Sunday, October 15, 2006

Selecting ERP product for an Organization

What is ERP, well for the uninformed it is Enterprise Resource Planning, the genesis of this was from MRP (Material Requirements Planning). ERP tries to encompass all the business processes of an organization so that all operations across the various function areas are integrated.

Some products which you could be familiar with SAP, Oracle etc.

Recently Microsoft has entered big time into this space and things have become interesting and I see lot of innovation coming up in this field which was normally a very dry space. I am sure many of you remember the screens of SAP which can put anyone to sleep with its rigidness and complexity

Also nowadays with the exponential growth and acceptance of internet, any ERP software which does not have a web-presence will not have a change to survive in the near future

Consideration 1: The products you evaluate, ensure that they are web-enabled and are designed in such a way that they can be opened up for the outside world if need arises.

I am a great fan of componentization, which basically means that products should be designed as a combination of objects so that the users can pick and choose the components they want and also when an ERP vendor goes through this route normally the product will be designed from some industry standard perspective. Has anyone heard of web-parts?

Consideration 2: If an ERP product has been modeled as components it is great plus.

I am of the strong belief that ERP systems are more internal to an organization than external so it is very important that it is very strong in business process functionality and not just on screen features. Many times when you go through presentations from various ERP vendors, you normally tend to get impressed with the cool features the pre-sales guys show you, but remember to look underneath that. Try to have all the key business process users on the meeting. There is a dual purpose in an ERP product. It is neither meant exclusively to meet business process requirements nor the technological contents. It has to make both ends meet. This key aspect differentiates ERP products from others.

Consideration 3: Don’t select an ERP product like selecting a car, look under the hood.

Every business has something unique, like say it may be the pricing logic for its customers, or their item code creation etc. Before you go through the process of an ERP selection, it is very important that you make a list of the most important processes of your organization which you will need in any product. This helps you to focus on how the product can address these requests. Don’t be alarmed that it is not directly supported, you will never find an ERP product which meets all your requirement, stay away from such claims, and in my experience I have never seen a product which will meet all requirements. The thing you need to look for is how easy it is for the product to be configured to meet your requirement, this will tell more about the flexibility of the product which is very important because with today business scenario where changes are very frequent you might we better off to have a flexible product which can take care of you maybe 2 years down the line. But remember Flexibility of a product is to be looked at from a perspective of supporting changing business requirements in its life cycle and not as something which gives you total freedom to change the software the way you want it. Customization is a necessary evil, but need to be used judiciously. 9 times out of 10 Customization is used in porting a bad business process into the ERP software.

Consideration 4: Be wary when the Sales guys says yes to everything, check out the flexibility of the product

It is said ‘Picture is worth thousand words’. Well the best way you evaluate an ERP product is to look at it working. Do a site visit to a company which has implemented the product in the last 12 months. It is important that you do not visit the company as soon as they have implemented the product, because with any implementation, the first couple of months will be a period of turbulence and soul searching within that company. It takes time for the dust to settle in and to appreciate the benefits of the product. If you meet the users too soon, you will take away some bad user experience which may not be the true scenario.
Also it helps if you also visit a company which is in the process of implementing the product. This will help you in getting a good understanding and feel for the effort involved and also it will give you a head start in your implementation.

Consideration 5: Do your Homework. Take a site visit seriously.