How to get more Returns on Investment in ERP (ERP ROI) –
When the organization thinks of using an ERP software,they should consider it as an Investment. Almost,everybody wants to have maximum returns on investment and investment in ERP is not an exception to that. To maximize the returns on investment in ERP, one should focus on ERP Selection,ERP Implementation, and ERP Optimization/ERP Improvement.
Let’s check out the common/generic points which need to be considered during these processes.
ERP Selection/ERP Evaluation
When any organization decides to implement ERP software, then one can think of following aspects.
1.Product suitability in terms of coverage and complexity:-
Following points can be evaluated in coverage-
- Can ERP software cover/accommodate the maximum number of the business processes carried out in the organization? (Minimizing Customization)
What are the areas/processes that will improve once ERP software is in place and to what extent (In short cost vs benefit)?
Following points can be evaluated in complexity-
- Are the employees technically matured enough to handle the complexity of the ERP software selected?
Is the depth of functionality in software is justifying the level up to which we want to have the control over processes?
a) Product Cost –The organization has to decide the number of licenses they must buy as per requirement which can be based on various factors like Number of Business Processes , Number of Employees to name few of them. So the organization has to bear a cost of getting required number of license.
b) Implementation cost – Cost required to implement the ERP software in the organization.
c) Maintenance Cost – Cost incurred for support or AMC required to ensure the flawless working of system
d) Hardware and other costs – Cost of hardware required (Server,Clients etc). Other costs may include the increase in manpower,system audits etc.
There can be more aspect to this but I have listed which I think every organization should think.
I think following (Important) points should be monitored during Implementation –
- Whether the ERP is accommodating Business Processes which were decided during selection.This can be evaluated by As Is – To Be documents/process.
- Pain areas in current practice are addressed which were considered while ERP selection. If it can not be addressed through the standard behavior of software then those can be addressed by customization or not.
- Mapping done in ERP is user-friendly without compromising the quality. User Acceptance Test (UAT) can ensure this.
- The Complete Knowledge (Conceptual as well as operating) is transferred from Implementation partner. This can be achieved by confirming the scheduled training is given to targeted audience or employees. This can be evaluated during Conference Room Piloting (CRP)
- Data which will be uploaded in the ERP initially (Before go live) is accurate as much as possible.This factor will decide the quality outcome of the processes mapped and can minimize the rework while transacting in ERP after go live. This can be evaluated by simulating the scenarios in a test environment.
There can be more points which organization wants to track or evaluate as per their need but I think above points must be evaluated.
Following areas needs to be focussed on improving the performance of ERP getting better and accurate results.
- Addressing the difficulties in executing Business Process (like bugs in customization ) which were not surfaced during implementation or testing phase.
- Confirming outcome of all business processes is as per the expectation.
- Evaluating (over the period) that the improvement (KPI)which was expected from ERP is as per decided
- Streamlining the Process to reduce the number of tickets and ensuring maximum system up-time.
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