How to Build an ERP System from Scratch
How to Build an ERP System from Scratch
According to the report Panorama Consulting Solutions 2018, about 23% of ERP implementations were unsuccessful. The main reasons for the failure are the purchase of an unnecessary ready-made system and inadequate planning. Today we will look at how to avoid these problems with the help of the right approach to the development and implementation of the ERP platform from scratch.
Many businessmen miss this step, considering it obvious: "The goal of the ERP project is to automate and optimize processes, or make everything work faster and better." That's just not the goal, but wishes. The goal must be defined and clearly outlined in time, for example:
● reduce the time of paperwork by 20% by January;
● reduce the time of registration on the site from 15 to 5 minutes by September;
● reduce the client’s waiting time from an hour to 15 minutes by August.
If we talk about the development and implementation of ERP, then ERP should be thought of as a tool needed to achieve certain tasks that your company faces. Based on this, you first need to think about such tasks and only after you decide what and how the ERP system should do.
You should define such tasks independently or with the help of specialized specialists. If you decide to do it yourself, then the simplest approach is to analyze the competitors and make it like you them, but a little better. SMART-approach will help you with this:
Thus, before starting to plan the development of an ERP system from scratch, first conduct an audit of your company's business processes. If something needs to be standardized and / or modernized, do it before starting work on ERP.
Developing an ERP system from scratch assumes that it will be created taking into account all the features and needs of a particular business. This means that you must tell all the nuances of your business project manager or, even better, show how your company works from the inside. If you have attracted third-party developers to create ERP, then this is a prerequisite.
In other words, you need to lead developers on scripts:
Without this, it is impossible to create a truly efficient and useful platform. How, for example, Avon failed to do this in 2013 during the implementation of the ERP / CRM / eCommerce system, which spent more than $ 125 million. The direct sales giant did not take into account the needs of customers and partners and in fact complicated their work by creating additional bureaucratic procedures.
After the development team has studied the company, invite all interested parties to the round table and indicate what you expect from the implementation of ERP. Then ask everyone to comment on this, so that each participant also identifies their expectations and concerns. During this meeting, you will need to take it all in, filter out and prioritize.
At this stage, it is important to remember that it is impossible to meet the needs of all participants, so it is necessary to strike a balance between the wishes of various parties and the implementation of the project on time and within budget. With the construction of such a balance should help the development team, which will tell you how difficult it is to implement certain functions and tools.
At the end of such a meeting, you should have:
By creating an ERP platform from scratch, you can help the personnel department automate and improve a number of labor-intensive processes, such as performance management and compensation, employee performance evaluations, or payroll processing.
ERP are designed to manage the flow of information and their automation, which allows the use of such systems for analysis and planning. To do this, you need to add the appropriate module to the system, which will collect and process data, and then visualize them in the form of tables, graphs and charts. In addition, a calendar can be embedded in the system to create and track various events and tasks.
The implementing of ERP-system will optimize the process of inventory management. Many elements of this process can be automated, and information on the status of stocks will be available to all departments of the company. Thanks to this, it is possible to stabilize inventory levels or, for example, to quickly create special offers (promotions, discounts, sales) for a product that has an expiration date.
Based on this analysis, Walmart conducted an experiment: the Pop-Tarts were delivered to supermarkets along Highway 95 (along the path of Francis Hurricane 2004) (stocks used to be exhausted quickly). Indeed, these cookies were sold particularly well these days. Now Walmart is using this scheme constantly.
If the company does not use any ERP-system, reporting can take a lot of time. For example, some companies even allocate additional time for employees specifically for reporting, so that they have time to do it during the working day. In the modern world, this is an archaic way of doing business, since even with the help of the simplest ERP, you can compile all the necessary reports in a few minutes.
When all the preparatory stages are completed and you have decided on the vision of the ERP project, you can proceed to coding. But this should be done step by step, that is, first create a MVP and implement it on a limited scale. So you test the concept with minimal risk and minimal money.
General recommendations here are:
This is because the brain does not like the new, even if this new is much better than the old. And the older a person is, the stronger is his desire to follow previously acquired habits. In order to understand how strong this desire is, it is enough to recall the elderly who are literally afraid of computers.
To get employees to use the new ERP system, follow these guidelines:
#1. Step 1: Define the goals and objectives of the project
#2. Step 2: Identify and engage interested parties
#3. Step 3: Explore the current state of affairs
#4. Step 4: Help developers understand your business
#5. Step 5: Determine Your Expectations
#6. Step 6: Decide on a project vision
#7. Human Capital Management (HCM)
#8. Process Analysis and Planning
#9. Inventory Management
#10. Making report
#11. Step 7: Design and Implementation
#12. Step 8: Train the staff to the new system!