Top 4 ERP selection mistakes & the solution

I frequently come across this major faultline in Manufacturing Industries while deciding on their ERP system. I wish to list below the top 4 ERP selection mistakes.

Suppose the software does not meet 97% of your business and statutory requirements on day 1. In that case, the obvious consequences will be time and cost overrun, user & management frustration leading to a systematic failure of the ERP project.

The real meaning of large Customisation is a clear signal that the system is not ready for your enterprise. Customisation comes with a huge element of cost and risk.

People are not sensitive to the fact that even making the 97% industry-ready ERP system needs the time-consuming effort of change management, onboarding, training & implementation, master data migration, user acceptance test (UAT), Opening balance migration, and going live. Imagine a 30-ton Gorilla of Customisation adding to this complexity.

1. Accounting Software:

They try to use accounting software for all their business process. Due to the limited scope of the accounting software, many of the transaction data will end up being done in Excel and Word formats. This is will make the decision-making too cumbersome.

It is like 5 people going on a bike. Terrible discomfort and it is dangerous too. The company suffers and their customer also suffers. Professionals will not like to work in such a company.

2. Global ERP systems:

With a budget of Rs. 10 to 15 Lacs looking to implement a global ERP. It is so large and takes so much time to implement. The funds allocated will not be sufficient. So like a Casino gamble, they further increase the stakes to Rs. 30 – 40 Lacs. It will still not work. They give-up. They end up using a few modules. Such ERP projects cannot see any ROI in their lifetime.

This is because many global ERP systems do not come with local workflows and statutory compliances, resulting in heavy customisation.

It is also very common to see many mid-size companies for the sake of global reporting, opting for large ERPs. This is not required. Any global reporting has very standard data like Sale intake, Sales, Order Balance, Stock valuation, Aging of Inventory, Debtors and Creditors, P&L and Balance sheet in GAAP accounting format. This can be easily achieved through a BI tool integration with required account mappings.

But for the outside world, they say proudly, we are using XYZ ERP system and suffer internally.

It is like buying a Ferrari and struggling with mileage and EMI cost. But socially a proud owner of a Ferrari. Make the right choice.

3. Using CRM.

CRM applications will handle Presales and Sales. Maybe some amount of inventory and Accounting. Then they spend time, money, and effort to make it into ERP which will never happen. This will also have its own limitation resulting in transaction data running in Excel and other manual methods.

In terms of the number of use cases in CRM Vs manufacturing ERP is like Snacks and square meals. It is not a wise idea to interchange these two.

4. Custom Built / In-house ERP solutions.

Firstly this idea starts with a 100% wrong notion “We work very different from the rest of the world” or We do not want to depend on any 3rd party vendor. So no system in the market can meet their needs.

The promoter has 3 friends running a software company. So the order is given for them to develop an ERP system.

Do you ever give an order for a Car, Refrigerator, TV, or Washing machine to your engineering friends? If not, how do you think they can develop an ERP system? A good manufacturing ERP system takes about 5-6 years of time with a minimum of 15 Beta customers to become worthy of its salt.

Disadvantages:

1. the top management ends up spending considerable time and resources on this project. This is a most futile exercise. Their primary business suffers.
2. since the development team is in-house, there will be a constant request for unnecessary feature builds. this will make the system clumsy and unstable.
3. developers will not be happy working on one single system, due to limited exposure to technology and learning. so they tend to leave the job. developers will also get better salaries working for
4. mostly there will not be any documentation, and hence if the senior developer leaves the job the maintenance will suffer.
5. whenever a major statutory change comes like Sales tax to GST, the in-house team will not be able to manage.
6. maintaining an in-house IT team in manufacturing industries will lead to inefficiency and huge overheads.
7. technology upgrades will be too costly and will not have exposure and guidance.

Do you really wish to fix this struggle for data?

When things go wrong, the most intelligent step is to accept and come out of it. As the famous saying goes “Once bitten twice shy”. But one should not get stuck with mistakes.

Here is the solution (lowest risk for moving into the right ERP)

At Syscon we are willing to offer our Manufacturing ERP for 30 days of trial on the cloud.

1. fully supported paid trial for 30 days (Cost Rs.20,000/- +GST 18%)
2. Each company will have 2 databases 1. Live data 2. Test data
3. Common training for 2 weeks ( 2 hours per day). The training schedule will be shared. Includes master data migration. The respective business function users are to attend the training program as per the schedule.
4. It is important for the users to complete test entries soon after the training session as part of UAT. This is mandatory.
5. Users are to provide the opening balance as of the cutoff date as agreed. The same will be migrated to the ERP application.
6. Now users can start off with the live entries.
7. The system access will be available for 30 days.
8. The prospects can choose one of the commercial editions and continue using the system.

Please make a signup and we will schedule a call for a detailed discussion.