So are you looking to guarantee failure of your new software implementation? I hope not! But let me show you why so many companies fail when implementing new software especially MRP or ERP software. It’s about money, change and communication.
First, let’s discuss money or budget. If you’re used to spending only a couple hundred dollars on some simple accounting software plus you use some spreadsheets, you’re in for a rude awakening. I’ve seen simple packages start at about $3,000 and then skyrocket up to over $100,000 easily. But it’s not just the investment in the software you need to plan for. Can your hardware handle the new software? Did you budget for implantation, modifications, and especially training? A simple rule of thumb is for every dollar you spend on software add another dollar or two for implementation, modifications, and training. Even for a simple $3,000 investment in software, be prepared to spend another $3,000, bringing your total costs to over $6,000. Working with a small manufacturer recently that was used to spending only a few hundred a year on software, they were in shock that they had to invest over $15,000 for only software to accomplish their new objectives and they hadn’t thought of the implementation, modification, and training costs. Make sure your budget is realistic and be prepared to go over.
It’s not just about the money. Are you prepared for the changes you’re looking to accomplish? Implementing a new MRP or ERP software solution involves big changes to your organization no matter what the size. Your current processes or lack of any need to be addressed. That’s why you’re looking at new software. But the software is only a tool. If no one is ready to embrace the changes that are about to happen, you’re looking at wasting an awful lot of money. These changes in business processes need to happen in order for you to achieve greater productivity and efficiencies and bigger profits. Your co-workers and employees need to understand this. According to a recent Panorama Consulting report, 38% of respondents cited lack of employee buy-in as the biggest problem facing ERP projects. Get them involved in advance of implementing new software.
Getting your employees or co-workers to accept these changes or embrace them involves communication and listening. This isn’t a top down approach. It involves talking about why these changes are necessary and listening to what your employees’ concerns are. They may have some insight as to what may work better. The people who will use the software the most will need to have some input into the decision or else you’re doomed to failure. Keeping your employees convinced of ERP’s inherent value and the transformation that needs to happen is not a simple meeting in a conference room for an hour. Constant and effective communication is a key to keeping everyone on the same page and motivated. The owner/CEO and all departments are in this together in order to overcome the challenges and ultimately achieve success.
Hopefully you’re looking to transform your business into a more efficient and productive machine that will generate bigger profits. It will take not only money but a willingness to accept and implement changes plus effective and constant communication. Look to guarantee your success.
Change can be painful. I know it’s an odd way to start talking about ERP implementation but let’s be honest about it. When you implement a new ERP software system in your organization, you’re disrupting the whole organization. That’s painful BUT it doesn’t have to be. Let’s start with my first tip for success.
Have you chosen the right ERP vendor? This may be the most critical step in selecting which ERP software to implement. The ERP vendor’s product better be the right fit for your industry and business model. Here’s one you may not have thought of: vendor culture. Your ERP vendor’s culture is trickier to evaluate but does it match your culture. They will be a big part of your business during the transition to a new system and you all better get along well. Picking the right ERP vendor is a huge step in the right direction for ERP success.
You next need to consider how you’re going to manage change. Change management will be a highly important contribution to the project’s success. Everyone in your organization needs to understand the business reasons for the new system and at least be accepting of this change. There will be a large group affected by this change and you need to communicate with them effectively and often. If you want long lasting success, your people need to embrace it and use it as designed.
But your executive team MUST be committed to the implementation of the new ERP system. This really comes down to leadership. If your CEO/Owner and whomever they’ve appointed to lead this effort are committed to ERP success, then it will be easier for the rest of the organization to follow suit. There’s a commitment that certain members of your team will have parts of the project to work on. It all must get done and there will be compromises along the way but in the end your team leaders must stand firm that success is inevitable.
The last tip is to know when to change a business process or how to adapt it. At some point you will have to figure out how to conform to the out-of-the-box ERP business process or you will have to do some customization to the new ERP. Every situation we’ve walked into they tell us that their business is unique. Sorry, not true. More than likely some bad habits have been formed and you now being asked to conform to what are the norm for business practices since that is what ERP systems are based on.
There are no guarantees in life except for death and taxes. So I can’t guarantee success if you’re implementing a new ERP software. This is only a partial view of what it takes to have a successful implementation. You can click on the report below to see what ERP Focus says on this topic.
So do you? Most of the small to mid-size manufacturers that use either QuickBooks or Sage 50 (formerly Peachtree) don’t even think about it but plug along using spreadsheets, Word documents, and a paper trail with their accounting software. If you’re going to grow your business, and want the ability to forecast and plan for demand, it’s time to move forward and get off the way you’ve been doing things since you started the business years ago.
A successful ERP implementation goes well beyond just putting it into place. Successful manufacturers tailor ERP in reaction to business change and needs. Mobile access and adding new functionality might need to be included. Certain performance indicators will help in your decision on whether you’ve successfully implemented an ERP system. Have you reduced inventory? Do you have greater accuracy? Have you streamlined your processes? Are you able to deliver on-time to customers keeping costs low, pleasing them which leads to greater profits? For the small manufacturer, keeping costs low while continuing to improve customer satisfaction is a major factor in their quest for growth. Are you growing?
You can’t streamline your business and grow it without a strategy. It’s a journey and you can get good results. The journey though needs vision, a roadmap, influence, drive, and budget which can only come from a leader. You can identify the right fit if you focus on key activities. If you have a solid foundation and have made a correct assessment, you will achieve significant improvements in performance.
I recently read a report by the Aberdeen group that stated 18% of companies with revenue under $50mil are not utilizing ERP (Enterprise Resource Planning) software and still favor spreadsheets and accounting applications. If you’re one of these companies, you’re not keeping up with your competition. Think about it. Over 80% of your fellow manufacturers are using an ERP application. Are you curious as to why?
Here are the top 5 reasons they are using it:
- Must reduce costs
- Need to manage growth expectations
- Delays in decision-making from lack of timely information
- Must improve customer response time
- Need to be easier to do business with
The number one reason, cost reduction, has been a leading pressure on small manufacturers for the last decade. If you’re adding new employees, adding business units, new products, and new processes, you need to find a way to control costs. The data and capabilities contained within ERP can be used to promote visibility, collaboration, and efficiency in your organization.
Are you looking towards implementing or changing your ERP in 2013 so that you can be more agile in your decision-making and your ability to interact with customers and business partners? Before you make a move you should consider your current technology infrastructure and applications, whether your outdated business systems can track business processes and integrate effectively and promote data sharing, and ensure standardized procedures are enforced throughout your organization. You can achieve tangible business benefits through a well formed ERP strategy. Let 2013 be the year you improve your organization and move your business forward.
Download the Aberdeen report "ERP and the Small Business"
When I talk with customers or potential customers, they inevitably say at some point, “If it ain’t broke, don’t fix it” so I don’t need to spend the money. Now, I’m typically talking to them about their server/network or their accounting/ERP software. BUT I have to point out, is it going to break in the future? Is 2013 the year you lose out and it finally collapses on you?
Got a call last week and the young woman asked me how long will her Peachtree(now Sage 50) make it? I had to point out that since she hadn’t upgraded in over 2yrs and her database had outgrown the program by 2 times the manufacturer’s recommended usage, it could be any day. The future for her is now but she doesn’t want to spend the money.
According to an article in American Machinist 10-31-2012, “There’s no consensus on whether US manufacturing is truly undergoing a recovery, but one sign suggests things are improving: More manufacturers are investing in enterprise resource planning systems(ERP).”
So should you be keeping up with your neighbors lifestyle? Things have been tough since 2008 and many manufacturers were reluctant to invest money into ERP and it’s been that way for years. However, there’s a cost to this approach.
If the economy is picking up and your competition down the street or nearby town does make the investment in a new ERP system, could they have found ways to process and manage information better and faster. Your neighbor might be able to serve customers in a more cost effective and responsive way. If you don’t respond in kind, your business, your livelihood, is going to be in trouble fast.
ERP software has advanced significantly and is now more robust, flexible, and configurable than they were even 5 years ago. Most people are surprised at the improved functionality and user access to needed information for their organization.
The future is now. 2013 could be the year it breaks. You owe it to yourself to protect your business by starting to investigate it now.
You can register for our informational webinar on Infor Visual below. It's being held on January 31st, 2013 at Noon.
Last time I wrote, I ended with 3 questions of which one was, “if it ain’t broke, how can we make it better?” So how can ERP makes things better? A successful Enterprise Resource planning (ERP) solution has to address all key areas of business management and include every facet of the operation, from research to manufacturing and marketing. ERP software gives you a full suite from estimating, work-in-process management, CRM, and accounting functions. These software packages can turn an estimate (quote) into a budget for project management, and then match invoices to project status and allocate job costs. Though if you’re a small manufacturer, you sometimes have to choose between a new piece of equipment and new software. You need a cost effective solution that’s easy to implement and use. What benefits do can you expect from the software? You should expect a strong return on your investment and a good system can provide hard dollar efficiencies.
Are there additional benefits? Absolutely!
Better planning and resource allocation. You need better data and greater insight into the actual money costs of inventory, people, and equipment which is one of the benefits of software. If you’re using QuickBooks or Peachtree (now Sage 50) and some spreadsheets, can you get really granular in your information? Better data and greater insight will also give you actual time costs for each step of the planning and production process.
Greener operations. It is the rage right now to be “green”. How green is your operation? You will generate less waste and scrap, reducing environmental impact which you get from better planning and tracking of your operations. Again, will QuickBooks/Peachtree with some spreadsheets really get you the desired results?
Support for lean manufacturing. The goals of lean manufacturing result in better planning, more efficient resource allocation, and reduced waste. Lean manufacturing will only lead to better quality products, more revenue, and bigger profits.
Compliance with increased government regulations. The types of material you use, the raw materials you consume, or the products you manufacture are now subject to even more strict regulatory requirements and documentation. ERP software can generate much of the required documentation due to ordering and receiving materials and equipment.
Forrester Research projects that the global ERP market will grow to over $50 BILLION in 2015. So who else is running ERP? Apparently the State of Georgia, Twentieth Century Fox, Disney, and Department of the Navy all run ERP software. QuickBooks/Peachtree with some spreadsheets was ok to run your business throughout much of the last decade but now is the time for you to seriously consider upgrading to ERP. A report from the University of Greenwich concluded, “ERP is now considered to be the price of entry for running a business.” Whether you’re a small manufacturer, regional company, or a global enterprise, ERP has become the software solution of choice.
If you’re like most of the manufacturers we’ve met, you’ve bought your ERP system in 1995, or 2000, or even upgraded in 2005. BUT you haven’t done anything since. Your revenues haven’t changed or decreased, your profits are either the same or less. But yet, you haven’t changed your ERP software since you bought it. Roger von Oech, author of A Whack on the side of the Head, says “Almost every advance in art, cooking, medicine, agriculture, engineering, marketing, politics, education, and design has occurred when someone challenged the rules and tried another approach.”
I’m someone who is always looking for options. No idea is perfect and it can always be improved. Maybe you’ve been using QuickBooks or Peachtree (now Sage 50) with some spreadsheets for years. That’s ok for some but not may be for you. You want more revenue, more efficient operations, and bigger profits. Can you get that from your QuickBooks or Peachtree (Sage 50) and some spreadsheets? You haven’t for years so maybe it’s time to CHANGE. Would you like to have the power to:
Plan production quickly, without mistakes,
Schedule jobs efficiently,
Make quality intrinsic, from design to delivery,
Give confident answers when customers ask about delivery dates,
Manage inventory more effectively,
Deliver consistently profitable results,
Manufacture at a level of speed and efficiency that makes the best use of the resources you have?
The right ERP software with the right implementation and training provides you with the structure to create a more predictable process and get a firm grasp on how every change affects your business. There are add-on packages to your QuickBooks or Peachtree (Sage 50) that can help if you’re not ready for an integrated ERP solution. There are easy-to-implement ERP solutions that provide manufacturers and distributors with multiple scheduling options so you can start improving performance right away. So if you’ve been saying to yourself, “if it ain’t broke, don’t fix it”, maybe you should start to ask:
If it ain’t broke, how can we make it better?
If it ain’t broke, when is it likely to break in the future?
If it ain’t broke, how long will it serve as the world changes?
DISCLAIMER: we offer Infor Visual, Sage 100 ERP as well as MISys to help the small and mid-size manufacturer.
The internet is awash in information on ERP selection and implementation articles, whitepapers, eBooks, and reports. Yet with all this information, many firms seem to still not get it right. May be it’s because businesses are like people and no two are exactly alike. Here are 7 simple ways to avoid these mistakes:
1. Start With Solid Footing.
You have to be on solid ground or have strong roots. It’s all about planning and preparation. Who uses it? How do they use it? What information do they need to achieve their expected results? The CEO or owner is practical: show me the numbers. But the employees who use it?? They will have every day experiences with what they want and are looking to see out of an ERP system.
2. Know Your Business
You have your own way of doing things, little quirks or necessities. Key features and a cookie cutter solution may not work for you. What exactly do you do and how can you do it better? ERP should help you achieve these goals.
3. Be Prepared
Do your homework. ERP systems vary in what they can do for different industries. Interview peers in your industry to see what works for them. Dig deep. Ask tough questions.
4. Expect Results Not Miracles
According to most ERP vendors, your business will be transformed into a highly efficient and profitable machine if you go with their system. You need some patience to see tangible results. Success can happen and will happen if the people involved make it happen.
5. Make a List And Be Like Santa, Check It Twice
Document every step in the process. There’s nothing wrong with being like Santa and checking over your evaluation system to track and measure growth. Selecting an ERP may not be like Christmas time but can you really be too careful in the selection process?
6. Don’t get Carried Away
Your ERP system should be able to go into miniscule detail about your sales, services, manufacturing, distribution, or whatever you do. But should you? Someone in your organization needs to input all that data. Time + Effort = Money don’t go overboard analyzing every aspect of your business because you can.
7. Use Decision-Based Reporting
Your collecting data but for what purpose? It better help you make better, more informed decisions. Use it to affect change not to impress your business associates or friends.
There will be highs and lows while you implement your ERP system. If you’ve done your homework and are prepared, you should be able to achieve sustainable business objectives. In the end isn’t that your ultimate goal; to get demonstrable results and improve the work you do.
If you're currently looking at ERP software, check out what's new in Sage 100 ERP:
This is a guest post written by Stuart Withers. Guest bloggers do not represent the opinions of Baesis. We hope to be featuring more guest bloggers during the rest of this year.
Enterprise Resource Planning - How ERP Systems Can Help Your Business
By Stuart Withers
Businesses are constantly looking for ways to streamline their processes. The ability to unite the data from a range of business departments can work wonders in helping you plan your business processes going forward. Luckily, with the advances in computer technology this ability has become a reality. This article will highlight how ERP systems can help you plan your business.
Finance and accounting
One of the most important business areas to monitor is the finance department. You want to ensure you have a good overview of all the payments made to and from your business. ERP allows you to keep on top of your budgeting, cash management, receivables, payables, and more.
Customer relationship management
Probably the second most important consideration is the management of your customer relationships. After all, it is you customers that make your business what it is. With a good ERP system, you will be able to effortlessly manage your customer care and customer service strategies, as well as have a detailed insight into your sales and marketing strategies.
Knowing exactly what goes into your manufacturing processes in terms of time and money will help you effectively plan and price your projects. With enterprise resource planning you can easily monitor workflow, the engineering process, and all of the associated costs that go into the manufacturing process.
As with manufacturing, knowing how your business currently handles its project management gives you a great insight into planning better strategies for the future. ERP systems allow you to keep an eye on all areas of project management, from the overall time taken through to all of the costing and billing associated with a particular project.
Without efficient monitoring, your human resources department can eat unnecessary chunks out of your budget. By having an ERP system in place, you'll be able to monitor all of your HR processes, including training, recruitment, and payroll. You can use this data to help you plan your HR activity for the future.
Supply chain management
A good ERP system will allow you to keep an eye on all of those activities that happen around your business too. You can check up on purchasing, supplier scheduling, commissions, and all of your orders, helping you find ways to reduce your supply chain costs.
Access control and customisability
Finally, you can use enterprise resource planning systems to fully tailor your business processes. You can control who can access certain data sets and you can even use external programming companies to tweak your ERP so that it is in line with all of your business activities.
So, hopefully you now have a better idea of the benefits enterprise resource planning technology can bring to your business. It is not hard to see how unifying your business process is a great method to employ strategies for better business in the future. If you'd like to know more, or would like to customise your ERP, then head over to Sapphire Accounting today. They are experts at customising ERP software for a whole host of businesses. http://www.saslimited.com/
Article Source: [http://EzineArticles.com/?Enterprise-Resource-Planning---How-ERP-Systems-Can-Help-Your-Business&id=7240970] Enterprise Resource Planning - How ERP Systems Can Help Your Business
So which do you need, accounting software or ERP software? It really depends on what information you’re looking for. Many people refer to their accounting software as ERP (enterprise resource planning) software. There is a major difference between the two. Accounting software will handle your AR/AP functions, budgeting, and payroll. It can get you information like income statements or cash flow statements. ERP software is far more detailed. ERP software can help you handle the accounting plus human resources, logistics, distribution & manufacturing, CRM (customer relation management) operations of your business.
If your business is using a version of QuickBooks or Sage 50(formerly Peachtree), you can get some basic information from the software. They have their limitations. Anyone I’ve encountered typically uses Excel spreadsheets to manipulate the data or add functionality. Some will even use add-on programs like MISys (manufacturing software) or ACT (CRM software) to enhance functionality. While these are great programs to use in a business, at some point ERP provides a better approach.
ERP software doesn’t require multiple vendors to get the functionality you’ll need. ERP software such as Sage 100 ERP can handle your accounting but it can also help with distribution, manufacturing, human resources, and CRM. Let’s use an example of a small manufacturer. How do they track inventory? Some suppliers become a preferred vendor. A bill of materials may be several levels deep. Do you have detail on labor costs or job costs? What does your production schedule look like? Do you need to cut a PO to meet your production schedule? In order to answer some of these questions many users of QuickBooks or Sage 50 will create Excel spreadsheets. With an ERP system in place, you can have the answers at your fingertips in some respects.
I’ve given a simplistic explanation of the difference between accounting software and ERP software. Running a successful business requires information that’s accurate so you can make the right decisions which will increase productivity or increase profits. Accounting software can help but ERP software will give you more.
Disclosure: Baesis is a provider of Sage 50, MISys, as well as Sage 100 ERP software.