by September 5, 2008 0 comments

Imagine a scenario where a Sales Manager wants to know the date on which his
largest client placed the order, the suppliers involved in providing the
materials, date of dispatch, bank involved in the transaction and the value of
order. He needs all these details at his fingertips to monitor a client’s buying
patterns, predict, strategize and prepare new sales pitch.

If an organization wants to be competitive in its business, it needs business
application software that can monitor the workflow of the entire organization
and can connect people within. ERP -for enterprise wide information
streamlining, and CRM – for streamlining customer management business processes,
are the solutions for that. Such enterprise solutions today are at the heart of
such organizations.

Choosing a software application to address an organization’s business needs
can be time consuming and expensive. Solutions like Enterprise Resource Planning
(ERP) have changed the work landscape for enterprises. Earlier it was only big
organizations who deployed ERP solutions. Today it has become imperative for
enterprises of all sizes to opt for ERP packages to get competitive edge. Like
most other software solutions, choosing an ERP solution is a daunting task and
there’s no ‘one-size-fits-all’ solution. If you don’t choose an ERP solution
wisely, your organization could suffer from unexpected results which may impede
proper functioning. While choosing an ERP solution for your organization, there
are plenty of factors to consider. In this article we will answer all that you
need to know to get the right solution for your enterprise.

Stand-alone or Integrated Suite?
In an enterprise, there are several departments and for each department
there are several business applications. For instance, there are accounting
applications for accounts department,CRM for customer management. Similarly for
HR and payroll there are Human Resource Management apps and SCM apps for raw
materials management. All these stand-alone applications referred to as ‘silos’,
can’t talk to one another. However, an ERP application is is a suite that works
together to achieve seamless business processes. The benefit of opting for
stand-alone applications would be limited by the fact that there’s very little
achieved towards a seamless business environment. You will have to incorporate
third-party solutions that will provide access to data from two or more
disparate applications.

While with an integrated ERP suite, there is just one version of data that
needs to be entered once and is propagated to all parts of the business. ERP
implementation eliminates the role of external systems to mediate between two
business departments, and gives advantages like standardization, lowere
maintenance costs, and organized data integration. Coming to budgetary
implications, an organization has to purchase licenses for each of stand-alone
apps, train staff for every installed application and maintain different teams
for support and maintenance. With an integrated ERP suite, the organization gets
a single suite that caters to all needs. A single vendor provides support as
well as necessary maintenance, with a single application interface for everyone
in the organization.

In-house or Vendor solution?
Once you have identified your business needs to be addressed by an ERP
implementation, you can start developing your own ERP solution or opt for an
off-the-shelf ERP solutions that can be customized. Going for an in-house
development is mainly advisable for enterprises having a strong development
team. In cases where business needs can’t be achieved through an existing
application, an enterprise can opt for a home-grown ERP solution to match its
requirements. The ERP market is dominated by SAP, Oracle, and Microsoft among
others who provide a complete suite for most industry verticals.

Manufacturing, finance and operations & logistics were few of the industry
verticals to use ERP solutions earlier. But today it is implemented in almost
every industry. Major ERP vendors have also incorporated packages to support new
industry verticals including farming, real estate and poultry. It is the type of
requirements that should guide organizations to choose solutions -in-house
or vendor made.

Open-source ERP solution?
ERP solutions have been proprietary since beginning. However, open-source is
gaining momentum in enterprise these days. But there hasn’t been any landmark
open-source ERP solution that has challenged the likes of SAP, Microsoft or
Oracle in the ERP market.

There are more than 400 open source ERP solutions available for download on, but opting for one is a tough call as there are very few
success stories. Compiere and Openbravo are the two popular open source ERP
solutions. For an enterprise to implement ERP solution, it can be a good idea to
first test their requirements by opting an open-source ERP package and as the
requirements are identified, the enterprise can choose any proprietary ERP
solution. The major hindrance in choosing an open source ERP is that the
organization will not have any implementation partners for the solution and so
also for customization.

Besides, open source ERP solutions can be opted by enterprises that are
having their own developers teams who can further built upon these open source
ERP solutions to build a customized ERP solution for the enterprise.

Cost structure
Enterprises dish out a huge chunk of fortune for ERP implementations and
expect huge returns for their investments. The major part of investments goes
into planning and implementation of the solution followed by licensing.

The proprietary ERP solutions are very expensive. Though the costs incurred
in licensing and implementation of the ERP solution is one-time, recurring
expenditure goes on maintenance and support. However, for an organization it’s
not necessary that they will require all applications from the ERP suite. ERP
solutions provide a modular approach to purchase and implement ERP system in a
phased manner.

You can deploy one application at a time; these applications are different
from stand-alone applications as when they are separately deployed, they can
still plug into each other to work in tandem.

With modular approach, organizations can deploy ERP applications to
individual departments or for business processes that need them and then can
move on to other departments. Many organizations do not have sufficient internal
skills to implement an ERP project.

This is where consulting agencies and companies offer their services in
identifying the organizational requirements from ERP and in choosing a solution
and its implementation.

Another consideration should be upgrades costs. Periodical software upgrades
are usually included in the maintenance. But major releases like version upgrade
are to be deployed which again costs you.

With proper strategy, an enterprise can build a cost structure as per their
budget and maximize profits from the ERP implementation.

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