Enterprise Resource Planning (ERP) – part 3
The implementation of ERP becomes difficult in organizations which have independent business units with separate processes and decision centers. It could be solved by the local change management professionals who could coordinate requirements, or by federated implementation (e.g. linked via Master Data Management) tailored to suit local needs.
It is better to begin ERP system configuration by deciding on installing necessary modules, and then use the configuration tables to adjust the system for the best possible alignment with the organization’s processes. For example, the type of inventory accounting – whether FIFO or LIFO – can be selected based upon the choice of revenue recognition by product line, geographical unit, or distribution channel. But if the the options provided by the system are not good enough, the organization has to either re-write the ERP code, or use the existing system and build an interface between this and the new ERP system. Both of these are not ideal, as they consume time and cost, and can effect lesser data communication between customers and suppliers.
Most systems have simple modules which provide flexible implementation of functions. The choice of module selection depends upon the functions of the organization. If more modules are selected, the greater will be the integration benefits. But you should note that it also involves an increase in risks, costs, and changes.
Since many organizations do not have in-house skills to implement ERP projects, they are handed over to many companies offering consulting services for entire ERP implementation. This includes planning, testing, training, implementation and delivery of the customized modules. Examples of customization are creation of process triggers and workflow, additional product training, system optimization, specialist advice for improving use of ERP, assistance in complex data extracts, writing reports, or in implementing Business Intelligence.
Multinational companies often spend four to five times more on the ERP implementation than the cost of obtaining ERP user licenses. ERP packages always include full source code and are shipped with team IDEs which are vendor-supported for customization and extension of code.
