Getting Started with ERP Software: Necessary Preparation and Analysis for Businesses

ERP stands for Enterprise Resource Planning, which is a system for integrating various management functions such as finance, accounting, production, sales, human resources, and more. The goal of ERP is to help businesses optimize the utilization of available resources and enhance operational efficiency. However, for a successful ERP implementation, businesses need thorough preparation and careful analysis of related factors. In this article, EnterSoft will introduce you to the initial steps to begin with ERP software.

1. 1. Understanding the True Nature of ERP Implementation

The essence of ERP implementation is the process of transforming a business from its current state to a desired state through the use of an ERP system as a support tool. Many businesses have misconceptions about the nature of ERP implementation, leading to mistakes and failures.

Misconception 1: ERP is a comprehensive solution for all problems

One of the reasons many businesses decide to implement ERP is the desire for an all-encompassing solution for issues ranging from production management, sales, accounting, and human resources, to strategic management. However, ERP is not a panacea that can solve everything. ERP is merely a management support tool that enhances efficiency and integrates data across different business units. To achieve the desired results from ERP implementation, businesses must clearly define their goals, needs, and expectations, as well as ensure the participation and commitment of employees and leadership.

Misconception 2: ERP is a one-time deployment project

Many businesses believe that ERP implementation is a one-time project, where you complete the design, installation, training, and handover, and then use ERP normally without further concern. However, this is a dangerous misconception because ERP is a dynamic system that continuously updates and adapts to changes in the business and market. Therefore, ERP implementation is not limited to the initial stage but requires continuous maintenance and improvement. This demands that businesses have a professional IT department to manage and operate ERP, as well as the collaboration of different departments to provide feedback and suggestions for the system.

Misconception 3: ERP can be deployed quickly and easily

Another misconception about ERP implementation is the belief that it is a quick and easy process, simply by selecting a reputable provider and monitoring their progress. However, the reality is different. ERP implementation is a lengthy process, lasting from 6 months to 2 years or more, depending on the scale and specific requirements of the business. Furthermore, ERP implementation encounters many challenges and risks, such as employee resistance, lack of alignment between departments, changing requirements and objectives, or technical issues.

Therefore, for a successful ERP implementation, businesses need a detailed and clear plan, a professional and dynamic project team, an experienced and reputable vendor, as well as a rigorous monitoring and control process.

2. 2. Understanding the Types of ERP in the Vietnamese Market

The ERP market in Vietnam is diverse and rich, with the participation of many providers, large and small, domestic and international. ERP types can be classified based on various criteria, for example:

2.1. Classification by Service Delivery Model

• ➣ Off-The-Shelf ERP

Off-the-shelf ERP solutions are pre-designed based on common standards and industries. Businesses can simply purchase and install off-the-shelf ERP without the need for customization or alterations. This type of ERP has the lowest cost and the fastest deployment time.

However, off-the-shelf ERP also has limitations such as not being suitable for businesses with specific business processes or high requirements for flexibility and personalization. It has limited scalability and upgrading capabilities and may not have a high compatibility with other systems.

• ➣ Custom ERP

Custom ERP solutions are designed according to the unique requirements of each business. Businesses can request ERP providers to develop or customize functions, interfaces, reports, etc., based on their specific business processes and needs. This type of ERP offers the highest level of flexibility and personalization.

However, custom ERP also comes with challenges such as higher costs and longer deployment times compared to off-the-shelf ERP. Maintenance and support depend on the provider, and the integration capabilities with other systems are not guaranteed.

2.2. Classification by Deployment Model

• ➣ Cloud ERP

Cloud ERP solutions are stored and operated on remote servers managed and updated by providers. Businesses can access and use ERP via the Internet without the need to purchase or install any hardware or software. This type of ERP has the lowest initial costs and the highest accessibility from anywhere.

However, Cloud ERP also comes with risks, such as data security and privacy not being fully controlled by the business, limited customization, upgrade capabilities, and its performance relies on internet speed and stability.

• ➣ On-Premises ERP

On-premises ERP solutions are stored and operated on a business's own servers, managed and updated by the business itself. Businesses have to purchase and install the necessary hardware and software to use ERP. This type of ERP offers the highest security and data privacy and the highest customization and upgrade capabilities.

However, On-Premises ERP also presents challenges, including higher initial costs and longer deployment times compared to Cloud ERP, limited remote accessibility, and requiring a professional IT team for maintenance and support.

• ➣ Hybrid ERP

Hybrid ERP is a solution that combines both Cloud ERP and On-Premises ERP. Businesses can choose which ERP functions are stored on remote servers and which are stored on their own servers. This type of ERP offers the highest flexibility and adaptability.

However, Hybrid ERP also has its own challenges, including higher costs compared to other ERP types, difficulty in integrating and managing different functions and requiring cooperation between the provider and the business for maintenance and support.

2.3 Classification by Origin:

• ➣ Foreign ERP

These are ERP software developed by large international information technology companies with a strong reputation and high quality. However, they come with high costs and may not easily adapt to the Vietnamese market.

• ➣ Domestic ERP

Domestic ERP software is developed by local information technology companies. They have the advantage of understanding the needs and culture of Vietnamese businesses. They are generally more cost-effective and easier to implement.

3. 3. Understanding the Functional Modules of ERP Software

ERP software is composed of various functional modules, each serving the distinct goals and needs of different departments within a business. The functional modules of ERP software can be categorized into two main types: core modules and extended modules.

Core Modules:

Core modules are essential components crucial for the operation of a business. These core modules typically include:

• - Production Management Module: This module helps manage and control production processes, from planning to progress tracking.

• - Purchasing Management Module: It aids in managing activities related to procurement from suppliers, such as ordering, receiving, payments, supplier evaluation, and more.

• - Inventory Management Module: This module helps businesses manage activities related to inventory, including inventory checks, adjustments, transfers, and more.

• - Quality Control Module: It helps businesses manage quality assurance activities for products, including inspections and categorizations.

• - Sales Management Module: This module assists in managing and optimizing sales activities, from marketing and quotations to orders, payments, and after-sales service.

• - Accounting Management Module: This module helps manage and record financial transactions, including income, expenses, accounts receivable, accounts payable, inventory, tax reports, and financial statements.

• - Human Resources Management Module: It helps manage and develop human resources, from recruitment and training to performance evaluations, payroll, and benefits.

Extended Modules:

Extended modules are advanced components that complement the core modules to enhance a business's efficiency and competitiveness. The specific extended modules can vary depending on the ERP software and the industry. Some examples of extended modules are:

• - Distribution Channel Management Module (DMS): This module assists businesses in efficiently managing distribution channel activities, including distributor and agent management, customer management, order management, inventory, logistics, payments, commissions, promotions, and reporting.

• - Transportation Unit Management Module: This module helps businesses efficiently manage transportation-related activities, such as vehicle management, driver management, routes, fuel, costs, income, and reporting.

• - Customer Relationship Management (CRM) Module: This module helps businesses manage and maintain relationships with customers by collecting customer information, developing marketing strategies, increasing customer engagement and loyalty.

4. 4. How to Prepare for Effective ERP Software Implementation

This is a crucial question that every business needs to address before deciding to implement ERP. Several necessary steps can be outlined as follows:

4.1. Identify Needs, Business Specifics, and Budget

This is the initial and fundamental step to select the ERP type that suits the business. Companies need to carefully analyze requirements regarding functionality, features, interface, security, integration capabilities, scalability, as well as industry specifics and business scale. Furthermore, businesses should also consider the initial investment costs and the ongoing maintenance expenses of ERP.

4.2. Choose the Appropriate ERP Type

After identifying their needs, businesses should seek out and compare different ERP providers in the market. Companies should pay attention to criteria such as reputation, experience, consulting ability, technical support, warranty commitments, maintenance, and more of the ERP providers. Businesses can request the ERP providers to conduct demonstrations, and trials, or seek feedback from customers who have used the ERP from those providers.

4.3. Project Implementation

After selecting the ERP provider, businesses need to establish a project management team comprising members from both sides to coordinate the ERP implementation. The project management team is responsible for the detailed planning of tasks, timeframes, resources, and budgets for ERP implementation. The ERP implementation tasks include solution design, system installation and configuration, data input and conversion, testing, and optimization.

Conclusion

ERP implementation is a strategic decision for businesses to enhance management capabilities and meet market demands. However, for a successful ERP implementation, businesses must have in-depth knowledge of what ERP can do, different types of ERP, and the necessary preparatory steps before starting the project. ERP is not a simple solution but a comprehensive system that connects and optimizes a company's business operations.

EnterSoft Software Solutions Joint Stock Company

Email: info@entersoft.com.vn - kinhdoanh@entersoft.com.vn

Phone: +(84) 28 625.88.511 - Hotline: 0985.200.060

Website: www.entersoft.com.vn