One of the most common things we come across at Practical Software Solutions when speaking to manufacturers about implementing an ERP system is the wide range of expectations. It makes sense since there are just as wide a range of different types of people and manufacturers, all with their own perspectives.
Part of our job is to help people manage their expectations when implementing a large-scale business system, like an ERP system. The last thing a company looking to make a huge investment in their infrastructure needs is a song-and-dance routine of how everything is sunshine and daisies.
Here is our list of three things to expect when implementing an ERP System:
Cost. If a one-man operation needed to buy the latest version of Microsoft Office 365 Professional for his home office, he can go to Staples.com and know he’s going to spend $149.99 (plus any applicable taxes). There’s no room for negotiation — or any reason to negotiate its price for that matter. He’s under the expectation he is paying for the familiar set of business applications — and that’s it.Once you get into larger industries, purchasing and implementing software goes beyond a simple download or buying a box off a shelf. There also are more variables that could have a five-figure price tag for one manufacturer and a six-figure price tag for another.Some of the things that factor into the cost of implementing an ERP system include:
• On-premise vs. cloud-based software: An on-premise ERP system features a higher up-front cost in an implementation, but a manufacturer only needs to make the purchase once. Cloud-based ERP systems have little to no upfront costs, but a company would have to pay every month or year (depending on the arrangement) to keep the software active.
• Hardware: If a manufacturer has gone years without upgrading its software, they may find their hardware (servers, mobile devices, laptops, etc.) is too out of date to operate a modern ERP system.
• Setup: Some large manufactures have a IT department as large and as qualified as many software companies. Instead of doing all the heavy lifting, the software partner can act as a guide and spend less time on the project. On the other hand, a smaller manufacturer may need a full team from their software partner to help with all aspects of the implementation. These differences would definitely mean an adjustment to the expectations of the cost of a project.
- Training. One of the ways some manufacturers try to bring down costs when implementing an ERP system is to skimp on training. However, manufacturing companies need to expect at least some training for its employees to get the full return on investment of their ERP system. For companies investing in a large-scale business system for the first time, they should expect long and intense training. This will involve the software partner training C-level employees and power users, while the power users help to train other users in the system. A company upgrading or changing their ERP system can expect to not need as much training to be caught up to speed on their new product.
- Timing. When formalizing a plan for implementing an ERP system, a company and its software partner will create a time frame for the project. Since every project is different, one manufacturing company can’t expect to base its expectations on another company’s timeline. Here are a few factors that can change the expectations of timing:
• Seasonality: Manufacturers that create seasonal items — from lawn furniture to rakes to snowboards — are most likely to have a busy season for their company. If their ERP system implementation crosses over into their busy season, or needs to be put on hold during this time, it will affect the timing of a project.
• Availability of internal and external resources: All people involved in an ERP implementation have lives outside the office, as well as other responsibilities within their own company. This can affect the availability of key members of the implementation team to have to delay parts of the project. A death in the family, a flu outbreak, a school play, or a business trip can all put a project off its schedule. On the flip side, a week with perfect attendance from everyone could help a project run ahead of schedule.
• Components: Sometimes, an ERP system is implemented in stages, especially to help with highly seasonal manufacturers. If a company wants to go live just on financials, it may take only three months. If a company bites the bullet and does a full implementation across the board, it may take as many as 18 months.
• Sophistication of the ERP system and business: A small company installing QuickBooks may be up and running in less than a day. A multi-national manufacturer most likely will need more than a year to implement an integrated ERP system.
By tempering expectations on cost, training, and timing, manufacturing companies can expect to have a successful implementation of any ERP system.
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