At a Glance
- 1.Poor software fit /inaccurate requirements
- 2.Business leadership is not committed to the implementation
- 3.Insufficient team resources
- 4.Lack of accountability to make timely, high quality decisions
- 5.Lack of investment in change management
- 6.Insufficient training/support
- 7.Insufficient funding
- 8.Insufficient data cleansing
- 9.Insistence on making ERP look like legacy
- 10.Lack of testing
Overall cost reduction, improved security, and interoperability are why small businesses invest in newer and agile enterprise resource planning (ERP) software.
The biggest question companies have at the start is: Do we use an on-premise solution or a cloud-based ERP?
On-premise solutions require more up-front costs for:
- Purchasing servers
- Creating databases
- The initial implementation
Ongoing costs involve:
- Information technology (IT) staffing
- On-line security
- Data back-up
- Duplicating this set-up for every site
Keeping everything local requires ongoing maintenance, specialized in-house or on-call consultants, upgrades, and updates. You’ll likely need more hardware as your company grows. As you add additional facilities, your computer infrastructure will also continue to grow.
Moving to the cloud can help reduce most of these costs by about 30 percent. Depending on the age of a company’s existing equipment, there may be some hardware costs in the form of upgrading existing equipment to ensure compatibility. These costs will pale compared to the expense of having to add or outright replace servers.
Among the features of a successful cloud-based ERP implementation are:
- The vendor is responsible for the cloud servers since it hosts and manages the software
- No additional IT costs for staffing, maintaining the hardware and software, software updates and upgrades
- The host (vendor) is responsible for your data security
This is just a small example of features and benefits of an ERP that pay off over time, especially when a company grows.
Other Cloud-Based ERP Advantages
Purchasing a cloud-based system has several other advantages beyond hardware and maintenance costs, including:
Scalability: A key reason growing companies move to the cloud is their ability to grow with it. Adding another 100 users might require expanding your server. As your company grows, adding new users to your ERP is just an internet connection away.
Agility: Does one part of your company require extra help with Supply Chain Management? An open-source-based ERP likely has a module designed just for that. Assuming you start with financial management, adding a sales component is a logical complement.
Disaster Recovery: Natural disasters such as fires, floods, or earthquakes are common everywhere. So are unnatural disasters in the form of riots and even wars. Cloud-based systems keep your data on multiple servers in different regions. When one server goes down, your data is safe on another. How safe are they? One ERP provider estimates that cloud systems are so secure and redundant its customers experience less than eight minutes of unplanned downtime a year.
Storage and access: This same geographical dispersal that means your data is safe from disasters also means that when you need more space, it’s easy to get. When your server farms occupy large warehouses, adding more terabytes—Western Digital has 18-20TB drives available for home computers with those in the 100TB territory made for commercial firms—is a power and data connection away.
Automatic updates: Cloud service providers provide around-the-clock monitoring. They are constantly finding ways to improve performance and data security. Microsoft, for example, employs 3,500 security engineers. They protect customer data in part by ensuring the Azure cloud computing platform is safe from all attackers.
Get started to learn more about key features and benefits of ERP systems
Plan Your Implementation
No matter what software your company has, and how robust your network may be, it’s still possible for your ERP implementation to fail. In fact, the average estimate of all ERP installations that fail is between 40% – 60%
Successful implementations often require focus on seven critical aspects.
Figure 1:Plan Your Implementation
- 1. It is choosing the right team. Your implementation team must have a good mix of talent. It should include people with experience in your particular business segment. Include business analysts, developers, software architects and project managers. The team must also include a strong-willed and senior management Champion from your company whose goal is ensuring the highest priority tasks are accomplished first.
- 2. We are planning a phased approach. Install the implementation in logical sections. This reduces disruption, especially when moving data from the old system to the new.
- 3. It was moving useful data only. Client data that is no longer relevant is not worth keeping. Bring over material that helps now and in the future. Reformat your data as it’s brought from the old system to the new while you perform the build. Separate that data into static, one-time entry data like customer lists, and dynamic information such as transactions.
- 4. It is setting achievable goals and expectations. A great way to accomplish long-term goals is by breaking each into a series of smaller steps, each with its payoff. Build on the previous step to accomplish the next and keep going.
- 5. Using the implementation to fine-tune your business. Many companies purchase an ERP system to reduce costs. Use the implementation to take a critical look at each business process. Where are the bottlenecks? Where is effort duplicated? How can each process be streamlined to be more efficient and effective?
- 6. Time is a sixth critical part of an effective ERP implementation. Don’t be in a hurry to turn the key; fire it up and race off. Successful implementations take six months to two years. Effective, thorough planning and a thoughtful, well-researched approach before purchasing will help ensure your ERP implementation is successful.
- 7. Another important task is understanding that a new ERP will look different from the old one. While having a familiar look and feel is nice, your staff will embrace an optimized newer version once they understand how well it performs. Microsoft’s Dynamics 365 line of products may look different than your old ERP, but it will retain some familiarity for Office 365 and Azure users.
Online ERPs are designed for flexibility and expansion. A cloud-based ERP is less expensive to maintain over time, no matter where your company has its production plant, warehouse, or office. Small businesses considering ways to improve efficiency and encourage growth will want to examine the many top ERP solutions available.
Before you buy, though, make sure you have:
- A plan with short-term, medium and long-range achievable goals
- An upper-level management champion
- A budget based on hard facts
- A willingness to change
- The strength and stubbornness to know that growth requires pain, the pain of change.
Taking the right approach will help your company prosper and grow.