Nowadays, most organizations are very apprehensive about ERP since it is a must-have for the business ecosystem. It plays a crucial role in managing and integrating core business processes. If you are a company that has recently finished ERP implementation and plans to deploy it, you should take a break and begin with an evaluation. ERP assessment refers to the proper analysis of the software as well as the process of implementation to ensure a smooth deployment and better results. In this blog, we will elaborate on ERP assessment and how it can be done.
Why is an ERP Assessment Required?
ERP implementation is a complex and time-consuming process that requires the company’s complete focus. Since all companies aim for success, it is essential to have a robust strategy and detailed analysis of the process. Therefore, an ERP assessment becomes the need of the hour. However, this assessment cannot just happen like that.
To begin with, you need to have a proper understanding of your business operations and, of course, business needs. Once you have this piece of knowledge, ERP assessment becomes easier. Through proper review, you will be able to resolve the confusion about,
- Whether you need a cloud-based solution or not.
- Irrelevance of software.
- Problems in regular functioning, if any.
- Estimating the ROI and TCO.
An ERP assessment will also help you determine how the chosen software can be beneficial or areas requiring more attention. In short, the evaluation process will give you a better understanding of your future since it helps to evaluate the effectiveness and performance of ERP implementation.
We have listed some of the reasons for conducting an ERP assessment.
- An ERP assessment is a must to evaluate the performance of the current implementation of even a company choice for an ERP upgradation. It helps to identify any irregularities or hindrances associated with the system.
- With an ERP assessment, an organization determines the alignment of the ERP system with the business goals and objectives.
- An ERP assessment helps organizations identify the opportunities related to operational efficiency and process optimization per the business objectives and changing requirements.
- Every business is customer-centric, and the organization’s main objective is user satisfaction. An ERP assessment helps the organization determine user satisfaction with detailed insights.
Indicators for an ERP Implementation
Understandably, not all companies have undergone an ERP implementation yet. How can one understand whether it is the right time to implement ERP? Some key indicators will let you know when the time is ripe.
a. Mediocre real-time data: Data is essential for the growth of your business, and if you cannot track the activity of your departments or analyze the data, you need an ERP. This will help you access all your data in real time and keep you informed.
b. Unable to grab chances for growth: The prime motive of any company is growing, and if you cannot grasp this chance, what good is your company anyway? Therefore, you need ERP software to be the first to seize every opportunity for growth.
c. Failure to cater to customer needs: Customers are the ones who define the success or failure of any company. If you cannot enhance their experience by catering to their needs, it is high time you implement ERP. This will help increase your revenue exponentially.
d. Inability to expand globally: To grow your business, you must expand globally and reach a much wider audience. If this seems like a far-fetched dream or you cannot manage expansion, you should invest in an ERP solution. It will surely help you reap positive results.
ERP Readiness Checklist
How will you know whether your ERP software is ready for deployment? You must prepare an ERP readiness checklist for this simple yet confusing task. You may ask questions as follows:
- Are all business operations transparent?
- Is there any function that is no longer required or has become redundant?
- Should we be expanding our business?
- Will bringing in new changes be feasible right now?
- Is going global in the future a good option?
Once you are done answering these questions, you should indulge in drafting a checklist for ERP assessment. A good evaluation is based on analyzing the following four areas properly:
a. Performance: Try to identify how the ERP affects the overall performance of your business. To be sure, you require a robust system that takes care of all your functions single-handedly. However, if the chosen ERP improves your business’s and your employee’s productivity, you may check this box.
b. Technology: Any ERP is based on technology, so this area must be considered. You may delegate this task to your IT team, which will analyze if you are good to go. Remember to have a good vendor by your side, experienced in your industry, and known to deliver the best service.
c. Value: You must know how much value the chosen ERP adds to your company and at what cost. Be wise enough to determine a budget and stay moderate to avoid financial problems in the future.
d. Risk: Any ERP software should be able to mitigate risks involved in the business. It should be robust enough to handle problems as and when they come so, your company flourishes. If your choice checks all these boxes, it is understood that the software is reasonable to proceed with.
Components of an ERP Assessment
After discussing the need for an ERP assessment, it is essential to know what a proper evaluation process comprises. To be sure, you will require an expert assessor who will evaluate your ERP professionally and provide reliable feedback. This person will carry out the ERP assessment by the following ways,
- Taking interviews with consultants to understand the readiness of your company.
- Assessing the existing systems to analyze the need for implementation.
- Evaluating business operations to identify pain points.
- Drafting a robust strategy by your existing culture.
- Providing reliable data and suggesting requirements.
Remember that this evaluation process by a professional is based on the current state of your business and will not be very detailed. If you want a thorough ERP assessment, you must employ a dedicated team alone.
There are several crucial components of an ERP assessment. Let us now understand these components;
- Functional: This component helps the organization ensure that the ERP system meets the business requirements and supports the day-to-day processes. It also evaluates the performance for the smooth functioning of the process.
- Technical: The technical component helps the organization evaluate the infrastructure and technology associated with the ERP system.
- Data: This component aims to identify and evaluate the data’s integrity and its effectiveness in the management processes.
- Business Process: This component lets the organization evaluate the alignment between the business processes and the ERP system. It also allows the company to identify opportunities for optimization and automation.
- Security: This component helps the organization access and evaluate the security protocols implemented within the ERP system.
- User Adoption: This assessment component examines user acceptance, engagement, and satisfaction with the system. In addition, it evaluates training programs, user interfaces, ease of use, and support mechanisms to identify areas for improvement.
Accessing these major components ultimately enhances a company’s performance aligned with the business goals.
Key Benefits of an ERP Assessment
ERP assessment is not just a random activity that companies should do for the sake of it. The entire process of evaluation results in positive outcomes for the firm. In this section, we will elaborate on these positive outcomes or benefits of a good evaluation.
a. Keeps your business fit: A proper evaluation of your ERP helps you keep your business in shape, streamline operations, and make the most out of them. You may look at factors like the size of your business, estimated growth, types of modules required, etc, for evaluation.
b. Assess existing system: Some companies already have an ERP in place, and an ERP assessment helps evaluate that system and identify areas in which one can improve. This also promotes a better way of operating through updated technology.
c. Know what is missing: An assessment of ERP is beneficial as it helps you understand your company and its operations better. If you know where you are lagging or what hidden risks might be there, you can improve in that area and exponentially increase the chance of business growth.
d. Estimated costs and timeline: When you collaborate with an expert for ERP assessment, they do not just tell you the estimated cost of an upgrade, which includes TCO, licensing, etc, but also the projected timeline. This way, you will have a proper idea of how much time and money you should invest.
What an ERP Assessment Process Looks Like
The process of ERP evaluation requires an expert in the field who can help you out with a complete assessment of your system. We will now discuss the 5 significant steps that any thorough evaluation must take.
a. Be Prepared for Change
ERP implementation is one thing, and its evaluation is another. However, just like implementation, the assessment also brings a string of changes that you must be prepared for. During the evaluation process, you may have to change quite a few elements of the plan, which can be demotivating and tiring for your team. Therefore, you must be mentally and physically on board for a successful ERP implementation.
b. Determine the Goals
Next, you should determine a set of objectives you are working for. You are not assessing for the sake of it, but obviously, for some pre-determined goals. In this step, prepare a list of things you want from this project, like where you see yourself in the coming years or the estimated ROI of the company. Once sorted, this can drive the evaluation process toward goals.
c. Define the Budget
You should avoid overspending on just one project as you have an entire company to run. Therefore, it becomes essential to define the budget of your company. Analyze what expenses you are ready to cover and identify your budgetary limits. Determining the budget by your estimated TCO and ROI is wise to stay within budget. If you have a budget to keep up with, all your expenses will be planned and in accordance with your balance.
d. Reevaluate and Choose the Best
Once you are done with the implementation and are ready for deployment, you should avoid hurrying and invest your time in understanding the options available. Ask yourself if there are better ways of carrying out the operations or better solutions for problems. A reevaluation will help you identify these and make your upgrade robust and foolproof. Remember to keep reevaluating until you find the perfect match for your needs so the process is genuinely successful.
e. Assess Deployment Pliability
When you complete the ERP assessment, you should assess the deployment flexibility. Understand and determine how flexible your solution must be. Ask questions like if it can grow with your business and cater to the dynamic demands and trends of the market. Remember to evaluate all possible options to improve your plan before deploying it. This will save you from the problems that might come your way otherwise.
ERP Assessment Template
As the next phase of the process, you must create an ERP assessment template, which will act as your guiding light and enable a robust work culture through proper strategy. You must begin by understanding how you should choose the right ERP system. You may start by identifying your objectives, determining a budget, and finalizing a vendor.
Once this is done, you can compare the features of the available options with your goals and choose the one that suits you. Also, you must have a checklist for ERP selection. You may follow the given steps to evaluate different ERP software:
a. Bring together an ERP Selection Team: This team must include a leader and department representatives. These representatives could be from finance, ownership, sales, production, and supply chain.
b. Determine your goals: These goals may range from ownership to sales and production goals. Remember that you have a proper list of the goals of each department, which may be compiled later to understand the company’s goals.
c. Work on the project: Once you understand what you want from the project, it is time to work more on areas like IT, database, deployment, user experience, etc. Be very clear about these areas to avoid any future hassles.
d. Find a vendor: After completing the above steps, find a suitable vendor. This person should have good experience in your industry and must be able to cater to your demands. You may ask fellow competitors for references for better results.
This blog highlights the importance of a thorough ERP assessment and the five steps you must follow for a quick evaluation. ERP assessment is a significant part of any deployment, which is necessary for ERP software to be successful. We hope this helps you out with your evaluation process!