Critical Success Factors for ERP Implementation in India

Since early 1990s, many firms around the world have shifted their information technology (IT) strategy from developing information systems in-house to purchasing application software such as enterprise resource planning (ERP) systems.

As more and more enterprises move from functional to process-based IT infrastructure, ERP system becomes one of today’s most widely used IT solutions in many large enterprises. IT managers responsible for managing their organization’s ERP implementation view their ERP systems as their organizations’ most strategic computing platform.   In spite of the widely used IT solutions, many ERP implementations are not successful. It takes longer time and costs more money than expected. Given the large investment that an ERP project requires and the potential benefits it can offer if successfully implemented, it is important to understand what is needed to ensure a successful ERP Implementation , during a whole process of ERP implementation, i.e.: pre implementation phase, implementation phase and post-implementation phase.

Serving as a company’s central nervous system, ERP systems orchestrate many functions, including  order management, materials planning, warehouse management, payables, receivables, and general ledger. Because these systems touch so many aspects of a company’s internal and external operations their successful deployment and use are critical to organizational performance and survival. In reality, ERP implementation is costly and complex. In many cases, ERP is the largest single investment in any corporate-wide project. The software is expensive, and the consulting costs even more.

Here is what works and what you need to do to reap the benefits of a fully integrated business.

A critical success factor is something that the organization must do well to succeed. In terms of information system projects, a critical success factor is what a system must do to accomplish what it was designed to do. Three factors consistently appear as critical success factors for information systems projects: top management support, client consultation (user involvement), and clear project objectives.

The critical success factors can be categorized as strategic factors, tactical factors, and operational factors.

Strategic factors:

Top management support – In any  ERP implementation  a top-down decision, approach needs to be taken for ERP adoption .The commitment of top management should be emphasized throughout an organization. In particular, no more important factor than the support of the management is critical in the project’s life. The roles of top management in IT implementation include developing an understanding of the capabilities and limitations of IT, establishing reasonable goals for IT systems, exhibiting strong commitment to the successful introduction of IT, and communicating the corporate IT strategy to all employees Senior management must be involved, including the required people and appropriate time to finish and allocate valuable resources to the implementation effort.

Tactical factors:

Effective project management in order to successfully accomplish the decision to implement an ERP system, the effective project management comes into play to plan, coordinate and control such an intricate project. In order for the ERP system to progress it is critical to clarify the ERP project’s and every participators’ scope and ensure consideration of all the required work.

Re-engineering business processesTo gain full benefit of ERP systems, it is imperative that business processes are aligned with the ERP systems, It is a proven fact  that the ERP itself can not improve the firm’s performance unless the firm reengineers the business process per ERP systems. Modification of the software causes problems, such as code errors and difficulty upgrading to new versions. Each company needs customized software, but the organization must keep customization to a minimum, since any modification will lead to higher related cost . It is very important to consider the extent to which the company needs to re-engineer its current business processes in order to be compatible with the ERP software.

Suitability of software and hardware – management must make a careful choice of an ERP package that best matches the legacy systems, e.g. the hardware platform, databases and operating systems.

Operational factors:

Education and training when the ERP system is up and running it is very important that the users be capable to use it, hence they should be aware of the ERP logic and concepts and should be familiar with the system’s features. ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

User involvement – participating in the system development and implementation, the users go through a transition period that gives them time to better understand the project’s consequences.

By ensuring  these  critical success factors in place, your organization will be much more likely to maximize the business benefits of ERP.

Which ERP Solutions to choose

If you can a SME or SMB in India, then Sage ERP will be more suitable for you. You can visit http://www.sagesoftware.co.in

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