Success of ERP system largely depends upon the implementation of ERP in accordance with the processes defined/Reengineered in the organization for respective modules. The objective of this article is to explain the theoretical framework for implementation of ERP.
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Following are the key steps involved:
1.Identifying the Needs
Some of the basic questions, which are to be answered during this step:
- How does it improve customer satisfaction in terms of quality, cost, delivery time and service?
- Why should an ERP package be implemented? Objectives/What do you want to achieve?
- Will it improve profitability?
- Can the delivery times of products be reduced?
- Will it help to reduce manufacturing cost of products?
- How can it help to contribute in the turnover and at the same time reduce manpower?
- Will it be possible to reengineer the business processes?
2.Evaluating the “AS IS” situation of the business
To understand the present situation of the business, the various functions should first be listed and measured according to the following aspects.
- Total time taken by the business processes.
- Number of decision points existing in the present scenario.
- Will it improve profitability?
- Number of Departments/Locations of businesses process.
- The flow of information and its routing.
- The number of reporting points/people
3.Deciding the desired ‘Would Be’ situation
The concept of ‘Benchmarking’ is used to see that processes achieved are the best in industry. Benchmarking is done on factors like cost, quality, service etc. This concept enables to optimize the processes to gain overall benefits.
4.Reengineering the business process
Reengineering of business processes is done to
- Reduce the business process cycle time.
- To reduce the number of decision points to a minimum.
- Streamlining the flow of information and eliminating the unwanted flow of information.
5.Evaluation of ERP packages
The various ERP packages are evaluated on the following criteria
- Flexibility: It should enable organizations to respond quickly by leveraging changes to their advantage, letting them concentrate on strategically expanding to address new products and markets.
- Comprehensive: It should be applicable across all sizes, functions and industries. It should have in-depth features in accounting and controlling, production and materials management, quality management and plant maintenance, sales and distribution, human resources management and plant maintenance, sales and distribution, human resources management, and project management.
- Beyond the company: It should support and enable inter-enterprise business processes with customers, suppliers, banks, government and business partners and create complete logistical chains covering the entire route from supply to delivery, across multiple geographies, currencies and country specific business rules. Other factors to be considered are:
- Global presence of package
- Local presence
- Market Targeted by the package
- Price of the package
- Obsolescence of package
- Ease of implementation of package
- Cost of implementation
- Post-implementation support availability
6.Finalization of the ERP package
Finalization of the ERP package can be done by making a comparison of critical factors through a matrix analysis.
7.Installation of Hardware and Networks
This work is carried out in a phased manner depending on the schedule of implementation and need of the hardware components.
8.Finalizing the Implementation Consultants
The factors of selection for consultants are
Skill set, Industry specific experience, cost of hiring consultants etc
9.Implementation of ERP package
This involves following things-
- Formation of team
- Preparation of plan
- Mapping of business process to package
- Gap analysis Customization
- Development of user specific reports and transaction
- Uploading of data from existing system
- Test run
- User training
- Parallel run
- Concurrence from user
- Migration to the new system
- User documentation
- Post-implementation support
- System monitoring and fine tuning
-Prof. Mahesh Bhanushali
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