Couple years ago, some friends of mine asked me whether or not they were ready to implement ERP software. Some of them had inventory problems, some other else were not able to get accurate report in timely manner and the rest didn’t know exactly what their problem was because it’s too complicated… it’s a barrel of laughs for me.I was a software developer at that time and ERP experience I only had was customizing Great Plains software. Since I did not want to disappoint them who were over estimated on me, I answered that question by asking: “how much money do you have?” Geez… what answer was that! I believe you cannot find such question from well-known ERP consultants.
But recently I think that the question is a good point to assess the readiness because ERP project is quite expensive and it would be great if you can spare some money in case, somehow your project goes to over budget. Why am I saying this? Well, According to some key findings of ERP vendor evaluation 2010, I found there are more than 50% of respondents that have over budget in their ERP Project, as shown in the following figure :
Therefore, in my opinion, how much money you can allocate is the first thing that determines you are ready or not to implement ERP.
Probably you have this question, “How much budget amount should be set?” Some well versed consultants use the following best practice:
If your sales revenue is $100, the budget should be around $20.
Second question that I think need to be asked regarding with the readiness is, “Have you defined the business requirement?” In order to get the answer, you must communicate it with all key stakeholders & employees to know :
- What problems are your user base having? What capabilities do they require that they do not have in your current system?
- What aspects of your system are preventing you from providing the capabilities and solving the problems that your user base has articulated?
And then you start discussing to define key business requirements. You most likely get abundance business requirements because everybody will be happy if their jobs become easier, right? If so, you should group them into nice-to-haves and “deal-breakers” (core competencies) which is the one you have to prioritize.
When the budget has been set and key business requirements have been defined, I think you are ready to implement ERP and go head to start selecting ERP vendors. Do I miss some in evaluating ERP readiness? Please let me know. Thanks in advance.