Why is it better to outsource ERP implementation?
Planning is an important part of management. There cannot be success without planning. Better the planning, more the success. When a project is planned 200%, the success expected is 80 to 90%. No matter how well we plan, some factors cannot be predicted or they are beyond one’s scope. A daily lesson plan has to be prepared by teachers. A wedding or a trip has to be planned. These are small term projects. It shows how important planning is for an enterprise: It is long term and complex. An entrepreneur invests valuable time and money in business. These are his basic resources, from which he has to generate maximum profit. Naturally, the resources have to be utilized carefully. This is not possible without planning. Enterprise Resource Planning or ERP as it is called refers to a system of management information. ERP is crucial to business as it helps to maintain the flow of information between all business functions within and without the business premises. A number of stakeholders are involved in business and the ERP system coordinates the business activities and the stakeholders.
The history of ERP
A business organization consists of a number of separate departments like HR, finance and accounts, manufacturing units, administration etc. Each department was isolated and used a separate computer, maintained data limited to activities in their own department and worked as segregated units. For paying the salary of an employee, the payroll department had to acquire information from the HR department. When there are thousands of employees, there is a rare possibility of information about employees being misplaced, exchanged or deleted. In case incorrect information gets transferred to the payroll department, there can be a lot of confusion and problems. Each employee was usually assigned a number and this caused greater confusion. The number was the only common data shared by all departments. Hence, an employee could not receive payment without a number.
This kind of segregation affected the spirit of unity, a sense of oneness that is so important for a single business enterprise. One cannot get the feeling of working towards a common goal when they are set apart from each other in the system. The mind-set was so formed that people in the finance department cared least about employee level data except the amount of salary to be paid, the benefits, tax payments etc.
ERP software came as a blessing. It saw rapid growth in the 1990s. Originally, the term came from materials requirements planning, which later evolved to manufacturing resource planning (MRP) and finally became Enterprise Resource Planning. It combined the data of formerly separate departments. It eased the functions and synchronization across multiple systems. It helped to standardize software specialities needed in large organizations.
The currently available ERP software can take advantage of cloud computing. It is highly advanced software that helps to manage all activities in an organization efficiently. Almost all kinds of activities are automated with ERP, leaving the top level personnel to concentrate on core level activities.
What ERP can do for your business
- ERP streamlines different processes and workflow.
- It enables sharing of data across various departments in an enterprise.
- It helps to improve efficiency and productivity
- It helps better tracking and forecasting of business activities anywhere within the enterprise. It enables monitoring projects constantly.
- It saves considerably on overhead costs.
- Fewer personnel are required to manage separate systems.
- ERP helps an enterprise to provide better customer service.
- It helps to maintain control over assets, cash flow and accounting.
- With ERP, you can streamline supply chain and operational functions like manufacturing, inventory and sales order processing.
- It helps to deliver products and services in time.
- It supports the HR management functions like procuring, hiring and retaining good personnel.
- It makes possible easy reporting, analysis of data and smart decisions using business intelligence tools.
Thus we observe that ERP caters to all departments in an enterprise including financials, supply chain, manufacturing, operations, reporting and human resource.
Nowadays, ERP systems can be deployed either on-premises or in the cloud. With the right enterprise resource planning software, all your business processes come together for easy collaboration and rapid decision-making to enhance your team’s overall productivity.
Why outsource ERP implementation?
Technology is advancing fast. The current ERP application software packages include a host of benefits with enhanced connectivity and superior performance. The functions extend far beyond common back-office functions.
ERP Implementation outsourcing is advisable for the following reasons:
- Most organizations do not have the expertise or experience in their organization to implement a major ERP package.
- Most implementers have a systematic approach to installing these types of
business systems and have perfected the approach through many installations.
- Organizations cannot or will not spare people up towork solely on an implementation.
- Bringing in implementation consultants helps by bringing expertise in to reduce the workload on the
day-to-day people who already have fulltime jobs within the organization.
- Assuming the responsibility of ERP implementation in-house can lead to failure and frustration.
- It actually depends on the size ofthe organization and the size of the ERP package. The bigger both are, the more likely outside help will be needed.
Outsourcing ERP leads to financial benefits. It simplifies operational efficiency. The ERP products are upgraded and enhanced periodically. The vendors upgrade their services in accordance, making available the latest technology. Vendors train personnel as per requirements. The services are based on monthly fixed charges. Thus, organizations can maintain and control cash flow. There is no need to purchase expensive software, change the software every time it is upgraded and train personnel for the developing technological advancements. It essentially simplifies the conventional complexities in implementation and evades the crisis of hiring, retaining and training IT staff to run the concerned applications.
Some precautions need to be taken in this regard. If outside consultants are going to be brought in for an ERP implementation, credentials, references, and must be checked to ensure that the consultants can actually do what they claim they can do.
When it comes to outsourcing organizational functions, the question How to outsource is not as crucial as Whether to outsource. ERP being strategically connected with all the core business processes of an organization, and hence perceived as the central nervous system of the company, many would consider keeping such an extreme strategic aspect of the business well within the organization walls. However, the benefits of outsourcing outnumber the disadvantages. It is for each company to decide what suits them most.
In the long run, outsourcing ERP implementation tasks will be a smart move for the business.
ERP solutions are provided by Zerone HiTech – including Microsoft Dynamics AX, Microsoft Dynamics NAV and Oracle. Zerone HiTech is the best ERP service provider offering the latest upgraded software at reasonable costs.