In this 7-part series we will present ideas and solutions to help build a business case for a new ERP in just 7 steps. In this first step we will take a look at some of the Business Challenges to getting support for your ERP project.
What is ERP?
Enterprise resource planning (ERP) integrates internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.
Step 1: The Business Challenge
While most businesses grow organically or through acquisition, there are times when processes or applications become inadequate to support sustainable business growth. Sometimes a business’s growth can be stifled by more than just an outdated or obsolete ERP, that being said an up-to-date ERP offers many features and functions to grow your company’s value.
Growing your business is more than adding a shiny new ERP software solution, one of the biggest challenges manufacturers face when implementing a new system is changing existing processes that keep your company from growing. How can a new ERP fix the processes already in place?
Because many organizations perform many of their business processes manually, workers have to deal with time-consuming, inefficient and error-prone data entry processes. New ERP software can help automate those processes, and eliminate wasteful processes, such as, re-entering the same information several times in order to move the process along.
While many companies are looking to reduce costs in these stressful economic times, it can be hard to sell the value of a brand new expense in the form of new ERP software to a CEO worried about paying his employees. The cost of replacing an obsolete systems is a worry many companies share today. There is more than just money at stake with an implementation, there is data transfer and even man hours to get your new systems and processes in place while still running a business.
The two basic challenges would be organic growth straining existing infrastructure and lack of organic growth making process efficiencies a prime source of margin improvement; adding a new ERP system is a solution to both problems. Facing these business challenges head on is a daunting task, especially when it comes to changing the way you do business (or in many cases have done business for decades). However, a new ERP system will give any manufacturer the opportunity to cut out many redundant and unnecessary steps currently nickel and diming them out of business. Automation, real-time Key Performance Indicators and Predictive Analytics are just some of the tools in an ERP system that can help you better understand your business from top to bottom and get the most out of your process, product and workforce.
Aside from the process solutions, there are many cost savings that come with a new ERP system. By better tracking your inventory you can reduce costs on overages and inventory carry-over from month-to-month. Another great benefit to upgrading to a new ERP, you can make your workers more efficient and grow your business organically.
Over the next seven weeks we will present:
Step 2: ERP Investment Benefit Assessment
Step 3: ERP Cost Assessment
Step 4: Implementation Risk Assessment
Step 5: The Implementation Approach
Step 6: Return on Investment Measurements
Step 7: Recommend the Preferred Solution