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What is the Cost of Implementing ERP

As a company begins to grow from a small to mid-size enterprise, it becomes more and more complicated to keep up with the company’s success. With growing demands and an influx of new data to manage, it can be difficult to continue to function at optimal capacity.

Implementing a Enterprise Resource Planning (ERP) system is what many manufacturing companies turn to help manage the work load. The process may not be easy, but when considering the time and effort it takes to collect, interrupt and keep track of data on a spreadsheet (especially if you are a medium to large size enterprise) it is well worth the time and money.

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ERP Consultant

Do You Need An ERP Consultant?

Nowadays, a growing number of companies are facing the choice of whether to hire an ERP service provider or not. Some of them swing between ERP consultants and systems integrators, who could help them with the ERP implementation process. However, most business owners decide to launch an ERP initiative themselves, without considering the knowledge and skill set of a specialist.

What do you think? Do you really need a high-priced ERP consultant to help you plan a new ERP deployment or upgrade an existing solution? Probably, not. Then why should you hire him? Even more important, why should you choose an ERP consultant over a software integrator? Let’s take a quick look at some points you should consider.

ERP Consultant

  • Knowledge and experience: The job of an ERP consultant revolves around implementing and customizing ERP solutions. Thus, he has greater expertise than a regular systems integrator or in-house IT personnel. Additionally, an experienced consultant has managed many ERP projects. As an expert on all the aspects of ERP project management, he will be able to guide you in the selection of the right software solution for your company along with the modules and features you need for industry-specific operations. Above all these, a good consultant can tailor any ERP environment according to your needs, without disrupting your business operations. In tune with both the ERP solution he provides and your organization’s needs, the consultant can also offer your employees the training they need to exploit the system beyond its apparent potential.
  • Support: Frequently, ERP consultants develop proprietary code, hotfixes, work-arounds, and utilities that make ERP implementations go smoothly and quickly, while improving the entire IT infrastructure. Most of them also provide post-implementation support. Though you have to pay for support services, a reliable consultant will be there 24 hours a day, 7 days a week, ready to help you avoid, address, and solve a series of issues that can “derail” your company. Compared to what you stand to lose in case of prolonged downtime, it’s worth spending money on support.
  • Biased decisions: Since most ERP consultants provide specific products and services, many of them will try to steer you into a specific product line. However, a true professional will analyze your business and tell you whether or not the ERP product he provides matches your needs. Some ERP consultants looking to build trust go even further. Putting customers’ interests above their own, they recommend the most appropriate ERP system for each company, even if this means sending customers to the competition.

Since we’re talking about trust, an honest ERP consultant will always explain the implications of a sizeable ERP initiative so that the business owner or the manager in charge of the project can allocate enough resources to ensure a successful system implementation. In addition, he will provide detailed information about the modules and features you can benefit from, indicating clearly what the system can and cannot do. He will also help project initiators decide what’s best for the company. In a nutshell, an honest consultant can help you get the right ERP system for your business instead of a “parasite” that will deplete your resources.

Most business owners and managers running day-to-day operations think they know their businesses. But what they don’t know is that choosing an ERP solution requires much more than understanding business processes. An ERP consultant, on the other hand, can accelerate the deployment process, minimize ERP risks, and offer a fresh vision that recognizes the complexity of process-oriented environments. All these points are extremely important for a company planning to adopt fully integrated business software and increase the value of its ERP undertaking. Though any ERP project requires a consultant’s input at some stage, careful research and consideration will help minimize your company’s exposure to potential drawbacks.

Given the above, it all boils down to one question: do you want a systems integrator who can help you implement a piece of software, or an ERP consultant who can turn a simple ERP implementation into an on-going success and positive revenue experience? The choice is yours, but don’t forget that choosing one over the other will make the difference between success and failure.

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MRO Manufacturing ERP

5 Ways Manufacturing ERP Can Improve Product Quality

Manufacturing ERP systems provide multiple quality management tools that discrete and process manufacturers can use to optimize their processes and deliver high-quality products at competitive price levels. The quality modules included in most ERP packages are fully configurable, allowing users to implement quality control functionality in flexible ways, by simply enabling or disabling a wide variety of features and parameters.

Do you wonder how an ERP system can help with product quality management? If yes, below are five ways you can use such a system to improve the quality of your products.

Manufacturing ERP

  1. Address variations: Manufacturing variations, ranging from ingredient, recipe, and formula to temperature, humidity, ventilation, and pressure variations, can greatly affect product quality. Not only ERP systems allow manufacturers to monitor and keep variations within definite limits, they also facilitate real-time equipment monitoring, machinery analysis, and remote data acquisition to ensure the best quality possible. By configuring ERP systems to track all variations, send alerts before deviations exceed preset values, and automatically take certain corrective actions, you can expect to manufacture higher quality products over time.
  2. Plan: Product quality starts with a plan. Using a manufacturing ERP solution to develop a quality plan will ensure that all of your employees will follow the same route, from raw material procurement throughout production to delivery. Additionally, new ERP features and functions have been developed to block inventory during and after the planning phase, allowing you to reserve the resources required (e.g. materials, documents, sampling, instruments, areas, etc.) and prevent the use of non-approved inventory. Manufacturers can also include in their plans various requirements, ranging from certificates of conformance, product specifications, employee IDs, and transaction IDs to other details essential to achieve a certain quality level.
  3. Ensure data accuracy: Manufacturing high-quality products consistently is impossible without timely, accurate, and complete ERP data. Since end products reflect any quality issues that may arise during the manufacturing process, capturing and synchronizing information as accurately as possible, while new data is added, is critical to ensure that you’re regularly meeting certain quality criteria and regulatory standards. Thanks to advanced ERP systems, collecting and accessing accurate, sufficient information is no longer a challenge for manufacturers.
  4. Manage documents: When it comes to product quality, document management is another important aspect. Manufacturing ERP packages allows users to attach files to projects and reports. For instance, a manager will be able to attach PDFs, Word documents, Excel reports, PowerPoint presentations, images, and other documents to projects and work orders to offer more insight into product specifications, bills of materials, recipes, formulas, inventory, etc. Since data accuracy has a significant influence on operating efficiency, having a system that allows you manage documents efficiently and maintains data integrity when transferring information between applications can help you improve the quality of your products.
  5. Test: ERP systems can also be used to define quality guidelines, predefine tests for materials and finished products, create quality orders that specify the tests that must be performed for particular products, record multiple test results and then compare them against predefined values. When managing nonconforming materials or products, manufacturers can create nonconformance reports and orders, include explanatory notes, link nonconformance orders to each other to identify and explore interconnections between quality issues, and estimate additional costs resulting from nonconformances. In addition, the top ERP solutions enable companies to track issues back to their origins, select the best solutions to problems, manage turnaround times for nonconforming products, connect test results to adequate preventive or corrective actions, and even schedule automated tasks to correct certain problems.

Identifying items with quality problems is essential for a company preoccupied with improving product quality. But more important than this is to determine and understand the underlying sources of quality issues. The fact that most manufacturing ERP systems give manufacturers access to critical information relating to the sources of quality problems, allowing them not only to determine whether a nonconformance was due to wrong work order number, poor-quality materials, defect codes, or wrong recipes or formulas but also to prevent future recurrences, is what makes these software solutions truly valuable.

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erp implementation failure

How You Can Avoid A ERP Implementation Failure

Implementing an ERP systems involves a series of processes, including customization, integration, data conversion, testing, training, and maintenance. Since all these cost a lot of money, ERP implementations are considered expensive propositions. Evidently, an organization that spends its resources to choose and implement the right ERP solution will do everything possible to ensure success. However, ERP implementation failure is fairly common these days. Why so many businesses fail to leverage their ERP investments?

erp implementation failure

The Problem

Before looking into the reasons why ERP systems fail to deliver the expected, it’s critical to define what exactly constitutes an ERP implementation failure. Typically, ERP failure relates to overall operational efficiency and business benefits. A few examples include the inability of the new system to meet the expectations estimated, budget overruns, and incorrect working of the system.

ERP implementation failures entail negative consequences for companies. But the good news is that most failures can be prevented. To avoid turning an ERP system, which was developed to help companies perform optimally and grab more market share, into a “parasite” that depletes the resources of your organization, it’s critical to assess the real reasons why ERP implementations fail.

  • Unrealistic expectations: Most companies don’t understand the implications of ERP implementations, so they fail to allocate time, money, and other resources efficiently. In addition, business goals and desired functionalities aren’t communicated clearly, which may cause a great deal of confusion. Sometimes, project initiators are unsure of what they want, repeatedly changing goals and requirements; this may lead to delays, increased costs, and a software solution of inferior quality. Other times, they’re just too enthusiastic about anticipated success, without knowing if the solution they’ve chosen can actually help them achieve their goals.
  • Lack of technical knowledge: Since leadership teams rarely support the idea of unlimited funding for continuous ERP customization and maintenance performed by third-party professionals, there’s an increase demand for complex training programs and appropriate documentation (e.g. e-books, whitepapers, and step-by-step guides on how to configure the system to fit specific business scenarios and meet certain requirements). However, ERP training is usually inadequate and vague regarding  software setup. As you may already know, lack of training can prevent staff from making the most of the ERP solution you’ve implemented. Furthermore, your employees will be unable to fine-tune the system according to future business requirements, which may seriously hinder your company’s progress and increase dependence on third-party ERP services.
  • Failure to manage organizational change: Understanding current business processes and setting short-term objectives are two factors that could help prevent ERP implementation failure. But there’s one more thing you must consider: business requirements change over time. One day, you may want to expand your business and hire 1,000 new employees. Is your ERP system able to support this type of change?

The Solution

Understanding things like ERP implementation costs, resource allocation, change management, and employee training can help ensure ERP implementation success. But how can you avoid ERP implementation failure? Here are a few takeaways to help you out:

  • Define your business operations, goals, and deadlines before selecting an ERP system. Most business owners don’t even know how their business processes work and rarely establish any goals. In their view, the ERP system should be able to do everything once it’s up and running. Now, that’s an excellent recipe for…failure.
  • Don’t rely exclusively on your vendor. Think about what you expect from the ERP system and how you’ll manage change in your organization. Also, delineate what exactly constitutes ERP implementation success and failure according to your own company’s “as-is” and ideal “to-be” states.
  • Require appropriate ERP training, documentation from the developer, and access to vendor’s support website. For example, Microsoft provides extensive technical support, e-books, whitepapers, articles, and online forums to ensure that all of its customers will be successful with Dynamics ERP software solutions, such as Dynamics AX and Dynamics NAV, over the long run.

Doing all these upfront will take a lot of time but will help you avoid ERP implementation failure, which can inflict a great deal of pain on your organization later on.






ERP Software

5 Things You Need To Know Before Consulting A VAR

The success of any ERP implementation majorly depends on the Value Added Re-seller (VAR) that will install or configure the system. Any good VAR knows that there is no out-of-the-box solution that will fit all organizations. The scope of your business, needs and users should guide the selection and implementation of the ERP software.

Group working

Choosing the right VAR does not have to be difficult. Ideally, you want to work with a reseller that has successfully handled multiple projects of a similar scope to yours in the past. The experience of the re-seller is crucial to avoiding down-times and rush installations that may increase installation costs and negate any gains anticipated from the ERP.

Below are five things you should know before you consult a VAR.

  1. System and Version

Know the system and version of the ERP you want installed or configured. ERP vendors occasionally update their systems to enhance security, bring new features or improve performance.

The VAR you want to hire should be conversant with the ERP system and version that you want to upgrade to. The vendor should also have experience in data management, transfer and conversion to avoid losses during the upgrade.

  1. Modules

Upgrading your ERP for the sake of getting a new system in the organization is not a prudent move. The cost of ERP implementation and the related learning curve can significantly reduce the output of your employees and bring processes to a standstill.

While there are stand-alone manufacturing software packages in the market, the best solutions are tightly integrated in a centralized ERP system. Depending on your production environment, you may require an ERP with process, discrete or mixed mode software.

Your system selection should be based on whether your production environment can be considered work-order based, repetitive, repair and maintenance, batch processing, job shop, contract manufacturing or continuous process. The VAR should offer you detailed costing information on the ERP system.

You should only upgrade if you will be benefiting from a function or module in the new ERP. The reseller should be knowledgeable and experienced in configuring the modules that will be important in your daily organization tasks.

  1. Add-ons

To get the full benefits of the ERP system, it may be necessary to install a number of add-ons from third party vendors. Add-ons extend the capability of the ERP, often enabling custom functions through available or additional modules.

The add-ons that may have to be installed directly in the ERP or may be available on the cloud. If the add-ons are coming from other third party vendors, does the VAR understand how to configure and customize them for your organizational use? Find out if installing the add-ons will increase your costs.

  1. Number of Users

You should also know the exact number of people that will be accessing and using the ERP system. The number of employees using the system may determine the licensing fees you will pay. For example, you may find that the first 20 concurrent users cost much less than the next 20.

Another metric to know is the number of concurrent users (the maximum number of users on the system at once.) The performance of the ERP can change as the volume of transactions or number of concurrent users increase.

Find out from the VAR how the number of users will alter your budget and the performance of the ERP.

  1. Sites Using System 

You should understand the costs of deploying the ERP. When costing the ERP project budget, take into account the initial implementation and total cost of ownership (TCO). For instance, a typical quote includes the ERP software, first-year support and implementation cost.

The initial costs usually include a complete ERP system for a single site. However, additional sites and modules will increase the cost. Find out from the VAR whether the contract excludes such necessary tasks as training.

Before you contact a VAR for any ERP project, you should know how to measure success in terms of saving money by increasing market share, increasing revenues, and streamlining operations. Measuring success will motivate the staff during the implementation, ensuring the project is on track and effort is put to attain important business objectives.