ERP system implementation

ERP system implementation

ERP system implementation

Enterprise Resource Planning (ERP) is a system implemented within entire organization or corporation that helps managing all company resources, supplies, information and activities in order to fulfill the business process and strategy more efficiently.

The term and principle of ERP systems was introduced on early 90ties and was originally meant to be used for manufacturing companies, but due the number of advantages it could provide and the fact that the business process of any company was much faster and efficient, it was spread across non-manufacturing businesses and governmental and non-profitable organizations very fast.

During almost 20 years that ERP systems have been available in various forms and with various functionalities, many companies and organizations have tried to implement them within their business model in order to catch up with their competitors. However whereas 15 years ago implementing the ERP system would mean a competitive advantage, nowadays it is rather a necessity if the company does not want to stay behind.

ERP system implementation

Smaller businesses can implement ERP system within a couple of months with no major information system and business process interruptions, whereas it can take years to fully implement ERP system within big enterprises. The bigger the company is and the more sophisticated the ERP system has to be, the more mistakes and errors can occur during the implementation process that can affect the success of entire project or even cause a failure.

Hence before any company decides to implement ERP system, it has to consider all pros and cons and prepare detailed plan determining all critical success factors in order not to fail the implementation process.

There are various examples of companies that failed to do this planning in the past and therefore suffered big losses during the ERP system implementation. For instance American biggest chocolate producer Hershey decided to adapt the SAP ERP system in 1998. It took them more than three years and due various reasons such as choosing the wrong time for implementation or having too much of workload, the company was struggling which leaded into significant losses in profit and sales.

Definition of success

Hershey is not the only example of bad ERP system implementation and hence it makes us think even more about critical success factors of ERP system implementation. There are various critical factors that can affect the success of entire process. Defining the success should be the very first step. It may sound easy but actually it is a long process which involves opinions of various people from the company compared with deliverables defined by ERP implementation specialist. Success does not have to mean only increased profit. It also involves e.g. higher efficiency of production, lower overhead of information or material, lower initial costs or easier human resources management

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