Choosing the right solution

Zatni Arbi, Contributor, Jakarta

Enterprise Resource Planning (ERP) may no longer be a buzzword, but it is clear that its role is recognized in making businesses run more effectively and profitably.

An ERP implementation is almost always a high-cost investment, costing as much as thousands of dollars depending on the number of licenses, or "seats". Yet boards of directors are still likely to give their stamp of approval to an ERP proposal by their CIO.

Their quick decision owes a lot to the hype surrounding the power promised by ERP solutions, which is said to have the ability to improve the bottom line by integrating all business processes across an entire enterprise. In many cases, having a world-class ERP also seems to be viewed as a way to boost a firm's corporate image.

However, the fact is that a large number of ERP implementations have failed in the past, causing huge financial losses, embarrassment and a lot of finger pointing. There were several possible reasons why its implementation did not bring in the expected results.

First and foremost, an ERP solution usually involves the rengineering of the complete business process. In almost all cases, business processes have to be fundamentally changed because the old ways may no longer lend themselves to automation, strict control and monitoring.

Such sweeping changes have never been easy. Employees tend to resist changes that may affect them individually, although these changes are necessary to improve the performance of their company. That is why full commitment and the involvement of top management is one of the key success factors in ERP implementation.

Another potential pitfall in ERP implementation is the mismatch between the solution and the core area of business that a company is engaged in. We still find financial companies trying to implement an ERP solution that is in actual fact designed for a manufacturing operation. The reason may be as simple as the company's familiarity and close relationship with the vendor's earlier product, which was perhaps a more generic ERP solution.

There are a lot of resources on the Internet that can help companies find the right ERP solutions for their business. A highly recommended place to start is 2020software.com. CIOs should also surf for white papers that will give them insights on making the right choice.

ERP vendors -- whether the top players such as SAP, Oracle, JD Edwards and Peoplesoft or the second or third-tier vendors such as Epicor, Microsoft Great Plains, Systems Union and Exact Software -- are not always the ones who do the implementation for their customers.

They usually have partners who provide consultation and handle the deployment -- including the development, implementation, fine-tuning and maintenance -- of ERP solutions.

Obviously, choosing the wrong implementor of an otherwise right ERP solution is another ticket for disaster. The challenge is to choose the right implementation partner, as there are a large number of IT companies out there that can provide these third-party services.

Some of these third-party contractors are partners of more than just one ERP vendor to ensure that they can serve customers with different needs. SDI Intelligroup, for example, is a partner of SAP, Oracle, Niku, Onyx, MicroStrategy, Vignette, Ariba and AT&T EcoSystems. Armed with multiple partnerships, these implementors have the flexibility to provide the broad variety of services that their customers might require in getting the most out of their ERP investments.

Mitrasolusi Binadaya partners with Symix and offers an ERP solution called SyteLine that meets the requirements of mid-sized industrial manufacturers. It also offers other products such as IMPACTxp and E-Syte to complement the ERP solution.

Inforsys Indonesia is another local implementor that partners with Mapics, which provides solutions for Mid-Market Manufacturers. Inforsys also develops shrink-wrap products such as SOFI 2000 General Ledger and Trading System.

Whether you choose a top-tier ERP solution from the big guys or a less expensive one from other vendors, you need to pay a lot of attention to the company that will help you with implementation. It is not uncommon that the cost of implementation may be two to eight times as much as the cost of the licenses of the software product.

When choosing an implementor, you will also need to look at their track record. You may request a site visit to a former customer of this implementor, which has an operation similar to, but not competitive against, your company's business.

Besides, you need to make sure that changes are not made only in the technology that you use. Changes should also be made in the business process, and therefore you will also require consulting services in this area as well. Some integrators have the capability to offer this service as part of their implementation service, some others may ask you to get another third-party assistance. If all the ingredients for a successful ERP deployment are there, it is not uncommon to see a 200 percent to 400 percent return on investment.