5 Mistakes to Avoid When Outsourcing an ERP System

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An integrated ERP solution can do wonders for a company’s efficiency and effectiveness. The advantages of having a cohesive ERP software that handles all the business processes is a goal worthy of time, effort, and the financial resources allocated to it. But the process of selecting the proper enterprise software and implementing it can be a nightmare if done without due regard to the complexities involved.

ERP systems must be a good fit for the company’s requirements. There are a myriad of factors to consider when outsourcing your ERP solutions. Otherwise, disasters such as total failure and wasted man-hours will occur. Here are the major five mistakes that must be avoided and the solutions that will help you create and implement a feasible ERP strategy.

1. Inadequate Planning and Low Level of Support from Top Stakeholders

Poor planning will almost guarantee that your ERP solution fails. Take time to assess the costs and benefits. Also, try to determine how much the ERP software will impact the organization once it has been deployed. The planning must cover all phases of the project, i.e. from requirement analysis to deployment and maintenance. Any phase that is poorly planned will affect the project negatively. So, it is necessary to determine the specifics of scope, complexity, and size of the project.
Ensure that the key stakeholders, (the top management of the company such as CEO and the CTO) are on board for the ERP implementation process and are fully committed to the project from the beginning to end. Detailed documentation of every step is also crucial.

2. Poor Change Management Preparation and Inefficient Training

Employees will be most affected by the implementation of ERP system. If inefficient training about the new business process is provided to them, it may lead to job dissatisfaction and high employee turnover ratio.
Since ERP implementation will entail major changes across the organization, handling this enterprise-wide change has to be done according to a pre-set plan. So, the ERP team has to make sure that the solution fits well into the corporate culture and the affected businesses process is transitioned over properly. Though employees may resist this change in the beginning as they are used to performing their tasks in traditional ways, proper training programs will ensure that the employees realize the benefits of the software solution and learn how to use it effectively.

3. Selecting the Wrong ERP Solution that Misaligns with Business Processes

Companies often fail to identify the needs that the ERP solution has to address. This can lead to problems as big as choosing the wrong ERP vendor or failing to incorporate the ERP solution into the organization’s business processes. Though these are worst-case scenarios, even if the solution is misaligned with a few levels of organizational structure, the effects may turn into bigger problems in the future. This leads to loss of time and productivity that end up making the stakeholders question the wisdom of such a costly project.
The decision for deploying enterprise software should be objective and the features offered by the vendor must match your business requirements.

4. Failing to Estimate Resource Usage and Misallocation of Resources

ERP systems are complex as they require a lot of steps to be implemented successfully. However, changes are rolled out slowly. As the changes are made, the new processes are also being tested to see that they perform up to the mark and as expected. If you assume that the vendor will take care of all these steps, you are mistaken. Vendors are experts in their respective fields but they require detailed information and feedback from the organization while they work on implementing the chosen ERP systems. Therefore, your company is responsible to allocate the required resources that are involved in the process. The right resource allocated to the right task at the right time will make all the difference.

5. Considering That ERP is a Simple IT Project

Assuming that implementing ERP solution is just another easy-to-handle IT project is a mistake which can cost a lot to even the largest organizations. Making this mistake in the form of negligence while implementing crucial steps of ERP may result in wastage of time and other valuable resources.
So, if you are investing in an ERP solution, you should carefully review your business plans and ensure that these deadly mistakes do not cause any failure to your business objectives.

5 Signs Your Business is ready for an ERP System

As you expand your business, you will inevitably experience some growing pains but the transition into a professionally run company can be a lot smoother if you know when it’s time to update your software
As a company grows, you undergo several stages of development and several stages of formalising your business processes. From payroll and accounts to IT systems and marketing, you add the relevant processes to your operations and learn as you go along. For small companies, it is inevitable that these process will be separate and disjointed – you can only do what you can at the time. When companies reach a certain size in terms of profitability and/or number of employees, a reactive approach to adapting to the changing nature of your business is insufficient. There will come a time when you need a comprehensive top-down approach to your operations and strategy. This is when you need to implement an Enterprise Resource Planning system (ERP).

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What is ERP?
ERP is a kind of software that allows for the integration of various different business processes including human resources, accounting, marketing and IT. It allows businesses to have a cohesive approach to their business operations instead of running different software programs for different parts of the business. It often saves money, time and allows for a greater top down view of the business. Here are the tell-tale warning signs that you need to adopt an ERP solution:

Your IT is becoming unmanageable

If your IT system is constantly experiencing problems, from the website and email servers to remote working, then you may be in need of ERP software. If your IT technicians are constantly putting out fires, then you definitely need ERP software. It could be time to stop solving problems by adding another layer of software and start afresh.

You don’t have direct access to information about your business

If you find yourself unable to easily access past sales figures, client buying habits and profit margins, then your systems are inadequate. ERP solutions can collate all this data and present it to you ready for straightforward analysis.

Accounting is unnecessarily difficult

Accounting is never easy but it is not that complicated either. If you are battling with paper invoices and several spreadsheets, you need to find a better way. Outdated accounting software designed for smaller businesses will slow your accounting team down.

You never know exactly how much stock you have

ERP software tells you exactly how much inventory you have at any given time. Without adequate stock keeping, client orders will be late or unfilled. This when the complaints start piling up. ERP software allows you to effectively manage your stock so that you have exactly the right amount at any given time, all according to your specific client requirements.

Different departments are using different software

This is standard for growing companies but once you are at the level where you are using professional software to manage your processes, you should be looking to adopt an integrated ERP solution to bring it all together.

The bottom line is that when simple processes become unnecessarily complicated and time consuming, you should consider upscaling your process management. The benefits of an ERP solution are huge – it can allow for smooth and efficient operations as well a top down view of your business that allows you to develop strategies for the future instead of constantly reacting to problems.

 

Are you cutting overheads? An ERP System is what you need first!

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Small and medium sized businesses need to be smart about where they focus there spends and constantly review the costs of their overheads. With regular profits it’s only natural that the company will grow, but if they’re a company that relies on a certain income to survive and something falls through, then they might need to start finding ways to cut down their unnecessary costs. Rather than letting go of employees or making them work overtime, it might be an idea to look at your enterprise resource planning software first (ERP software) to see how you can streamline processes and reduce your expenditure.

Small and medium sized businesses need ERP solutions as much as they need profits. Why? Let’s look into this in detail.

ERP solutions is like your backend office. It takes care of the administration that no one wants to be a part of. Even if there is a person or a team of people working in administration, they require an employee salary equivalent to a sales or team leader role, the difference is the later is growing your business and contributing to the profits of your company. This is not to say that an administration team is not important but if your company is struggling to make ends meet then it might be an idea to review your backend operations and see if it is still necessary considering the running costs. With some research you may find that many alternative solutions have emerged.

Some businesses, which can afford to, outsource their work to other even smaller companies working ashore. Is this feasible? This might be beneficial in some scenarios but it’s not a perfect solution. You need to imagine a backend office, working odd hours behind the scenes where it is difficult to manage processes when you cannot oversee the daily workings of your business.

After all, what your business needs is a piece of technology that does everything a backend office does with the help of a few clicks. How? The answer is ERP solutions. These enterprise solutions allow you to handle all kinds of data efficiently and seamlessly. Human resource, payouts, business processes, project management, you name it. An ERP solution will allow you to have full control over your business and at the same time reduce overheads costs, especially if you are a tech-savvy business leader.

Furthermore, ERP solutions are offered in different packages to suit the needs of every business structure. You need some and then you don’t need some, and these packages allow you to choose what suits your business the best in terms of operations and affordability.

A business leader who is considering implementing an ERP solution needs to keep in mind, that every ERP software should be given a test-run. This is the best way possible to move forward with a particular software solution and to establish if it’s the best system to replace your current day to day processes.

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