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Choosing ERP effectively

Choosing ERP effectively

Choosing solution to plan enterprise resource( ERP) is still a question for many businesses, when that information is not made clearly and systematically. This post will share how to select an ERP solution effectively

When does an investment of ERP?

The nature of ERP system is not something too huge and complex. Within the daily system of the company, if the flow of information and business work process is done through the computer system then would have considered a kind of ERP. In fact, when the growth is too fast, or when company leaders began embarrassing to control because of information which they handle too many, they start looking supports as software ERP. However, due to funding problems the medium and large enterprises often think of equipping an ERP system. Therefore, to answer questions ERP is not an investment, companies need to assess their status in the 5th or not:

Company starts with business transaction volume increasing rapidly, the volume of goods exported and warehouse receipts increase more quickly than capturing information to operate of leaders. Errors often occur in the beginning stages in storage, warehouse, delivery, information confusion between bills and goods  … loyal customers started complaining more.

• Business is competitive strictly, profit are reduced and the requirement for cost savings, rationalizing management process is set up goals of leadership and enterprise.

• Company is developing well, high profit and wants to expand production and business scale to many other areas.

• Export companies want to open markets abroad as well as with other international partners for business cooperation. Customers and partners are demanding enterprise management model compatible practices by the world.

• Companies are working with cumbersome management system, less effective and are in the process of restructuring the management structure.

If company situation are these situations, investment ob ERP may be one effective solution to help company out of current difficulties to achieve its strategic goals.

Select "skirt" fit ERP

Back story about the cost, in the context of the economy are many changes now, the budget for computing often is cut and makes room for other important business objectives. Therefore, the selection of ERP is more difficult than ever. Even in cases of companies have money, buying ERP is never an easy question. The problem is how to look at the purchase of ERP as a merely purchase or a long-term investment.

The current investment of companies often stops in the current business models more than a long-term orientation. ERP investment is not simple, so ERP investment will not end when the companies start to operate the system. For example, a company manufacturing and trading of consumer goods in the first 3-4 years needs developing, so its major goal is to solve the stages relating to sales and finance with the motto "have goods timely and sale to gain market share”. Thus, the modules on financial management, inventory management and sales management will be applied. After 4 years, they will continue to interest "analysis and minimize losses, costs, reduce the price …" so the module of production management, financial analysis, personnel, salaries will be put into. Also, when the technology factor has been established as a competitive factor, the connection of the ERP system and lines will be set out as the connection with the bank, with the supply chain, the sales agencies …

Thus, the important problem for” the skirt" ERP being not "too tight" or "too big" is companies need to identify their development strategies in 5 years, 10 years not based on the current model.

How much is ERP invested ?

When considering to equip ERP system, companies need to prepare for their budget. Enterprises should not hesitate to external or internal ERP solution but should consider the total cost of ownership (TCO), including major items:

• The cost of copyright

• Cost of system deployment and transfer

• The cost of system warranty and maintenance

• The cost of hardware and communication infrastructure

• Cost of internal company (the account arising from structural changes, salary, bonus employees, overtime money …)

• The cost of expansion and connectivity in the future

Statistics of projects Vietnam enterprises implementing ERP said that the cost of $ 50,000 up to several hundred thousands or millions dollar for the period of initial investment.

The other view is the investment on revenue. With big businesses and are looking to expand production, business or international cooperation, the rate of investment on the IT system in the first year usually accounts for 3% of total revenues, of which 1.5 to 2% for ERP . From the second year, operating costs is about 1% and about 0.5% for further development.

Requirements in bidding?

Vietnam Enterprises often use the traditional method is bidding through hiring an independent consultant to study the current situation and then put into technical requirements. Similarly, foreign enterprises use this form known as Request For Proposal (proposal required). The joint stock or private companies ,instead of having to conduct extensive selection, negotiate to sign contracts directly.

The way of business is not wrong but many businesses because of relying on the consulting unit, or not close in making requests for solutions lead to heavy records on the form, unclear criteria or leaning on more technical and financial solutions than professional functions. It is itself not only harmful to units deploying but also harmful to the company by implementing long time, the total cost will be up.

Two important stages to solve this problem :

1. Survey current details and future trends

2. Given criteria of professional, technical and clear price for solution proposals.

Vietsoft – SAP Partner

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