The Five Key Steps Of ERP Planning

Successful ERP Planning is all about getting the most appropriate business solutions for the organization to run more efficiently resulting in increased profitability. Installing ERP system need not be a long, arduous and costly process. In fact, with good ERP planning, the system can be implemented at reasonable cost with negligible work disruption. Whether your ERP planning includes systems which are off the rack or customized, it is important to remember that nothing comes cheap and easy. ERP planning would essentially involve five steps:

(1) Thorough understanding of the existing operating processes in the company. Identification of future goals and tools needed to reach those objectives. Assessment of return on investment (ROI) for alternative solutions.

(2) Selecting the ERP product which is best suited to your organization. The business modules must reflect familiar technology, tasks and linkages currently used in the business processes. Is there any possibility of the product being refined or fine-tuned to suit your specific needs?

(3) Selecting a suitable service provider who will help you through the process of ERP implementation.

(4) After sales customer support and technical service from the ERP partner.

(5) Training and skill up gradation of people who will handle the ERP system.

Much before selecting an ERP system or even deciding that ERP is the sure shot way to go ahead, ERP planning involves creating a list of competitive advantages which the company hopes to achieve by implementing ERP. Will the current competitive edge enjoyed by the company be impacted in any way by the benefits of an ERP system? Or the new benefits will plug any loophole or strengthen any weak link within the organization?

If getting any additional competitive edge is possible through an alternate business solution, then that alternative needs to be evaluated thoroughly. This is important because an ERP system changes the fundamental way a company is used to doing business. Implementing ERP may affect its culture, structure and basic corporate philosophy. Unfortunately most companies believe that implementing ERP is a giant IT project. It is not so at all. It is a business-led decision which involves all facets of the business operation and must be considered as a giant business initiative, with an IT component.

Thus, ERP planning is in reality part of a business plan for the organization, which specifies, what business advantage it will get, by implementing ERP. The decision to go for ERP is business-led, in the sense that it must address one or many business needs. Once the needs are identified, these form much of the ERP planning and overall management of the ERP project. If no business need is identifiable, then no amount of ERP planning and strategy can help the organization.

The reasons for implementing ERP could be as varied as the organizations. From the strategic and organizational point of view, it could be one or many of the following: seeking competitive edge, lowering operational costs, hastening response to changing customer or market needs, better customer service, stricter inventory control, professional management of all resources available within the company, etc.