Enterprise Resource Planning (ERP)
ERP systems are a vital means of capturing the data and providing the information necessary to manage a complex business organization.
ERP systems are a vital means of capturing the data and providing the information necessary to manage a complex business organization. The constraints inherent in such a complex system, however, severely limit the quality of cost information needed to support the myriad of cost-based decisions faced by management. By developing a conceptually valid, cause-and-effect-based cost model of the organization, constructing a physical model to perform computations in accordance with that model, and then marrying that model with the company’s ERP system, an organization can enhance the quality of its decision support system; a move that will ultimately improve the quality of its decisions and enhance its bottom line.
BBS, as specialists in Finance, Cost & Management Accounting with a strategic focus on performance management, can steer ERP projects towards success. We act as a subject matter expert to the Project team members who will help the Functional consultant’s team to understand the client’s requirements with clarity. Our industry-specific knowledge help brings Industry best practices to the project, thereby increasing project ROI. Our in-depth expertise of operational and business processes can help businesses realize the benefits intended. We also offer Post Implementation audit services to evaluate ERP project success.
The business has to carefully select ERP software, plan the implementation, implement with the right mix of business processes and manage the changes & improvements thereafter. Our role is crucial to bridge the knowledge gap between the business & the implementation partner, thereby improving the effectiveness of ERP projects. BBS with our industry-specific knowledge & project cost management skills can act as a catalyst by maximizing business benefits and improve project ROI. In order to sustain the maximum benefit, the first thing required is to understand and define the business model and identify the various segments/key drivers. Most of the ERP packages are equipped with the flow chart of various processes(viz. SAP uses Event-Driven-Process-Chain- EPC). If the business model is accurate, then all tasks, events, users etc can easily be integrated and comparison with the desired target can be quickly made.
Implementing an ERP for any organization, in a structured manner, will bring about cost advantage, and therefore a company can just relax after implementing such a system. The system requires close monitoring or observation methodology in order to obtain the maximum benefits or competitive advantage. In order to gain the maximum gain implementation methodology should be perfect.
The methodology in short is depicted as follows:
- Identification of the Need
The very first step of implementation of ERP is to identify the requirements or reasons and whether introduction of it will generate additional profit to the business. Therefore, the first condition comes in the mind is the profitability. The next to follow is the cost and time effective, i.e, whether this will reduce the delivery time or cost of the product and also ensure effective checks and controls in place.
- Evaluation of Existing Business
The secondary step is to evaluate the existing business infrastructure/process thoroughly in order to get a clear picture whether the software packages like ERP can be installed and accommodated within the existing resources of the organization. Various business functions such asprocurements, sales, distributions etc must be illustrated and Process Map should be prepared. Process Map will deliver the information about the number of departments and their locations, number of decision points, time required to complete a business process, number of reporting points etc.
- Fixing the Desired Target and Re-Engineering the Business
This step requires the business to be well acquainted with the desired areas which it wishes to achieve. Generally thedesired target is compared with the industry standards and encompasses the areas such as cost, lead time, quality etc. Other areas to look out is to match up the existing business process with the newly accommodated business process and if there is any mismatch, re-engineering of the business is laid down to fill up the gap.
- Evaluation of ERP Packages
ERP software packages is be evaluated under different terms, such as, the global as well as local market acceptance, whether further improvements or updates and timely service supports are available in future, adaptability in the targeted areas of operations, price, cost and ease of implementation and post implementation support. Continuous improvementsin the R&D areas of the packages are one of such a crucial condition since the business world as well as its operations are always highly dynamic.