ERP systems and software for CIOs |
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| 02 Mar 2006 | SearchCIO.com |
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Enterprise resource planning (ERP) software and systems affect numerous people and processes within an organization. Therefore, it's critical to take the necessary steps to create an effective ERP implementation strategy. Organizations that get the most value from their ERP efforts do so for a number of reasons, including obtaining executive support; treating the implementation like a continuous improvement process, not just a project; and completing the implementation in less than nine months. This Executive Guide will provide you with the resources and advice necessary to evaluate and implement a successful ERP program.
This Executive Guide is part of the SearchCIO Executive Guide series, which is designed to give IT leaders strategic guidance and advice that addresses the management and decision-making aspects of timely topics. For a complete list of topics covered to date, visit the Executive Guide section.
Table of contents
 Experts' Corner
ERP basics
ERP advice
ERP journey
SAP
Open source
More resources
Overcoming today's ERP challenges
[Brenda Kerton and Dr. Curtis Gittens]
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| Dr. Curtis Gittens, Senior Research Analyst |
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| Brenda Kerton, Senior Research Analyst |
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ERP systems can help an enterprise become more efficient and effective in serving its customers. Implementing an ERP solution, however, means that CIOs must deal with three major challenges.
Challenge 1: You must understand what an ERP system offers the enterprise. An ERP package covers numerous functions, typically in a set of modules that can be implemented separately or together.
- Order management -- includes customer relationship management, order processing
- Engineering -- includes bill of materials, product design
- Manufacturing -- includes production scheduling, shop floor control
- Distribution -- includes transportation management, fleet maintenance
- Material management -- includes inventory management, purchasing and receiving
- Finance -- includes accounts payable, budgeting, project accounting
- Human resources -- includes personnel management, payroll
In short, an ERP system covers functions in virtually every part of the enterprise.
To overcome this challenge:
- Understand the business strategy related to each function. Are customer expectations being met? What future business directions will not be met with the current functions?
- Understand the current business capability in each function. Are the business processes effective in design and execution?
- Understand what automated solutions are currently implemented. Are they effective in meeting current or anticipated future needs?
Challenge 2: You should understand how much ERP is required and what pacing makes sense. In order to meet this challenge:
- Assess specific business value. What business value can be achieved by various components? What is the business case for each proposed component?
- Determine business priorities. What are the high-priority business requirements within a functional area and across functional areas?
- Determine pacing requirements and alternatives. Will ERP components be implemented over time? If so, in what order? Alternatively, will all required components be implemented with pacing based on business unit or geography?
These first two challenges cover the enterprise-level planning required for a successful ERP program. CIOs take note: The majority of the planning is about the business, not about IT.
Challenge 3: You must create a successful implementation program.
- Create a steering group led by a strong business sponsor. There must be a strong executive champion for this change, who has real passion for transforming the way value is delivered to customers. Since ERP implementations typically cut across business departments, the sponsor must be politically astute.
- Get help. If an organization has not tackled something of this magnitude, consider help from experts who have "been there, done that" and understand the typical pitfalls of an ERP implementation.
- Set expectations. A typical ERP implementation takes about 18 months. Business processes must be redesigned. The ERP package must be selected, installed and configured based on business requirements. Business and IT staff must be trained and support mechanisms put in place.
- Manage the change. The program must simultaneously manage the process, technological and behavioral changes.
- Enable the infrastructure to support this change. This includes the organization design, financial asset allocations and IT systems. The ERP package is just one piece of technology that provides the enterprise with the business capability needed to deliver value to its customers.
- Communicate, communicate, communicate. Defining and executing an effective communication strategy is required to keep all stakeholders informed of the changes. Overcommunication is not possible with an ERP initiative.
As with ERP planning, ERP implementation success is largely a business issue. IT is a critical support but cannot lead the charge. Implementing an ERP system provides the enterprise with the opportunity to fundamentally re-think how it does business and serves its customers. Installing the software is the easy part -- transforming the business is the real challenge.
Brenda Kerton is senior research analyst at Info-Tech Research Group Inc. She focuses on IT compliance, application development and the software development lifecycle.
Info-Tech Senior Research Analyst Dr. Curtis Gittens has been in the IT field for more than 15 years. He has extensive research and development experience in computer science within a number of industry verticals including utilities, health care and e-business.
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- Column: Knowledge capture that sticks (unlike Silly Putty) (Source: CIO Decisions magazine, 09/01/2005)
- Column: Thwarting the rumor mill, communicating change (Source: CIO Decisions magazine, 10/01/2005)
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- Column: Killer apps? Get ready to wait (Source: CIO Decisions magazine, 12/01/2005)
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