ERP & Change Management – Get your people on board!

Implementing and ERP solution typically involves substantial change and as such the management of the change should not only be considered from a technical perspective but also from an internal H.R viewpoint.

Change is an environmental constant and as such change management is something which organisations of all sizes need to consider in order to ensure that they achieve an effective fit which is the basic premise upon which strategy is formulated.

“Change management is the coordination of a structured period of transition from situation A to situation B in order to achieve lasting change within an organisation”.

BNET Business Dictionary

Change is an ever-present component of small business ownership. The ability for small business owners to effectively manage change lays the groundwork for growth and helps build the foundation for the development of a positive corporate culture.
Change is not just another business event, it is a mental, emotional and physical process within which you need to consider and pay attention to the needs of individuals and the organisation as a whole.

Successful implementation of change management calls for proper planning, special leadership, and communication skills.

A huge aspect of integrating ERP is human based. Implementing an ERP will bring in changes to the way people work within the organisation, processes will change and there may be rationalisation of responsibilities within departments. All this will may evoke resistance from the employees and this has to be managed effectively before, during and after the implementation of the ERP package. Top management has to lead the way in propagating the reasons for the implementation and the business benefits that can be expected by implementing a new ERP package.

If the employees are not educated and informed about the benefits of the ERP system and assured about the security of their jobs by the top management, they will start believing in the rumours that float around and will either resist or sabotage the ERP implementation.

Don't underestimate the importance of people working in cross-functional teams to the success of the project. ERP implementation failures are attributed more often to people than to technology.

ERP Vs Accounting – What’s the difference?

Though ERP Systems have been around since the 1960s there still is a common misconception that ERP Systems and Accounting Systems are one in the same.

ERP Systems originally existed in the form of MRP systems and developed into what we know as ERP systems around 1990. Global ERP leader SAP technologies were established in the year 1972 by five engineers.

Paul Marketos, Managing Director of Bluekey Software Solutions, which specialises in implementing SAP Business One, says that while accounting is central to any business, it is not what differentiates it.

“Without integrated systems, accounting only offers after-the-fact reporting. But, there are so many factors other than what’s happened in the past influencing where your business stands today and where it will be tomorrow and in a month’s time."

“An accounting package cannot help you forecast demand for products, reduce stock handling, keep goods flowing or improve stock management. Nor will it allow you to set up business rules which prevent stock from being sold or shipped at the wrong price or to customers who owe you more than 90 days; or ensure that managers are alerted to operational exceptions.”

“Where an accounting system assists in tracking the finances to provide an overview of where the company stands from a financial perspective, based on historical data; ERP can be used to plan, control and streamline all aspects of business in real time, into the future."

“ERP integrates your key operational and customer-centric divisions, from production through to sales and service, enabling them to operate more efficiently. In fact, ERP is so effective in planning, integrating and controlling the business that good accounting is just one of the by-products of ERP,” says Marketos.
He believes that ERP is becoming a competitive necessity for companies of all sizes."

“Having made the shift from manual ledgers and Excel spreadsheets, companies that have automated their accounting processes are starting to realise that they need something bigger and better to improve efficiencies and profits because an accounting package simply cannot do it for them."

“The fact is that even with the best accounting package in play, that one source of the truth - that complete and accurate view of the business - remains elusive, and the only way to get it is with an integrated ERP solution."

“Many larger enterprises are also beginning to put pressure on their supply chain to implement ERP, not only to automate and speed-up administrative processes, but to streamline communication and other transactions as well,” says Marketos, adding that very often, the implementation of an ERP system leads to a complete re-engineering of many business processes, resulting in a leaner, meaner, faster and more profitable version of the business.

“With better inventory control, costing and operational efficiencies, ERP can actually help to drive profits, and so it quickly pays for itself,” says Marketos.

When the competitiveness, health and longevity of a business is at stake and the only way to increase profits is through improved efficiencies and cost cutting, the investment in ERP can be easily justified.

Keys to Ensuring ERP Success for SMEs

Make you first ERP implementation your last by following these steps when selecting and implementing ERP.

1.Know what your company needs and wants
2.Look into the future, plan for it
3.Be committed from the top down
4.Try before you buy
5.Pick a partner that understands your business
6.Monitor the progress to ensure focus
7.Don’t bite off more than you can chew

Know what your company needs and wants

What does your company need ERP for? What major areas of your current structure are letting you down. These are things that your company needs to have in order to function properly; there are other things that would be nice to have be may not be a necessity though be sure to consider these once the fundamentals have be accounted for.

Look into the future and plan for it

When assessing your company software needs take some time to look at what you would like to see in the future. Short sighted planning opens organisations up to things like replacing systems, or spending a lot of money to meet future demands. Your ERP systems should support your company and employees in achieving growth.

Be Committed from the top down

If the owners and managers aren’t serious about the integration of their business and the installation of an ERP system the likely hood of success is minimal. The people who run and own the business have to be the driving force behind it at times. How it should be set up, who should do what, breaking down departmental barriers, signing the checks. Buy in is important from the top down. Employees will follow your lead.

Try before you buy

There are many different ways to try before you buy such as trials and full demonstration in using your own data. It is very important that you see that way your companies’ data will flow and how your people will use the system in there day to day jobs. Just because a software package does something, it doesn’t mean it does it the way you need to.

Pick a partner that understands your business

The software you buy and the company you buy it from are not necessarily the same. There are many software salesman out there who know how to navigate the software and talk the talk, but they really don’t understand your business processes. Your partner should offer advice when asked, they should bring business process value to your organisation. Anyone can tell you how software works but you need to find someone to tell you how software could best work for you. IIS have implemented over 200 SAP Business One implementations in almost every business sector and we continue to support our business partners within them.

Monitor the progress to ensure focus

Someone at a high level has to monitor the progress, ensuring that internal staff and vendors are progressing at the proper pace. You will also want to ensure the budget is on track based on the progress of the implementation. You need to ensure that things aren’t sidetracked and if they are that they are scheduled for in the future and the reason that this is happening should be valid.

Don’t bite off more than you can chew

ERP is important and effective in many areas. SME’s often have key people who where many hats, if you try to do too much you will these people will be overloaded. Focus on what is going to give you most return for your investment first and then expand the system. Copyright of Integrate IT 2010

Copyright of Integrate IT 2010

Maximise your ERP Solution by Measuring ROI

According to a report issued by the Aberdeen Group ROI of ERP Software is gaining increasing attention from SMEs of have implemented solutions. The focus has shifted since a survey they carried out at the beginning of 2007 when 32% of companies never estimated ROI to justify ERP projects and 33% never measured the actual return on those investments.

The top strategic actions which are of importance in achieving optimum ROI and the full benefits from ERP are seen to be standardising and accelerating business processes, and providing visibility to business processes across functions and departments.

While many companies now feel compelled to make an investment in ERP as a necessary infrastructure to support their business, best practices for maximising the benefits from such a solution involve the measurement of the reduction in costs, improvement in schedule performance and customer satisfaction, and the ability to redeploy employees to add more value to the organisation.

Best in Class companies are 33% more likely to utilise ROI estimates to justify ERP projects than Laggards and 71% more likely to measure the results when completed. While 100% of Best in Class companies use ROI estimates to justify ERP projects costs, they do not all come under the same level of scrutiny.

Replacement activity was cited as requiring the most scrutiny as an existing ERP solution is presumably already bringing value to the enterprise, while a new purchase will be most likely replacing a need that has not been previously satisfied.

The most regularly suggested reason for not measuring ROI is that it is too
difficult to measure. The most successful ERP implementations have clear objectives which should be easily quantified and measured so that full gains can be realised.
24% of SMEs point to a lack of tools to measure ROI, however, most if not all of the tools are available within the application for which the ROI is being measured.

While ERP plays a supporting role in creating and expanding sales channels and in developing strategic partnerships, it is essential to enabling improved business execution, the top strategy in aggregate across companies of all sizes.