ERP implementations in a recessionary economy: Is Limited Functionality ERP the way?
Hence for an IT service provider, the challenge lies in guiding the customer to make the right amount of investment in a timely manner, so as to minimize the initial CAPEX requirements at these times of turbulence.
Here are some of the ways to my mind, which can be put in practice for proposing new engagements:
1. Partnering with stakeholders
Let us partner with the customer and create a close collaboration between customer, IT service provider and the OEMs to provide the customer the best price
2. Using out-of-box features
Customers should be encouraged to use the standard built in features of the ERP product to the greatest extent possible. Enhancements should be entertained for addressing only the business critical needs.
3. Customer driven design
The need of the hour is more emphasis on incorporating customer’s requirements and his wishlist at the very early stage and designing the solution along-with the customer. This will reduce the number of iterations and rework in the project life cycle. Extensive workshops with the customer on the product and design will help on this aspect.
To add to the above, another aspect which can be explored more can be to bring in more modularity in the solution. We need to work with the customer in identifying the core business needs that need attention on a priority basis and provide a solution on those areas only; however care should be taken to ensure for the future enhancements to be added to the core solution with ease later.
In summary, the impending recession has made customers more cost-conscious than never before; this is probably the right time to sell a limited functionality ERP in a big way. This concept may sell when corporates are trying to just sail through rather than expecting to make huge profits. Customers with basic business processes in place in an ERP framework will be equipped better to scale up in boom times through adding more functionalities.
Comments
One other way to reduce the cost of ERP implementation is to use 'Pre-configured Solutions' based on industry benchmarks. These are essentially vertical specific solutions. Since processes within an industry vertical seldom varies, the ERP product configuration for basic processes remain same.
ERP implementations using these 'Pre-configured Solutions' are termed 'Rapid Implementation' because they reduce the implementation duration and therefore the cost.
Posted by: Samiksha Hariharan | November 13, 2008 11:31 AM
Good article.
When it comes to cost cutting,during recessionary economy even considering open source erp software is a best bet.
Posted by: erp software | December 15, 2008 7:09 AM
Partnering with Stakeholders: One more trend is client recruiting SME for the implementation in low cost countries to keep the cost down.
Posted by: Srikanth Sripathi | December 22, 2008 3:49 AM
I think rather than using cost as a driver, business value should drive ERP implementation during these challenging times.
As per recent surveys, more than two thirds of participants suffered operational stoppages and only 20% realized 50% or more of their projected benefits.
There has to be a strong link between business and IT strategy. Companies should be achieveing measurable and tangible value from ERP based technology solutions.
Consultants should work with clients as partners to answer 2 important questions:
* How do we ensure that the ERP system is being built to deliver the intended benefits?
* How do we measure and validate results to confirm benefits that have been realized?
Cost can be further optimized through hardware/software optimization and leveraging out of the box features to keep future upgrade costs low.
Posted by: Ankit Dangar | January 11, 2009 5:37 AM