Tuesday, April 08, 2008

ERP and management issues

Second day!

This morning after a brief recap we studied the most important ERP systems. And I can now classify three different ERP systems: the major players, the smaller ones and the open source ones.

Why does a company decide to use major players? I would say that it is safer to use those because they have been used for a while and experts have solved many errors or problems concerning these systems; thus they are more confident. The after sale services can be more efficient than smaller companies but the problem is that as it will be a big company you will be a customer number 653 and I think this relationship will not be personal. But as these systems are frequently used by big companies with good financial results, employees don’t need as much friendship as some smaller companies want (not only be a customer number!).

Why is a company more interested in smaller systems? First, the initial cost is cheaper and it can have an impact on the top management (but I don’t forget that the costs that a company has to take into account when implementing such a system are not only the initial cost! Keep in mind that the implementation cost and maintenance cost are huge!). These systems are more set up in small companies because it can easily be customized to their needs.

Last but not least! The open source systems as Open office or Firefox can be popular because they are free, they can be simple to use, you can ask to community support. However, you need to have within your company IT specialists: in-house people will are able to customizable a system and they will be have the support of the community if they need some help to improve it.
Thus, it’s physically possible to use two of these systems but it doesn’t make sense because employees will have to manage two interfaces (it takes time, too much complicated). And as I said before you need additional support to implement SAP for example: in-house people are not sufficient to correctly implement ERP; the company needs to hire people who have some specific IT skills and competencies about this implementation and the different modules. However, key employees need to be involved in this process. If key managers are not involved this can be a reason of failure of the implementation. Thus if managers are engaged they will help IT people to make key decisions. First the company has to pick the managers who know what is necessary and never forget that communication should start at the beginning of the implementation across the departments. HR implementation therefore consists in engaging key persons to the project and companies have to avoid asking to less powerful people to do this step rather than to use key persons because it will not be a good solution to the prosperity of the company. Consequently, ERP implementation is not only an IT process but HR issues have to be considered as well.
In an IT or consulting companies, there are lots of jobs and each person has a specific role: when implementing ERP lost of persons intervene such as a project manager, a developer, a coder and so on.

The characteristics of a SAP are that SAP supports multiple languages and multiple currencies, everything done within the system can be trailed. In theory there is no specific SAP database and thus you can use ACCES but it will not fit your needs. But this is one benefit of this system: ERP system can be customized according to the needs of the company. This concept is called Best-of Breed (the best solution adapted to your needs, or the decision you make according to your needs).

Finally, I realized that copying the ERP system of your competitor is not the good solution to increase your market share because the most important is to fit the software to your needs. ERP systems don’t provide any competitive advantage by itself but the management of a company can lead to a better implementation.

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