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How to buy ERP software - Step 4: Business processes

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25th Dec 2005
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Is the current way you do things the best way, asks David Carter in the latest instalment of his guide to buying and implementing ERP and accounts software.

One of my main themes is that you must get your admin staff to test how well any package handles some of your company's own orders and invoices.

To your admin staff, handling the order well will usually mean handling it in the same way they handle it now. They want the minimum disruption to their work, which means making as few changes as possible. So they will tend to prefer a system that replicates what they do now. But maybe change is necessary? Just because you have always done something in a certain way, that doesn't necessarily mean that is the best way.

When companies like Easyjet and Ryanair entered the low-cost airline market, they did not simplycopy the systems used by their more established competitors. Instead, they rethought the whole way of doing things. They realised they could reduce costs and increase efficiency by cutting out the travel agent and dealing directly with customers. So they installed computer systems that allowed customers to order their tickets directly over the internet and created a completely new business model.

One manufacturing company I know realised that its existing systems had grown haphazardly over the years. When the company decided to scrap the old systems it decided to reorganise around a new enterprise resource planning (ERP)package that linked its operational and finance functions.

When you change to an ERP package, you have an opportunity to change the way you do business as well. This process of rethinking the way you do business is called Business Process Re-engineering (BPR).

Potential areas for BPR
Rethinking your business is not as easy as it sounds. As an introduction to BPR I would recommend 'Re-engineering the Corporation, a Manifesto for Business Revolution' by Michael Hammer and James Champy. It is full of real cases, some of which may be relevant to your own business.

In many cases, the growing capabilities of ERP software are enabling the change. On the purchasing side, many companies are now allowing staff to raise purchase orders and authorise the supplier invoice themselves rather routing purchase invoices through the Bought Ledger department. And requisitons and authorisations can go to managers via email or over the internet rather than travelling on paper. For dispersed organisations, in particular, this greatly speeds up the purchasing process.

Many companies are also giving suppliers direct access to their stock control systems and passing responsibility for reordering down the supply chain. Others are using the internet as an alternative route ot market and integrating sales order processing with customer relationship management (CRM) software. And why not buy a new digital PABX and use computer-telephony integration (CTI) to recognise the number of incoming calls and route them directly to the person who handles this customer? When they lift up the phone, the details of the customer are already sitting there on the screen.

The change team
With technology making so many changes possible, you need to encourage staff to come up with new ideas and think "outside the box'. For many people, however, the way they work now exerts such a stranglehold that they simply cannot conceive of doing it in any other way. Early on, try to identify people who can think alternatively.

The director-level 'enforcer', whose job is to push through any changes in the organisation needs to get together with the alternative thinkers in advance of the new project to try and identify better ways of doing things. Tell them to imagine how they would do things if they were starting with a clean sheet, money no object. How would they organise things? If they had the perfect package, what would it do? Work out a wish list.

Give each member of your change team a notebook to record their ideas. Often good ideas come as a flash of inspiration while you are in the middle of a problem. The notebook lets them scribble and idea there and then, so they can come back later on and think the idea through in detail when there's more time.

Make it clear that all ideas must originate from the business itself. If someone says 'we need CRM' or ' I want e-procurement', get them to work out the nitty gritty detail by writing down a concrete example of how it would work, step by step. Buzzwords on their own are too vague to be useful.

With so much going on in technology, and given that you may not have grappled first hand with new business software for more than five years, you may also want to bring in outside help to refine your ideas.

At the end of the day, though, the consultants and experts go home and the users will be left to run the new package. In order to make the implementation work, the end-users need to be committed to it ('buy-in', in the jargon). There is a role for consultants, not so much as the experts telling you what package to go for, but as 'enablers' to help your users choose the package that is right for them - they are the ones who should have the final say in the selection of the new package.

Write up the ideas of the change team
Once the change team has come up with ideas for the new system, nail them all down in writing as wishlists for each department (ie the sales admin department wants this, production wants that and so on). The ideas don't have to be particularly detailed at this stage, just topics you will want to explore in more depth when you start talking to suppliers.

The wishlist should cover 3-4 pages. Don't bother to write down your standard requirements because they are contained in the test pack. Now write a couple of pages introducing yourself to possible suppliers. Say who you are, what business you're in, what package you have now, how many screens you think you will need and so on. Keep it fairly general, but sufficient to let the suppliers know that they are in the right ballpark.

Having assembled your requirements as best you can, it is now time to send them to potential suppliers. How do you identify these potential suppliers? We'll discuss this in the next article.

Accounts/ERP software implementation guide
This article is part of a series by David Carter to give you comprehensive advice at every stage of the selection and implementation process. The articles over:
  • Step 1: Defining your requirement
  • Step 2: The Test Pack
  • Step 3: The project team
  • Step 4: Business process re-engineering
  • Step 5: Picking a supplier
  • Step 6: The demo
  • Step 7: The decision
  • Implementing the system.
  • David CarterIT Zone consultant editor David Carter has installed more than 100 accounting systems and always emphasises the need to extract good management information from business software. You can get more advice and help from David on these issues from the following AccountingWEB articles and resources:

  • Accounts/ERP Software Selector
  • Mid-market Software Lab Tests
  • So you want a new desktop accounting package?
  • Choosing the right software reseller
  • Reporting Challenge: Resource planner outgrows Excel
  • Interested in Excel pivot tables? Start here
  • More pivot table tips & tutorials

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    Replies (3)

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    avatar
    By lornajane
    02nd Aug 2004 21:20

    No, it's not just you, Paul
    I also thought the article looked interesting, but nowhere was ERP explained - it doesn't take a lot of time to expand a TLA (three letter acronym) the first time they are used, and then readers can concentrate on the meaning of what they are reading.

    Thanks (0)
    John Stokdyk, AccountingWEB head of insight
    By John Stokdyk
    04th Aug 2004 12:25

    In David's defence
    Gentlemen, we take your points to heart.

    In this instance, however, I should admit that in editing the article for the site, I neglected to include the full description of ERP the first time around.

    I also forgot to include the contents box identifying David's article as one of a series on accounting & ERP software. There is a more extensive discussion of the elements of enterprise resource planning software in Step 2: The Test Pack.

    The next instalment in the series will get down to the nitty gritty of software selection and implementation. Before he did that, David wanted to encourage people to consider their new software from a wider perspective than just upgrading what they do now.

    We hope you stay tuned for the next episode and that as a whole David's ERP series will provide practical help to members.

    John Stokdyk
    Editor
    AccountingWEB.co.uk

    Thanks (0)
    Teignmouth
    By Paul Scholes
    30th Jul 2004 13:13

    Maybe it's just me?
    After a certain age you don’t mind looking stupid.

    I’ve also been helping clients with accounting & other systems for years but the only time I can remember discussing ERP was when I went off on one about Kurt Russsell’s brilliant performance in Tombstone (1993).

    It’s taken me 10 minutes to track down the meaning, a nice supplier (or is that now solution provider?) had this paragraph on their home page:

    We won't blind you with buzzwords and jargon (though if you really want to know what Enterprise Resource Planning (ERP) is, we can tell you). We will take the time to understand your business and the issues you face and work with you to implement the right solution.

    Shame really because the article looked interesting but now I’ve got NBT left to read it.

    Thanks (0)