What Is Enterprise Resource Planning?
Enterprise resource planning (ERP) is both a concept and a catch-all term for technology systems that efficiently allocate resources and scheduling for your business, whatever your industry or sector. ERP systems come in as many configurations and types as there are companies – each business needs different solutions. Even competitors in the same industry will have different equipment and resource needs, as well as different staff with disparate skill sets, all of which affect the type and function of the ideal ERP system for that firm.
Implementing such an overarching software solution that potentially touches every aspect of your business can be a daunting and expensive task, but well worth the cost. Most businesses choose to outsource the worry and aggravation to a consultant partner. SkillsetGroup IT’s innovative and agile consultants remove common ERP implementation roadblocks and align your tech solutions to actually solve your business problems rather than just add another layer of busy work for employees.
What Are the Benefits of ERP Systems for Business?
Handled correctly, all that work on the front end customizing and implementing your new ERP system will drastically reduce waste in employee hours, effort, contractor costs and materials.
Ideally, ERP systems can integrate all the disparate functions of your business, improve efficiency and communication among departments and generally streamline operations. The following description is from APICS’s Operations Body of Knowledge Framework, third edition. (APICS is the U.S. national association for professional supply chain and operations managers).
ERP systems can include functions such as
- demand management, including
- forecasting and sales promotion;
- human resource management;
- product data management;
- document management;
- project management;
- business intelligence;
- sales planning;
- traditional manufacturing planning and control systems; and
- nontraditional pieces to facilitate lean manufacturing.
Other integrated ERP functions:
- Accounting systems
- Maintenance system
- Vertical supply chain planning (multi-plant planning)
- Distribution requirements planning (or their equivalents)
What Are the Steps in Choosing and Implementing an ERP System?
Most companies, whether implementing a new ERP system or migrating data from an old one to a different platform, benefit from hiring an IT consultant to oversee the process.
SkillsetGroup IT, for instance, has a nationwide pipeline of software development and implementation experts who can smooth the transition on a technical level. We also have the expertise in-house to tell you which professionals and how many you need to implement a system based on your specific business needs and detailed research into your current operations.
The human element is just as vital to setting up an ERP that improves your business outcomes. The most powerful technical solution in the world does no good if the people who are supposed to use it don’t understand the value of the system or the processes required to use it.
Assess your business needs.
If you haven’t already, start documenting your key business processes, data types and storage locations. If you run a manufacturing plant, where are your invoices for materials shipments stored and how are they processed? Are they handled digitally already on a legacy system, or are you going to have to retrain employees used to handling paper receipts and invoices? What software runs your point-of-sale system? What about accounting and HR? Which application do you use to handle your time clock and payroll systems?
All these processes and legacy technologies will have to be scrapped and replaced or fully integrated into your new ERP.
Hire an IT consultant.
IT consulting companies like SkillsetGroup IT have deep expertise and pipelines of talent that let them build teams of technology professionals to handle these big, enterprise-wide implementations. Make sure you have a consultant who is versed in recruitment, organizational management, vendor management and other ancillary, non-tech skills your firm will need for successful implementation.
Start shopping for your new ERP system.
This is where you select the best system for your needs from the dozens of vendors and developers out there. Your IT consultant will advise you on the best ERP setup for your needs. For instance, do you need a fully customized solution based in the cloud? Maybe your ERP should be set up as a hybrid cloud service? Or perhaps it would be best integrated with your onsite legacy systems? Your consultant will help you answer all these questions. At SkillsetGroupIT, we’ll even guide you in crafting requests for proposals that get the best responses from different vendors so you have an array of highly researched options to choose from.
Educate and update your employees who will be using the system.
Your changing technology absolutely must come with a change in your company culture. Opaque processes and implementation schedules that aren’t communicated clearly to employees will ensure you have a hard time getting them to adhere to new processes. You must be transparent about what your new system is trying to accomplish and when. It’s also imperative to couple your employee education about new data processes with explanations why the procedures will improve production and benefit the business. A full picture of the system, even at a basic level, will improve employee compliance with the new processes they are learning.
Prepare your data for migration to the new system.
Many businesses without existing ERP systems may have data stored in various formats across several different applications and databases. Before you can launch your new ERP, you must get your data into shape, usually by transferring it all to spreadsheets (most ERP interfaces will accept historical data in uploaded in spreadsheet form). Take this opportunity to clean it up; remove old customers from lists or update current vendors, etc. Your ERP system is only as good as the data you feed into it. If your data is inaccurate, so will be the insights you draw from it.
Launch and configure your new ERP system
All the networking and hardware requirements are finished; now your IT team under the supervision of your seasoned SkillsetGroup IT consultant can install and configure your ERP according to the detailed plan you’ve mapped out together. Don’t be alarmed if plans need changed and processes need tweaked at this stage – it’s all part of fine-tuning your system for optimum performance.
Test your new ERP system.
Now your ERP system is launched and configured, you need to make sure it serves your business needs as intended. Where are sticking points? Are there aspects of the user interface that need streamlined or reconfigured based on use cases on the ground? Your testing process should answer all these questions and allow your team to finish fine-tuning the operation.
Train your employees on the user interface.
As with some of the other items in this list, you should be doing some training and updates on your new ERP implementation in tandem with other steps. Now, however, is when your production managers, clerks, HR specialists and accountants will get the hands-on experience of how their work will change, day-to-day, while using the new system. Your IT consultant will have arranged training specialists to help with this, whether they are members of the implementation team, third-party onsite training specialists or representatives of your software vendor.
Activate your ERP system for full integration into your business.
Your ERP should be ready to go at this point. Start fully utilizing all the features and collecting data in a uniform way to inform future business strategies and streamline current operations. With such a complex system, you’ll have to monitor its functioning to make sure your configurations are still optimal – another round of testing and tweaking shortly after going live is usually beneficial.
Monitor and maintain your ERP system
Unfortunately, ERP systems are quite complex, so security and functionality updates happen all the time. This means as much as you’d like to “set it and forget it,” ERP systems need regular monitoring and maintenance. A consultant like SkillsetGroup IT will include these requirements in the strategic implementation plan, meaning you’ll know roughly how much ongoing maintenance will cost well in advance. By the time you need a bug fix or a software update, you’ll already have an IT staffer or established third-party vendor in place to handle any potential problems proactively, keeping your business running with minimal interruption.
Are Cloud-Based ERP Systems Better?
Off-the-shelf ERPs like Salesforce and Microsoft Dynamics 365 (often integrated with Microsoft Teams) are ubiquitous. But so are various combinations of technology aiming to provide business solutions for companies in every industry. For instance, most off-the-shelf ERPs are customizable at the user level, but developers have also created basic platforms for in-house or contractor developers use as foundations for custom ERPs.
Many larger or specialized companies have fully custom ERP systems built from the ground up and hosted locally, but the cloud computing model for ERPs is swiftly eclipsing locally hosted ERPs, custom or not.
According to industry surveys, most CIOs working with locally hosted ERPs would switch to a cloud-based system if given the resources.
This points to a larger trend in business solution applications sold from the cloud as a subscription service. The software as a service (SaaS) model offers a lot of benefits to the user over the old model of a one-time license purchase that can cost thousands of dollars – or even tens of thousands. With SaaS, the software company seamlessly updates your company applications in real-time as developers discover and fix bugs, patch security holes and improve functionality.
But there are many different combinations of cloud services and in-house technology that can fit a variety of industries and businesses. ERP hosting setups usually follow one of three general models, according to a 2020 article in the New Journal of Information Networking.
- Software as a Service (SaaS): Delivers software applications through a thin client interface so that users do not manage or control the underlying infrastructure.
- Platform as a Service (PaaS): Delivers middleware used by developers to build and configure SaaS applications.
- Infrastructure as a Service (IaaS): Delivers computing power like storage, network, and provision processing use to deploy and run software.
Which one of these hosting models you choose for your business will depend not only on the industry and sector, but also the kind of IT operation you have in-house. If you want to hire full-time experts to build and maintain your system, you may want to use a PaaS or even just rent IaaS.
If your existing staff doesn’t already include deep IT expertise, however, it may be best to sign on for an SaaS ERP system and hire consultants to train your staff on using the out-of-the-box solution.
Contact SkillsetGroup IT to Learn How We Can Partner to Build or Revamp your ERP System
We can take on an ERP implementation project with sharp managers and other IT experts at any stage of its lifecycle, overcoming all roadblocks to successful implementation.
Our team members have a strong reputation for delivering key, enterprise-wide solutions and successfully managing technical resource deployments nationally.
SkillsetGroup IT Division Manager John Manukian can tell you more about how we can smooth the path of ERP implementation in partnership with your business. Contact him at jmanukian@SkillsetGroup.com or 469-300-7676
You can also learn more about the detailed steps involved in setting up an ERP system in future white papers from SkillsetGroup IT.
Shadrack Katuu (2020) Enterprise Resource Planning: Past, Present, and Future, New Review of Information Networking, 25:1, 37-46, DOI: 10.1080/13614576.2020.1742770
Nawaz, Nishad & Channakeshavalu,. (2013). The Impact of Enterprise Resource Planning (ERP) Systems Implementation on Business Performance. 10.2139/ssrn.3525298.
APICS Association for Operations Management APICS Operations Body of Knowledge Framework Third Edition 2011