Change Your Business Practices to Suit Your New Cloud ERP Software

Jul 17 2020 Published by under Uncategorized

Many businesses love their old software and do not want to change them.

They buy a cheap Accounting or an ERP software that meets their business requirements when they were making USD 1M. Now they want to use the same and make it run as the business has grown to US$10M. As their business need changes to meet Sales demands or CRM needs, they buy additional software and spend huge money to integrate the new technologies to their old Software. Because they are not able to see the future growth and do not purchase a FUTURE ready ERP software.

The challenge they do not understand is, they spend huge amount of money to run the old software, they keep IT personal to run and manage their hardware and server etc. This would lead to loss of business opportunity as the old solutions are not integrated together affecting customer services.

Recently as part of our cloud ERP software sales, we met a US$100 million manufacturing company in India. During our discussions with the company management, we were sure that they are interested to go for a Cloud ERP Solutions. But the challenge was “can we customize the product to suit their business practices and needs?”.

This means, management wanted to retain and follow their 30 year old practices where they manually check the data, numbers even after these are generated from their current stand alone ERP. They wanted controls and approval at every stage of documentations.

They were in dilemma, because their business had expanded and had operations in 3 large locations. But they wanted to continue with old practices as they are afraid that their “Old workforce” can’t manage the pressure. They don’t want to change the legacy of the company Founder too.

It gave us an opportunity to think what is happening here and our findings were as below.

1. Old practice: When the Founder started the business, he wanted to control every document movements and approved by him. It is OK as that time where the taxation rules were stringent, getting bank loan was difficult and Information / trade secret should be kept under wrapped. But as the business grown they added more people to do the manual document preparation and built “verification layers”, but didn’t automate the process and remove the old practices.

2. Fear of Unknown: Many senior employees worked as assistants to the Founder and gained his confidence and were promoted. The loyalty and “fear of unknown” didn’t allow them to change the old practices. They followed “Boss is always right” model.

3. Don’t fix anything unless it is broken: They didn’t make any attempt to know what is happening around the world and they didn’t trust anyone. This was the problem as they never sought after some of the best practices around the industry and made an attempt to practice and follow. They have an ISO9000 certificate, as it was essential to get the large company orders. They strongly believed that they follow a “World class practice”.

4. Resources Cost is cheap, but now it is affecting the organization as the current Workforce did not follow the level of commitment and loyalty that was exhibited by senior employees.

5. New generation is looking to change the current practice, but are overruled by their parents who are more “experienced”. So many young generations are forced to follow the old practices, as the senior workers never listen to them.

6. Data duplicity and entries were high as their current system is a combination of multiple solutions that are decentralised.

7. Founders and their family could not penalise the old workers even though they miss the deadlines or missing the compliance rules as they were loyal to business and had grown with the business.

After analysing the above, we suggested the following with justifications. Because it is essential to be empathic to customer needs and see how can we help them?

“We are happy to customize the ERP to suit your needs. But, before doing it, you should run our ERP “as it is” for 6 months. Post that we will take a decision on the next steps to follow”.

We justified this on why they should go for automation of an ERP and not to customize it to follow their old practice with below points.

1. A world class ERP solution brings some of the best practices used across the world. This could help them to improve the productivity, reduce wastage and improve inventory movements.

2. Cloud ERP brings in process automation, control and meets compliance needs as it is. No more last moment run and miss the compliance deadlines and pay a penalty.

3. It reduces the chaos and simplifies the process.

4. It brings in clarity to the process and Business Owners can see the right details at right time.

5. Competition is increasing day by day and Businesses need to be ready with right process to win the customers. Customers are the decision makers now as the information is freely available to everyone.

6. Government Rules and regulation have become stringent. Every county is co-operating with each other to find tax evaders. So it is not advisable to keep the Oral records or miss the bookkeeping.

7. Just because they are following a process for many years doesn’t mean it is correct now.

In summary, we won the deal being honest with this prospect and implemented our Cloud ERP Software as it is.

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ERP Software Cost – Direct And Indirect Costs

Jul 16 2020 Published by under Uncategorized

ERP software cost includes all the direct and indirect costs incurred, from purchasing the software till implementation process is completely over. Some costs are clearly evident in this process while some are silent or hidden. Generally an incomplete analysis of ERP cost would just include the expenses to be made in purchasing of software and hardware whereas total cost of ownership of ERP goes far beyond than just these.

By a survey conducted way back in 2002 it was estimated that an implementation of ERP on an average cost $15 Million ranging from $0.5 Million to $300 Million, but it is quite an old estimate, times have changed a lot since then and there surely would be major change in the average cost of implementation. However, the factors affecting the cost have not changed and more or less remains same as they were right at the beginning. The cost of purchasing the software and cost of installing the hardware necessary for running the ERP are two basic cost centers involved with ERP ownership. Apart from the purchasing cost the cost involved in making the system run in the form of manpower, system software, purchase of software for security features and checking third party intrusion, license renewal fees etc should also be taken into account.

Implementation process involves lots of activities and these days most of them are preferred to be done by taking help of external consultants like functional analysis of the company to prepare ‘as is’ document. Similarly, for technical analysis and GAP analysis services of experts or agencies are availed to get the best output and independent opinion. These services incur costs and increase total cost of ownership of the ERP. Indirect cost in these activities are those man hours which have been invested by the in-house staff for getting these activities done, these costs are ignored most of the times, but have crucial impact on total cost of ERP implementation.

To provide sufficient training, companies need to invest decent amount of money firstly in hiring trainers or paying the consultants imparting training to handle the ERP, hiring technical staff to support the ERP and training them according to the software and hiring or developing existing managers as ERP consultants for future needs. All of these add up to the total cost of ERP software.

Cost of tools and software required for integration with external entities, for optimum utilization of the ERP and for integration with present system also cost and these costs vary according to the scope of implementation and ERP software itself. Some ERP software may need lot of these tools and software and some may not.

Data conversion is another activity that involves cost depending upon the nature of the ERP and the format and media on which old data has been stored. Actual cost of data conversion can be accessed only by putting together all of these factors and sometimes it can be quite high. Testing of ERP its components, performance and user acceptance is a compulsory process which has to be conducted before going live and this activity also incurs cost on the company to increase total ownership cost of the ERP. Some companies may spend more money on one process and another may spend less but for calculating actual and realistic cost of ownership of ERP all of these cost centers are needed to be included.

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What is the Purpose of ERP Software?

Jul 13 2020 Published by under Uncategorized

Enterprise Resource Planning (ERP) software can be described as a complete business software solution. It is aimed at the integration of all business processes and sub-processes into a single unified system. This system is formulated and implemented in an organization to effectively and efficiently achieve the business goals of the organization.

ERP packages are implemented to manage the existing and prospective business plans and policies in an efficient manner under strict deadlines. It can be referred to as the ultimate business solution package that is predominantly concerned with making sure that the available resources of the organization are utilized in the best possible manner and coordinated with the business objectives of the organization.

It is crucial that modern day business organizations have a single unified system, which aims at harmonizing its business efforts. This can prove to be a crucial determinant in deciding the scope, area and net results of the organization as a whole, rather than running many different systems that don’t work well together. What makes ERP different from any other business solution package is the presence of a single and unified database system.

ERP software is as essential to the needs of a business today as food is for living. Businesses cannot run competitively in the absence of properly drafted and formulated ERP software. The more effective implementation and follow-up, the better are the results. ERP software is needed by all modern-day organizations, irrespective of the size, area of operations and business objectives.

Nowadays there are many ERP packages available in the global market, including SAP, PeopleSoft, Oracle, J D Edwards, and BAAN.

The selection of an ERP software package is dependent on many factors: previous software implementation, nature and size of operations, recommendations of consultants, and management decisions.

Before installing specialized software, a detailed study must be made and reviewed to match the business requirements with the available packages. This must be taken as a serious study as any mistake in selection or its effective implementation can prove disastrous to the organizational objectives and prospects. The ERP software must be installed by an ERP vendor or third-party consulting organization, which are expert service providers when it comes to providing Consulting, customization and support.

Some of the benefits of ERP Software:

* All processes and sub-processes are linked and unified into a single system.

* There are enhancements in the field of productivity, efficiency and achievement of business objectives.

* ERP tends to considerably reduce the response time by effectively transferring crucial information.

* ERP helps in streamlining the numerous functions performed by the organization as a whole.

* It helps the management to make vital decisions with unparalleled accuracy and in-depth study.

Thus, ERP software can effectively change the outlook of any business organization that exists in today’s cutthroat business world. Proper implementation of the ERP software is the key factor, which can benefit the growth prospects of any organization.

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