What is an enterprise resource planning system (ERP), and do you really need one? Are you looking to grow as a company and gain a large market share in the process? When running a business, there are so many items on your daily itinerary to look after last thing that is on your mind is a ERP system. It can be overwhelming, keeping in consideration staffing levels, product quality, fulfilling sales orders, keep your supply chain flowing as well as your company’s cash flow. The office flow of information can be overwhelming to the point of overflow of information.
The Need For An E.R.P. System
When information overflow is running you down, it is evident that an Enterprise Resource Planning system (E.R.P.) may be needed. There are certain key factors to take into consideration when considering such a purchase. It is important to analyze and assess, what does your company require out of such a system? Such an acquisition does not come lightly to the the pocketbook but it is a necessary investment. The following items need to be investigated when an enterprise resource planning system is being considered:
- Does the organization require a C.R.M ( Customer Relationship Module), where contracts, sales orders and additional information is maintained and kept up by multiple personnel?
- Is a robust purchase order system required? How does the organization wish to manage its inventory, at what level of detail? Will inventory management be a large part of your business?
- What will your financial reporting be like? Is your company a complex project oriented firm? With multiple progress billings on the go as well as detailed work in progress reports needs on a daily or weekly basis. Or, are you a 3rd party dealer – middle man – so to speak where no inventory is held on site. The type of E.R.P. set up will depend on the type of organization, the service or product produced, and the detailed logistics of the workflow that encompasses the firm.
How Tech Savvy Is Your Organization?
Another point to take into consideration is when a company wide system will be rolled out; the question to be considered is: How well will the technological change be accepted in your organization? When it comes to enterprise resource planning installs, I have seen quite a few conundrums in my consulting travels. I am astounded that such a question is never posed, scrutinized or at the very least considered with from a critical view point. Unfortunately it is far too late when a firm is halfway into the project and the implementation is scrapped due to high expenditures having been incurred with no results to show for it. This is a true waste of equity if you will if there are shareholders involved or an increase in borrowed funds if this involves a revolving line of credit at high interest rates that are being paid.
Welcome to The World Of Technology ..Can You Handle It
Look, at the end of the day an organization has to be realistic and truthful with itself. Can the firm afford a major purchase for the perfect system that comes with all the bells and whistles? I’m sure it can, but more importantly will the system be used efficiently? Are all the bells and whistles really necessary? Furthermore, will there be a short lag time where all employees can be brought up to speed on how to operate within the system properly, or will there be major training costs involved to get the ball rolling? Will the new system hinder key processes, such as manufacturing of a product or fulfilling a major sales order for the company?
These are just some important factors to consider, and should not be taken lightly as there is the possibility of risk, as well as reward.