The need for Enterprise Resources Planning was felt because of the growth of business houses which used to operate within a limited area and with a comparatively lesser capital .These business houses were being managed by owners directly and every decision used to be taken by them only. With the passage of time the business houses started growing to such an extent that it became virtually impossible to have information readily available to the management to analyze the same for taking a quick, effective, efficient and timely decision.
The traditional system of book writing was not able to match the ever growing demands of the management to quench their thirst for MIS on real time basis. The complexities of present day business demands quick reaction to the changing business environment based on the facts and figures available e.g. requirements of funds , treasury management, production planning based on delivery schedule to match the orders booked by marketing department, responding to tenders in a most competitive manner, managing available human resource in most efficient and cost effective manner, materials management etc. are few challenges which are critical for the existence of present day business houses.
These demanding situations motivated software people to come out with a product which can satisfy the needs of present day business houses to a great extent. The book writing got revolutionized and by the passage of time we were able to have software in place which can handle these situations. This software in common man’s language is known as ERP.
ERP however stands for enterprise resource planning but technically speaking it is the software which helps in recording the transactions in such a manner which gives us the best possible output in terms of reports on real time basis which ultimately help management in decision making enabling them to maximize the use of available resources in terms of men, money, material, machinery, land etc.
Presently we have ERPs available for almost every industry be it manufacturing, service sector, Government departments, social sector, banks, financial institutions etc. In our country a lot is still to be done in this direction. There are instances where it has been experienced that after putting a lot of money and efforts the software implemented could not match our demands. This has in few cases given birth to bitter relations between the Client and the service provider. But the question is how to overcome such failures. I personally believe that by taking few steps at the initial stage minimize chances for the failure of any ERP software. These steps can be briefly described as under:
Understanding the business: Every business house has its own distinct needs to cater to achieve success. In some industries inventories are more important to control than planning cash or manpower. Thus before selecting software we must have extensive discussion to understand the business and its needs.
The requirements and expectations of the management and the actual users is vital information to consider for selection of software. The implementation team must have an experienced functional consultant who can easily understand the business of the client and its critical areas. It is suggested to document the minutes of the meetings for further discussion among team members to jot down the expectations of the client on priority basis. It has been experienced that in some cases service provider promises anything and everything to get the order for implementation of software which is undesirable. It is in the good interest of both the client and the service provider to know in advance about the features of the software being implemented.
Selection of Software: Based on the understanding about the nature of organization and the requirements of the management a decision with respect to the most suitable software can be taken easily. Through discussions and demonstrations we can help the management to select a software which can be more beneficial in terms of improvements in revenue generation, increase in work efficiency and cost savings to the organization keeping in view the implementation and software cost, annual upgrades , annual maintenance, inbuilt flexibility for customization to generate reports having regard to the size of the organization and to maximize the benefits it can expect from ERP implementation. We need to switch over to ERP only if there is cost saving, improvements in earning, improvement in work efficiency levels, better controls keeping in view the investment needed for the said implementation.
Training of users: The next step is to discuss the features and uses of the software with the actual users. This will help us to know their level of understanding which they possess about their own functional job and their comfort level of working with computers. This step will help the implementation team to chart out program with respect to level of training to be imparted to the users. Every effort should be made to spell out the flow of data from the entry level to the generation of report to make users understand the errors which could happen in case data is punched without having regard to the paths created for deferent types of entries at the initial input level.
Creation of Blue Print for implementation: – This is a critical stage and the success or failure of the ERP software depends on the vision with which blue print popularly known as documentation is done. Here the role of functional consultant becomes that of an apparel designer, the more creative the designer is the better product we will get. Most of the ERPs are like unstitched cloth and it is up to the understanding capabilities of the implementation team to visualize the flow of inputs to achieve desired output. Creation of dimensions and number series must be simple to understand and need based to make the data input effective and efficient.
Sometimes it has been observed that to impress the client long and complex number series and dimensions are created which ultimately create more problems than solutions as they are not user friendly and give birth to more errors. Designing of chart of account, traditionally known as Trail Balance, needs in-depth knowledge of accounts and should be finalized by the functional consultant only after discussing the same with the concerned department of the client and his technical team. Users need to be educated about the use, importance and the advantages of using proper number series, dimensions and selection of appropriate ledger account to produce and or reproduce reports expected to be generated on the basis of data input. The real time report generation is the key difference between traditional software for recording business transactions and an ERP. Thus it is the quality of data input and the use of proper dimensions which plays vital role for generation of a quality report. Efforts should be made to use the software in original form with least customization to ensure good response. Sometime customization beyond certain reasonable level creates problems and can be responsible for malfunctioning of the software.
Going for Implementation: – Once the documentation is ready the implementation team should configure the software by strictly following the guidelines so laid down. It is always easy and also advisable to implement ERP in phases or department wise for better results. Implementation in phases give better ideas and any need for deviation if felt during the process of implementation may, if thought fit, be incorporated only once the implementation is complete. Any change during the process of implementation can create problem in successful completion of the implementation.
Security Concerns: – Not only security of the data is of supreme importance but the users should be given limited access to change the basic structure of the flow charts thus created by the implementation team. In case changes are allowed freely it may harm the basic structure and we may not be able to generate the desired reports for which customization was done. Implementation of ERP is outcome of the vision of the implementation team who has translated the desires of the client using the limited flexibility available with the software to the best of their ability. Thus implementation once complete must not be altered frequently, if the change is necessary it should be carried out with the consent of service provider and must be incorporated in the basic document. Users can be authorized to make routine changes i.e. change in passwords, creation of new records etc. as per their individual competence.
Start Input of Data. Once the software is in place with complete documentation a dummy company can be created and actual data punched in. Once the actual data is punched into the system we can test its efficiency by generating desired reports. Once all the results are found up to the mark and users along with the management is comfortable with the working of the software the same can be made live to resume normal working.
In short ERP is a tool to integrate the activities of the different departments, different divisions and different companies working under single management globally in such a way that there is little or no dependence on paper work to communicate within the organization and to generate any available report which can be critical for the existence of the organization on real time basis. It is a tool which helps in better management of resources in any form available to an organization resulting in improved returns on investment.
Dilip K Raina
Chartered Accountant & Microsoft Certified Professional –Navision & Axapta.