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Introduction One: Prepping for ERP Enhancement Two: ERP Implementation Three: Growth & Global Considerations Four: Change Management & Communications Next Steps
Introduction
As companies grow, they get weighed down by a lot of information siloed in individual systems finance, accounting, manufacturing, sales and service, and customer relationship management (CRM) among them. Getting these data sets talking with one another effectively is key to operating with the speed, efficiency and individual responsiveness that customers demand in todays 24/7, always-on economy. Enterprise resource planning (ERP) systems have been developed to accomplish precisely this: to automate, manage and integrate the flow of information from multiple business functions both internal and external information such as customer and marketing data in real time. Many companies are realizing that flexible ERP solutions enable them, for example, to align their data on purchase orders, inventory receipts and costs. They can track orders from acceptance to fulfillment and revenue from invoice through receipt of payment. And all of this provides valuable insights to assist sales forecasting and inventory optimization.
But how can you achieve the benefits of ERP if you are a small to midsize business (SMB) lacking the capital human and financial of a larger company?
To find out, we spoke to three industry experts on ERP transformation in SMBs. Nick Castellina is a Research Analyst in Aberdeen Groups Enterprise Applications practice, who focuses on cloud-based, software-as-a-service models for ERP and ERP implementation in SMBs. Luis Gallardo is an Associate Partner for IBM Global Services in the midmarket group of Global Business Services, with over 14 years of experience consulting in a breadth of industries from consumer products to life sciences. Kathy Killingsworth has more than 25 years of consulting and private industry experience, and oversees the strategic direction of Tribridges national Microsoft Dynamics AX practice, which includes on-premise, hosted and cloud-based financial and ERP solutions. We asked them the questions that midsize businesses most frequently ask about ERP. This guide summarizes their advice to us.
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ERP helps to standardize best practices and introduce formalized methodologies across the organization It can enhance operational visibility, financial control, or integration of the supply chain.
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Additional questions you should be asking and answering are: Are your IT resources too time consuming or costly? Do you have disparate, stand-alone software systems? Do you have a number of different software applications for different purposes? Is your companys growth complicated or hindered by software integration issues?
If your organization is facing challenges in any of these areas, it might benefit from a targeted enhancement to your current ERP implementation.
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What specific business problems are you are able to solve with an integrated ERP solution?
Luis Gallardo: This is a company-by-company and even a business-unit-by-business-unit question. It really depends on the companys circumstances: where the most pain can be alleviated or the most business benefit can be attained. It could be a question of enhancing business visibility, by improving the integration of operations with the administrative functions; or it could be a matter of achieving operational efficiency and financial control or integrating of the supply chain. The key is determining your needs before you implement the ERP solution, and knowing your objectives and goals going into it.
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Strong project management correlates very strongly with a successful ERP implementation. An ERP implementation should be viewed not just as an IT solution, but also as a business solution that will transform your organization, helping it to become more effective and efficient.
So, what questions should we be asking ourselves as we begin thinking about upgrading our ERP capabilities?
Nick Castellina: You should start by looking internally. Kathy Killingsworth: Come up with an internal set of questions, based upon what makes you unique and innovative as a company. Luis Gallardo: Focus on your culture, what is important to you in terms of value, current pains and needs. This will provide core values and needs based set of questions. Kathy Killingsworth: Next, put your core values to one side and objectively evaluate how the weaknesses in your companys culture might impact this ERP project. First and foremost, is your company flexible enough to allow the change required to accommodate a new way of
doing things? Are your stakeholders prepared to reengineer their processes to obtain better results? Who are the key decision makers in your company who need to buy into a new system in order to make it successful? Despite what they say, people are not always open to new ways of doing business and managing change. What is the message that will resonate with internal concerns to help gain support for a new system? Are people afraid of losing their jobs? Do you have a project manager who has enough experience within your company to manage this project for you? Should you hire someone to act as your project manager for this critical initiative? By asking these questions first, youll be stresstesting your companys culture for its ability to adapt to technological changes.
Luis Gallardo: Next, you can move to the tactical aspects of ERP: finance, scope of the project and project management. Nick Castellina: And you will need to answer a new set of questions, such as: What can you afford? What can you support? Which processes are absolutely necessary for support? Who will be using the solution? Are there any technologies that need to be integrated? Is there agreement on the requirements and budget necessary to implement the solution successfully? Oftentimes, successful organizations employ a third party to help with this process. They can help devise a list of essential criteria.
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Looking ahead, your ERP implementation should be able to adapt to changes in your business as your company grows.
improvements, such as reduced transaction costs and reduced complexity. Clearly articulating these goals and expectations will give your team context and direction so that design decisions can be aligned with, and support, overarching goals. Luis Gallardo: A good business partner can help you break down the overall strategy into its key points and then help you map those to opportunities within the business and ultimately to the right ERP solution. Each opportunity will need to be prioritized by the business value it can provide to ensure that a proper business case for it can be made. Kathy Killingsworth: Looking ahead, your ERP implementation should be able to adapt to changes in your business as your company grows. It should be flexible, low maintenance and scalable, and it should enable end users to readily obtain the information they need to perform their tasks. To this end, you will need to determine if your current staff is trained in the new ERP software. If not, do you need to consider hiring new technical experts? You will also want to consider whether the company that developed and owns the ERP package is sufficiently innovative and continually enhancing the software. Beyond these basics, think about the improvements you expect from a new ERP system. For example, if you are focused on product costing, how will this be handled by the various ERP solutions? Can actual costs be tracked and compared to standard or estimated costs? Or, if you have to accommodate regulatory compliance business requirements, will the ERP system meet those needs?
9 Many cloud providers claim to be single tenant, but in fact are sharing terminal servers or database servers with other customers. Make sure you ask. All that being said, the increased scalability, faster deployments, reduced dependence on IT, minimized initial investment and rich integration capabilities of ERP via SaaS are all very attractive reasons for midsize businesses to strongly consider the cloud.
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TIP!
SaaS solutions can be implemented more quickly, require fewer internal IT resources, and can be paid for on a month-to-month basis
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public and private. Public clouds are standardized and built for massive scale. Public cloud solutions allow large numbers of customers to share database servers and application code they are great (financially) for the provider, but not particularly great for you (the customer). Private clouds are customizable to the needs of an organization. They enable you to leverage existing IT resources and offer additional layers of security, as well as increased redundancy through access to a colocation model for data storage. Private clouds offer: Reliability and fault-tolerance The hosting partner is able to host secure, reliable applications. No patching or maintenance With less hardware to manage and maintain, you can focus on what is important. The ability to get online fast Private clouds enables you to quickly deploy both a business site and business-critical software. Enhanced control You have greatly enhanced, often full control over your systems and data.
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Whatever approach you take, the method of implementation should be aligned with your organizations overall goals.
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Companies can get ahead by implementing social tools within their ERP.
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foreign currency translation, and compliance with International Financial Reporting Standards (IFRS). Languages and the implementation of native language interfaces for different countries are also keys to effectively and properly using the system. You dont want language barriers to prevent people from efficiently utilizing the system. Foreign currencies and languages are just some of the global issues that transnational corporations need to consider. Other global issues include legal and statutory reporting in other countries and compliance with local labor laws and processes. Kathy Killingsworth: Top-tier solutions such as Microsoft Dynamics AX provide foreign-currency conversion, localization compliance and language conversion support for several countries around the world. Localized versions of top-tier solutions enable foreign subsidiaries to easily address local legal and statutory reporting requirements, while still conforming to internal corporate consolidation and reporting standards.
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Next Steps
Now that youve heard from the experts, you should have a better sense of what an enterprise resource management implementation or enhancement to your existing ERP solution would be like. The decision whether to move forward is, of course, for you and your colleagues to make. But we recognize that you may have any number of further questions and concerns that you would like to address. Our advice is to reach out to a reputable ERP vendor or implementation service provider (like IBM or another experienced provider that you can trust) to talk through these issues and gain a better sense of where your organization stands vis--vis a new ERP solution. And when the time is right, move ahead.
To learn more about IBM ERP solutions for the midmarket, please contact an IBM marketing representative or IBM Business Partner, or visit the following web site: http://www.ibm.com/midmarket/us/en/erpconsulting.html
Additional Resources: ERP infographic: Getting the Most from your ERP Analyst Blog: Take an Integrated Approach to ERP Analyst Blog: Let the Chef Make Your Selection for you: Utilizing Business Partners Analyst Blog: Creating a Winning Team Aberdeen eBook: A Guide for Successful ERP Strategy in the Midmarket: Selection, Services, and Integration. Aberdeen eBook: Using Services to Support a New Generation of ERP
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Nick Castellina is a Research Analyst in Aberdeen Groups Enterprise Applications practice. Nick joined Aberdeen in 2010. His primary research focuses on the use of ERP, SaaS, or cloud model, as well as ERP strategies in small and mediumsized businesses. His enterprise applications research explores how ERP is used differently across industries, and how it can apply to all roles within the organization. Additionally, Nick leads a yearly study on financial planning, budgeting, and forecasting. Other topics that he covers include project management, enterprise performance management, professional services automation, and the office of the CFO. In addition to these activities, Nick plays a major part in the development of the Aberdeen Business Review.
Luis Gallardo is an Associate Partner for IBM Global Services in the Midmarket group of the Global Business Services organization. In nearly 14 years his consulting career path has covered multiple industries, with the core of his work in distribution industries with considerable exposure in life sciences, consumer products, food & beverage, clean (green) technology, electronics, insurance, entertainment, retail, manufacturing and government. Luiss broad project expertise is centered around the ERP business software applications area, specifically focusing on delivery and business development roles for all aspects of ERP implementations, built upon a solid financial expertise a financial educational background and process expertise. His consulting knowledge extends into several different disciplines, including software selection, business case development, business transformation and application management services .
Kathy Killingsworth has more than 25 years of consulting and private industry experience, including IT strategy and business process management, systems and software development, packaged systems implementation projects and quality assurance. Kathy oversees the strategic direction of Tribridges national Microsoft Dynamics AX practice, which includes onpremise, hosted and cloud-based financial and ERP solutions. Major areas of focus for Kathy include growing the firms AX business, continually improving the overall solutions delivery experience, ensuring that the solutions and sales process meets the diverse, industry-specific needs of Tribridge clients, and developing new ways to enhance customer service. Under her leadership, Tribridge has been acknowledged with numerous customer excellence awards for innovative ERP implementations. www.tribridge.com/erp
Copyright IBM Corporation 2013. IBM Corporation 1 New Orchard Road Armonk, New York 10504-1722 U.S.A. Produced in the United States of America May 2013 All rights reserved. IBM, the IBM logo and ibm.com are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at ibm.com/legal/copytrade.shtml References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. All customer examples described are presented as illustrations of how those customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics may vary by customer. SMM03011USEN-00