offering or processes are anticipated.
4. Agree Internal resources for the project
A change of system needs someone internally to work with the system provider. This person needs to be the conduit for scoping, timings and deliverables. With several people in the business making requests it can be difficult to capture and ensure all needs are met. One person with ownership of a central document that can be shared and reviewed with the system provider, in order to understand project progress against milestones is recommended.
5. Try a number of suppliers
If you have a specification document, you can put this out to 'tender' with a number of potential suppliers. Brand loyalty may be misplaced as different versions can bear no resemblance to your existing system and so it's worth considering new offerings. We recommend discussing with customers and suppliers in your industry to find out the systems that have worked well and perhaps ones that haven't been as successful, and why. Engaging with a third party, although bringing extra costs, to sit in between you and the end software provider can be very beneficial. They can support in the specification, tender and implementation process to ensure requirements are met and also assist with (potentially) complex decisions that may be required throughout the process, using their experience to ensure the right outcome for you.
6. Don't underestimate how much time this will absorb
To meet the service provider's commitment, they will need information and deliverables from you in an agreed timeframe. If the complete information and deliverables are not provided in a timely manner, then it impacts the whole schedule which could be expensive in time and money.
7. Agree the scoping document and costs
Once the system provider has put together a detailed scope this needs to be carefully reviewed to make sure you're getting exactly what you require (this could be a long document but shouldn't be skimmed). We have seen clients suffer by not having a clear signed-off scope agreed with the system provider and the project has not gone to plan.
This is the point that costs have to be agreed. This will normally be a combination of software cost, consultancy fees (for the install and any bespoke development) and training to ensure consistent 'best practice' usage across the business. We also recommend you find out at the earliest point as to whether you require any additional hardware to run this new package which can significantly increase outlay, although many ERP systems are Cloud based which takes away additional hardware spend.
8. Agree Milestones for payment
We recommend that payment instalments follow a clear breakdown of the scope into smaller chunks, or 'milestones'. Sit down with the system provider throughout the process and agree where each deliverable has been met (this should be signed off by both parties) which would then trigger an invoice and payment.
9. Agree initial support
Having support when your new system goes live is crucial. Don't cut costs in this area. Work with the system provider to have a block of on-site support when you've gone live alongside typical telephone support to alleviate any issues as soon as possible. Disruption can have a real negative short-term impact so paying for a consultant on site is worth it in the long run.
10. Ongoing maintenance package
So, you've invested in your new software which hopefully brings a new-found utopia and more information and insight than you know what to do with, so here is where you need to agree a support package. This should be designed to include telephone support, ongoing staff training, report writing and regular system updates so your system is always running optimally, so you can get the most return on your investment.
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