ERP Selection: The Place to Start

  • August 25, 2014
  • Feature

By Dennis Gilhooley, Jr., Ultra Consultants

ERP selection can be a challenge for today’s mid-market manufacturing company.  A typical ERP project can last much longer than expected and very few companies have the resources or in-house expertise to dedicate to this important effort. The team must take a close look at a range of options - from on-premise and SaaS solutions to the cloud delivery model, new product enhancements, technology platforms, increasingly sophisticated levels of integration and collaboration, easy user interfaces and more. Just as important, the project team must fully understand how available technologies can best serve their organizations.  Robust business intelligence (BI), dashboard reporting, mobile access, intuitive look and feel, collaboration/social tools, real-time data access and other advanced features can help companies work smarter, make informed decisions and improve business processes.   Given these challenges, organizations saddled with legacy solutions often don’t know where to begin when it comes to an ERP selection project. ERP Selection Challenges Through our work teaming with manufacturers and distributors, we see that ERP selection is typically driven by a common set of conditions, including poor access to information, core systems that are difficult to use, and an over-reliance on standalone systems that function as islands of information. In general, we see midmarket manufacturers and distributors facing the following ERP selection challenges:

  • Uncertainty: The company can’t get a clear handle on what’s available with modern ERP in terms of BI, reporting, features, integration, mobile access, security and more.
  • Resource, time challenges: The manufacturer doesn’t have the necessary internal IT expertise, resources or time to effectively take on an ERP project. Nor can the company spare internal staff for this effort.
  • Lack of insight: The company is challenged to understand current processes, including where the opportunities are to improve with new technology, and which ERP system best fits requirements.
  • Future growth: Many organizations are not exactly sure of their technology needs in the face of growth from expanded markets or facilities, or as their operations are acquired, merged or consolidated.
  • ROI concerns:  Many teams are wary of making a significant investment in technology when they don’t have a clear handle on expected costs and ROI.

Start Here Before an investigation of ERP systems begins, we’ve found that a business mapping exercise is useful.  This approach involves business process mapping for insight into where waste resides, where bottlenecks occur, and where there is a possibility for improvement. Business process mapping helps elevate the conversation beyond features and functions, and stresses the business case for change. The current state map should include your current state metrics which becomes a component in the development of the business case for change. By definition, a business process map lays out each of the step-by-step workflow activities for a functional part of a manufacturing organization.  For instance, a process map for shipping would include the steps of obtaining the customer order; picking the part; tracking the address; loading onto trucks; barcode label scanning and shipping paperwork, and any other process unique to a company’s shipping function. Note that a typical manufacturing company will have upwards of 200 to 300 processes. Within each functional area, each step isolates an individual process into a workflow diagram for a clear depiction of a process or series of parallel processes.   Within the process step, we document what happens in the process step – what was the input to the step, what happens with that input, and what is the subsequent output. Why Business Process Mapping? A thorough business process mapping process helps the manufacturer identify, and ultimately eliminate, bottlenecks in a workflow such as an excessive use of workarounds, manual data entry, double data entry, excessive use of Excel or homegrown systems, use of paper files or proprietary solutions, as well as redundant record keeping. The exercise also helps set Key Performance Indicators (KPIs) to deliver insight into business case improvements. From the current state the team maps a future state map, which becomes the basis for vendor evaluation and implementation design. The KPI’s identified with a current state become the final component in the business case for change and they become the goal line for the implementation project. Final Thoughts We remind organizations that an ERP project is more than simply selecting a technology solution. Instead it is a platform for improved overall business processes, which in turn leads to increases in productivity, information timeliness and accuracy, better decision making, enhanced customer satisfaction and business performance. A business process mapping exercise is an important step to achieve these business improvements. AUTHOR BIO Dennis Gilhooley Jr. Dennis Gilhooley is a Senior Consultant at Ultra Consultants, independent ERP experts with a focus on delivering business process improvements to manufacturers.  Dennis has more than 15 years of experience in business process improvement, management consulting, ERP implementation, lean manufacturing, project management, portfolio management, sales management, education and technology training, supply chain management, and project management. Dennis has a BBA in Marketing from Loyola University, Chicago and a M.Ed. (Computer Science) from DePaul University. He is APICS – CSCP certified, PMI – PMP certified and an IBM trained Lean Six Sigma Black Belt

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