Enterprise Resource Planning (ERP) is a management software that offers an integrated system to manage and automate several complex business processes in organizations such as supply chain, inventory management, invoicing, human resources (HRM), asset management and accounting and others. ERP systems simplify the overall business, as it brings order to various chaotic business processes. ERP systems accommodate the needs of all kinds of industries and business owners across the globe and are a driving force towards enhanced automation today. ERP solutions with impactful features have proven to be a significant source of growth for small and large organizations. ERP software provides a single-source platform to organizations and enhances productivity, efficiency, customer engagement, and overall profitability.
Knowing the critical benefits of such an ERP system, enterprises large and small have to ensure that the design, implementation and management of such a system is done in a well-planned manner. If there are shortfalls and gaps in ERP implementation, businesses will suffer financially.
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Selection and implementation of the most suitable ERP software is a complex process. With an assortment of several attractive modules offered by ERP vendors, one can easily choose a system that is not an ideal match for the organization. Thus, mapping out the detailed requirements of your organization is extremely crucial to find the right ERP solution because eventually, the whole business will rely on it. Gathering the correct requirements for all aspects of the organization is the first and foremost stage of any ERP implementation. The more detailed the requirements, the more optimal a system can be designed and implemented. Therefore, defining the requirements of the ERP solution that your organisation is envisaging is a critical step prior to embarking on selecting a solution or implementation. The undefined, and the undocumented, might give a chance for a costly mistake, especially for small businesses.
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There are essentially four segments of ERP requirements for small businesses that can be considered for designing optimum technology solutions and management tools. These requirements include Software Requirements, Infrastructure Requirements, Change Management Requirements, and Financial Requirements.
Software Requirements for small organizations
Software Requirements for small organizations must look at the interior of their business to devise the various functions the ERP software needs to perform. Functional requirements will gather at three crucial levels i.e., end-user level, stakeholder level, and policy level.
End users from core departments such as Human Resources, Supply Chain, Finance & Accounting, Asset Management, Logistics, Inventory Management, and others as relevant, will give detailed and practical knowledge of the business processes. Thus, end users can provide valuable inputs in defining the functional needs of the ERP software and selecting appropriate modules & features. Similarly, stakeholders of the organisation such as management, investors, contractors, compliance specialists, and customers also play an active part in mapping out software requirements. The stakeholders mainly govern the dashboard, reports, and authorization functionality of the ERP software. Lastly, on the policy level, different organizational policies like leave policy, outsourcing policy, overtime policy, and many more and they must be documented and included in the functional requirements so that the ERP vendor can incorporate suitable validations and features under those requirements.
ERP implementation aims at making business activities more simple and more efficient. Therefore, studying existing processes and identifying key processes that can be incorporated into an ERP solution helps small businesses design better ERP technology solutions and avoid operational problems and gaps.
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Infrastructure Requirements
During documenting requirements, decisions regarding ERP Infrastructure including hosting, deployment options, mobility, and other technical aspects must be evaluated. Cloud, on-premises, or the hybrid of both represent the choices for ERP deployment. On-premise software is installed locally, on your business’ computers and servers, whereas cloud software is hosted on the vendor’s server and accessed via a web browser. However, most enterprise resource planning solutions are online, but the ERP deployment decision varies with the type of organization, budget, office facilities, working arrangement, and employee positioning. Evaluating these factors in advance will help small businesses consult with the ERP vendor and arrive at the best solution to cater to their technical requirements. Also, consider your end user access and the infrastructure that needs to be provided to your teams and the location of their work and the ease of working and security features that need to be addressed. In the new normal of composite work structures, defining these at the beginning will provide your IT teams or vendors with clear direction for setting up the same.
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Change Management Requirements
It is equally critical to look ahead and anticipate the probable requirements and challenges that your organization will face after implementing an ERP or any other technology solutions. Identifying such gaps initially and having a defining change management program will help to avoid extra costs in the future. Users of ERP software often need training, hand holding, coaching and customer support to get familiar with the brand-new system. There may be a lot of business process improvements that might have been done during the designing of the ERP solution that must be considered to ensure that all team members are aware of the updates to your organization’s processes, policies. There are also chances that when end users are using the ERP system they may require some additional features, modifications, and improvements. Also, any digital solutions need timely maintenance, upgrade, and bug fixes. It is, therefore, essential to foresee these requirements in the long term or have some room in your ERP implementation plan to accommodate these. Initially, employees might experience friction and discomfort while engaging with the redesigned business system. Identifying the challenges in the transition phase will help tackle and plan efficiently. Gathering change management requirements for special training packages, programs, training personnel, future scalability of the ERP software in the beginning will provide clarity on the size and volume of work that is to be carried out for transitioning into automation.
Financial Requirements
ERP implementation is a commitment and ongoing expense to businesses. Small organizations should be aware of various costs associated in adopting ERP solutions to define the budgets. It is necessary to gather financial requirements for the initial implementation of the ERP solution and ongoing costs associated with for licensing, deployment, integration & customization, support & maintenance, and training to arrive at the required financial projections for a successful ERP project implementation. The financial requirements of an ERP project will be dependent on the number of users, the features and functionality that you expect, infrastructure to securely use the software, ongoing costs for maintenance, training, change management expenses, and more. It is important that all the relevant cost elements are thoroughly thought about prior to embarking on an ERP implementation journey. Many times, small businesses underestimate the amount of financial commitment that will be required to successfully roll out an ERP. For a successful ERP implementation, both current and ongoing costs must be considered and there should be a firm commitment from the top management for the investment of such financials for an ERP project implementation.
During financial consideration, it is equally imperative to prioritize modules and features of ERP software that are necessary to the business. Organizations may select ERP that is popular in the market and end up with an overpriced solution or a solution with many unusable features.
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Conclusion
All the requirements regarding the ERP software must be consolidated and structurally layout in a document known as Software Requirements Specification. An SRS is the foundation of the entire ERP project as it contains the detailed framework that people involved in the development will follow. It ensures all the project requirements are fulfilled and keeps every team member on the same page.
Large business organisations may have dedicated IT or ERP teams or consultants to support them, but small companies do not have dedicated teams or consultants to gather ERP solution requirements. And in challenging times, the budget to invest in ERP requirements management could be scarce. Small business owners can assign this crucial task to mid-level managers, IT executives who can use this as a guideline to define clear requirements for ERP projects.
Most organizations perform poorly in gathering ERP software requirements which leads to the failure of ERP implementation or a heavy financial burden to get it right. Businesses must allocate enough time to conduct extensive research to arrive at detailed ERP requirements internally before jumping straight into the implementation phase. Every organization must get this step done, so everything else will fall into place smoothly.
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