“ERP applications represent the core market for SMBs. The focus is on updating existing solutions or part solutions,” explains META Group analyst Matthias Zacher. Over the last year, SMBs’ readiness to invest in new IT and new business software has once again seen a dramatic increase. The META Group forecasts growth of six percent for the SMB IT market in Germany in 2004. Just under 50 percent of the planned IT budget for SMBs is for new acquisitions.
Selection requires careful planning
When selecting ERP software in particular, SMBs need to ensure that the system they have opted for corresponds to their specific needs and is able to grow with the company. Critical success factors when choosing ERP systems include implementation, license and maintenance costs, future viability and the financial stability of the provider. “Choosing suitable, cost-effective software that is capable of future development and finding the right implementation partner is the task of the system evaluation process,” writes Eric Scherer of Swiss business software specialists and consultants intelligent systems solutions (i2s) in the magazine iT REPORT. “The requirements and conditions of the user need to be compared with the capabilities of state-of-the-art ERP software packages.”
It is also advisable for SMBs introducing a new ERP system to ensure that the relevant persons within the company (e.g. the responsible decision-makers) have built up specific knowledge of enterprise resource planning and its effects on business processes before the new system is introduced. This in itself makes a lot of work for companies, however. A global user survey by the META Group revealed that the key obstacles during planning or in the runup to implementation of ERP solutions were the complexity of organizational changes (short term) and the implementation costs and duration of the project (medium term). Smaller SMBs in particular will not accept “long introduction times for ERP systems,” says Thomas Teufel, Managing Director of SAP business partner Teufel Software. SMB’s therefore need to observe a few “basic rules” when introducing ERP.
Standardizing ERP projects
The process of introducing ERP is a project that needs to be carefully controlled right from the outset. This includes deadline planning, project organization, cost planning and the cost situation. Companies introducing an ERP system need to ensure that it will work for all aspects of the corporate structure (organization, employees, reporting etc.). ERP introductions must therefore be logically linked to business strategy. Attention should be paid from the outset to establishing an end-to-end solution, from the preliminary phase right through to the optimization phase, and the whole project should be supported by professional change management.
Even though SMBs are willing to reorganize their corporate structures, the project procedures still need to be standardized so that the company can start using the new software as soon as possible. To ensure systematic operation with minimum technical and business-management risk, it is advisable to use tried-and-tested processes. These include, for example, Accelerated SAP (ASAP), one of the methods used by SAP to perform step-by-step introduction based on best practices and years of practical experience. Project progress (deadlines, budget, targets met, deviations) can be tracked and monitored precisely in five phases (project preparation, conception, realization, preparation for going live, support during the actual start phase).
ERP is more than IT
An ERP project is always more than an IT project pure and simple. This might seem obvious, but it can’t be stressed too strongly. Some ERP projects make profound changes to companies’ business processes. Even for SMBs, ERP introductions can also be very complex, wide-ranging projects requiring a great deal of attention above and beyond the actual introduction phase.
When selecting the project team, companies must give employees the opportunity to learn from external advisers so that they can pass this knowledge on to other employees within their own company later. There must be efficient exchange of information both between the different project members and between the project team and the management. If the project is to succeed it must receive the full support of the management and the senior management.
The importance of risk management
In many cases, due to time and manpower limitations, SMBs introduce a new ERP system to run alongside the existing “day-to-day business” of the company. This is likely to cause delays. Despite careful planning, extra costs can also be incurred over the course of an ERP introduction as a consequence of “change requests”, for instance if interfaces need special programming or the sales side needs an additional module. Companies should therefore keep funds in reserve for additional costs that may arise.
Risks can result from unclear project targets, inadequate project preparation and insufficient project structuring including budget, deadline and target controls. The project may also be at risk from inconsistent data and missing or incomplete interface definitions. Experts from the Forrester subsidiary Giga Information Group therefore advise that, for every IT introduction project, emergency (what if…) scenarios should be planned so that companies are able to deal with these situations if they occur.
Timely training, promoting acceptance
The success or failure of an ERP project rests on the system’s acceptance by users. Companies need to include their employees in the process, i.e. ensure that they are involved at an early enough stage and that they receive training on the new system. It is generally advisable to inform all employees in the company, as an ERP introduction affects almost everyone if it changes business processes or corporate structures.
It is important to train future users in good time and training should be as practical as possible i.e. real data and master data should be used wherever possible. If possible, end users should be able to start working with the system as soon as they have completed the training events, to ensure that the knowledge they have acquired is retained. User satisfaction is an important quality criterion for ERP software.
Improving systems, speeding up processes
Even when the introduction is complete, this is not the end of the story by a long way. When the system goes live, that’s when the optimization phase starts. This should be just as well planned and organized as the actual introduction process. It is probable that an ERP system will need to be changed or expanded, either because a company has grown or because it is being incorporated into a larger organization. This results in adaptations or even redesigning of business processes (business reengineering). Flexible, scalable ERP software not only needs to reflect these processes but also to improve them and speed them up.
SAP and its partners are therefore offering a comprehensive product portfolio to SMBs featuring mySAP All-in-One solutions and SAP Business One. Numerous industry-specific processes are already incorporated in qualified mySAP All-in-One solutions. In the trade, service and industry sectors, there are currently around 80 complete systems for industry-specific business processes that have been reduced to key business-management core processes. For the standard SAP Business One solution, company-specific adaptations can be made to the standard solution where necessary using the Software Development Kit (SDK). Numerous additional solutions in the form of add-ons developed by SAP business partners are available for special requirements, and these are undergoing continuous development and improvement.