Enterprise Resource Planning (ERP) is the process of combining multiple data sources and processes into a streamlined system. Due to the high costs of ERP development, usually there are organizations that are specialized in ERP systems development.
ERP software products are built to be modular so that they can be easily deployed. Many organizations will have some common modules that they use, such as accounting and finance. On the other hand, modules such as manufacturing and supply chain management may not be required by all organizations.
ERP integration is an expensive, complex and a time consuming process. Therefore usually it is implemented as a three step process, which are,
- Consultation,
- Implementation and
- Support.
Consultation
When an organization considers ERP integration to their existing business processes, they usually seek out external expertise. This can be due to multiple reasons. First and foremost, since it is a complex project which has long term benefits, the organization will be better off getting advice from someone who has been in the industry and knows the benefits and disadvantages of existing solutions. ERP consultation costs vary greatly depending on the complexity of the project, the resources and allocated budget and time. For example, a large-scale manufacturing organization who is going to implement a nation-wide ERP system may even take years of consultation, compared to a small urban retain organization which can go through this process within weeks.
Implementation
Implementation is the most complex stage in ERP integration. Generally, many consultation firms will suggest that they implement a system with a solid history and a background. This is due to the inherit complexity in ERP systems. Even though some systems can be customized to support legacy databases and softwares, it is often a wise decision to transfer data to the new system so that the organization can gain the maximum benefits of the ERP system.
Implementation phase can span from two or three months to about two years depending on the project complexity. Necessary human resources are another factor to consider in ERP integration. Many organizations will outsource this process to a specialized organization, especially in short term projects. This organization can sometimes be the same consultation company they started with.
For large scale ERP integration projects, some organizations may chose to train or hire their own employees. This approach provides two benefits. Having their own staff reduces costs and provides technical in-house expertise. The other benefit is that the organization can be more confident in the project implementation since their own employees have a better understanding of the existing business processes. However, it is not uncommon to see the implementation of a hybrid solution, where outsourced specialized staff working along with in-house staff.
Support
After successfully integrating an ERP system, it is followed by the support phase. Supporting an ERP system is one of the crucial decisions an organization has to make because of its effect on the Total Cost of Ownership (TCO). Few of the primary costs to consider are the in-house and external staff hiring, staff training, infrastructure and software vendor fees. Even though for some small scale projects, in-house staff can be trained, a dedicated team is necessary for large ERP integration projects.
ERP Integration Issues
Even with careful planning, consultation and implementation, systems rollout can still present some major challenges. One of the key ERP integration issues is the offset between the existing business processes and the standardized solution offered by the ERP software vendor. There can be times where the organization will have to amend some of the existing rules for faster system deployment. When this occurs, the implementation teams must work closely with the core business decision makers to ensure that they do not lose their competitive advantages during the process.
Another integration issue that might arise is the data and system compatibility with legacy systems. Often organizations will chose to migrate data and eliminate those legacy systems. In large projects this process will require a specific data migration strategy.
ERP integration is a complex process which requires careful and thorough planning. Integration projects can take from weeks to years to be implemented. With experienced consultation, implementation and support, Enterprise Resource Planning can amplify the competitive advantage of a company.