CFO Blog

An Enterprise Resource Planning (ERP) system is a group of applications which are integrated to form a company-wide information system.  The ultimate goal is to improve efficiencies and create transparency across all business segments.

Step 1. Understand the Goals: The first step in the design and implementation of an Enterprise Resource Planning system is to understand the end goal of implementing the system. This includes management’s expectations as well as user requirements, which includes:

• Create a system that would present at company-wide view of our financial results.
• Create a system that will share data across all business departments
• Optimize inventory levels
• Improve customer order turnaround
• Standardize procedures throughout all locations
• Reduce errors caused by multiple entries of data across various existing systems
• Etc….

Step 2. Analyze Current Business Processes:  The next step is to analyze the current business processes to be sure that every aspect of the business is considered and represented in the new system. This is also a good time to re-engineer certain business processes that may be inefficient or unnecessary.  This would include automating procedures that are currently done manually.

Step 2. Define Each Process:  After the business processes have been identified, we must define each process and department procedures so that we can develop the new ERP software system around these procedures. This process entails significant dialogue with each person involved in the process to be sure that every aspect is addressed and integrated.

Step 4. Choose an Enterprise Resource Planning software: There are a number of ERP systems available; the objective is to match the one that best fits our needs and our budget.  Ideally one that will require the least amount of customization.

Step 5. Design and Customize Software. In this step, the IT team takes all the information compiled from the previous steps and customizes the software so that it works with our company infrastructure. This step also includes integrating the remaining applications that we will continue to use.  Finally, this process includes converting the data into the new database and relating the data so that the business is fully integrated and all information feeds the appropriate reports and can be accessed by all parties.

Step 6. Train Team. Not to be discounted is the importance of adequately training all employees on how to work with the new system.  Employees often have a very difficult time breaking habits, and implementing a new system introduces a number of changes for them to digest.  If the team does not buy-in, the process could be a disaster. To this end, it is critical that the necessary parties are involved in the development process to be sure that the new procedures are something that they can work with.

Step 7. Implement. Implementation is the final step in the process and must be done carefully.  I suggest going live in one department at a time to be sure that the entire business is not interrupted if bugs occur (and they will).  Then one by one we will get all departments online. 

Written by, The Company Pulse (analyst@thecompanypulse.com)