If you belong to leaders who realize they have lost hundreds of millions of rupiah to pay for something that can actually be handled by the system but confused about how to choose a suitable system. Even you have been put on the system, but not implemented properly. Don’t be confused by the system, you need to just relax and let us come here to do it.
Is ERP Right for You?
What is ERP?
“Yeah we have system, accounting system”
When you hear “system” in a company, maybe you are immediately reminded of the accounting system, but currently, there is a more sophisticated system than just an accounting system. So let me introduce you to the ERP system. ERP is a key strategic tool for all companies in a nowadays competitive and globalized economy. ERP is a software-driven business management system that integrates all aspects of every-day business and operations by integrating all departments and functions across a company into a single computer system. ERP became a system that has almost become the default for operating any kind and size company.
All companies regardless of their size are facing various challenges such as globalization of markets. This new environment predetermines each company to survive and become more competitive by only making substantial use of information technologies and information systems (IT/IS). This substantial use of IT/IS has transmuted the ERP systems market into the industry‘s fastest developing sector. In other words ERP systems have become vital strategic tools in today‘s competitive business environment.
“it is not working harder it’s all about working the system.” Evan Spiegel CEO of Snapchat.
The Types of ERP
- Cloud ERP
This type of deployment manages the software and its data centrally (the internet cloud) and allows its users to access this data through a web browser. The overhead cost and efforts involved in implementation are reduced significantly. There are certain advantages with this type of setup like faster deployment time, timely system upgrades, and better performance. Since, there is no additional hardware required in Cloud ERP, the deployment takes not more than six months. The ERP system will vendor continuously upgrades the system with the newest versions for optimized performance and better accessibility.
In On-Premise ERP, the solution is installed locally on the computer’s servers and hardware. This is then managed by the IT staff. The primary investment in this kind of setup is quite high since the software is implemented in-house along with related hardware and servers. Companies will have to resource a dedicated IT team to maintain and upgrade the system, which demands a lot of time and effort. Yet, it allows its users the complete freedom to access their own data with additional customization abilities and gain control over the implementation process.
This solution is the best-combined outcome of both On-Cloud and On-Premise ERP. Most of the companies aim to enhance their existing onsite ERP without compromising on the hosting server. Such companies serve as the potential buyers of Hybrid ERP since in-house ERP is complemented by cloud-based servers for enhanced performance. There are times when companies don’t want to invest in certain functionalities during initial implementation, however, this scenario can be replaced in the future. Hybrid ERP is therefore preferred because it is simple and scalable.
ERP system has evolved and covers a wide range of functionalities, including non-accounting ones, However, they all share several common and basic modules at their core such as Procurement, Inventory Management, Sales & Distribution, Warehouse Management, Manufacturing, Service Management, Accounting, Human Resource Management (HRM), and Customer Relationship Management (CRM) with high security, cloud database, and user friendly.
Finance and accounting
This module manages your company’s cash inflow and outflow by keeping track of all financial-related transactions. Features include the general ledger, account ledgers, budgeting, banking and reconciliation, tax management, financial reporting and analysis, multicurrency, and more
The Inventory Control module is used to make direct adjustments to warehouse stock balances and costs, to transfer and configure items, and to perform physical inventory counts
In short, The Purchasing module comprises functionalities ranging from purchase order to supplier invoice payment. This module enables you to maintain all your supplier and item master data in a centralized area, so you get full visibility of your entire purchasing process
HRIS module covers all the functions associated with your talent including personnel management, personnel task, organizational management, and payroll
CRM in Sales module includes sales force reporting, task accomplishment, tracking leads, and marketing
Why Do I Need It?
Company leaders are taking to addressing their pressures and challenges is not that much different, regardless of having ERP or not, so let’s talk about ERP benefit. ERP benefits could be classified into two types: tangibles benefit, which can affect the first line of the business; and intangibles which are less quantifiable.
For tangibles benefit, usually the benefit takes 3-4 months after full deployment. The quantifiable benefits from ERP implementations can be the reduction in operating costs, administrative costs, inventory reductions (for manufacturing and distributing), improvements in complete and on-time delivery, improvements in schedule compliance (for manufacturing and distributing), and etc.
Intangible benefit, especially for ERP users who complain about how their ERP software doesn’t give them the expected benefits. As well as those that are unobserved, there may well be unanticipated benefits, which emerge from the discovery of unnoticed functionality or innovative ways of using the new application. Let’s see one by one per division. Finance and accounting, being able to instantly see a company’s financial position mean decisions can be successfully made. HRIS, track personnel hours and employee performance as well. Inventory, for businesses that operate over multiple sites, the ERP application becomes essential in keeping track of stock, raw materials and other inventory that is housed in different locations. Purchasing/Procurement, the software enables decision-makers to receive automatic documentation to approve payments and orders and thus reducing the administrative burden as well as ensuring that everything bought is tracked and recorded. Distribution/Warehousing, ERP distribution systems will ensure that inventory in warehouses is optimized to meet the company’s supply chain requirements so it will raise the efficiency. CRM, records of all interactions of your sales with customers, clients, and partners so you can track your sales performance and prospects your business.
As well as those that are observed, there may well be unanticipated benefits, which emerge from the discovery of unnoticed functionality or innovative ways of using the new application like easier and more efficient problem solving, a more efficient and happier workforce, and better able to be more proactive in improving the business.
Is ERP Worth it?
We understand that the ERP system needs massive resources to be implemented so it can be a risky investment. However companies are eager to invest in ERP systems, they want to be certain that their investments return the expected benefits in terms of business.In terms of business, Return on Investment (ROI) is easily the most common method used in business to measure project returns and to compare these with other potential investments. It is calculated by adding up the expected efficiency gain from an ERP system and then subtracting the expected costs before using ERP.
So from implementing ERP, you will save IDR 58.5 million per month, or IDR 702 million per year. Surprised by the numbers? Imagine how much opportunity profit you should get and opportunity cost you have lost. Now you can discuss with the finance team, and see the numbers of efficiency so you can estimate by dividing by the total cost that you spend on each activity. This calculation is only calculated from the efficiency of operational and administrative costs that are tangible only. There are still many other benefits that can be obtained from ERP implementations that are intangible, for example more effectiveness of sales, so more leads, more clients, more revenue. So when your system is busy doing a lot of things, you can focus on growing your business.
How to Choose The Right ERP?
Implementing a good and right business system must be a high priority to each of business. Efficient cost and higher productivity are two main basic goals in every company, and a good and right system is the way to achieve it. Implementing ERP or SaaS is a transformational process that shouldn’t be decided lightly or with limited information.
Nowadays, we see many systems that have already developed and provide solutions for companies, either it is ERP or SaaS, but, who is the best?
We know there are most common ERP systems that have been recognized as the best ERP systems. Those are SAP Business One, Microsoft Dynamics NAV, NetSuite and ImpactFirst. Let’s have a more deep understanding about them.
SAP was first launched In 2002 and made SME as its first targeted market segment with the purchase of what is now SAP Business One (SBO). SBO is the lowest cost ERP version offering from SAP, designed to be deployed quickly and with minimal customization. SBO is best suited to light manufacturing as it lacks advanced planning and shop floor control features when deployed out-of-thebox. There is a large community of value-added resellers, many of which have developed their own modules to add the missing features needed for more complex manufacturing processes.
Microsoft Dynamics NAV (formerly Navision) as part of the Microsoft Dynamics family of ERP software. The software can be hosted in the Microsoft Azure Cloud (for an additional fee). Two licenses are available: a perpetual license and a subscription license to an external service provider. Microsoft Dynamics NAV 2016 is split into two versions: the Starter Pack, which offers basic functions in finance, professional services, and distribution; and the Extended Pack, which adds manufacturing and warehouse management features. The purchase of the Started Pack is required in order to get the Extended Pack. We’ve chosen to use the Extended Pack in Microsoft Dynamics NAV 2016 for the purposes of this comparison.
NetSuite is an integrated solution for mid- to enterprise-sized businesses. NetSuite separates its business management software into four products: NetSuite ERP for inventory, supply chain, and financials; NetSuite CRM for sales and marketing; NetSuite Commerce for both web and on-site sales; and NetSuite PSA for project management. The different parts of the system can be purchased separately, which gives some flexibility to the customer NetSuite also provides a version of its software for multinational organizations called OneWorld, which offers the four above services with additional features for multinational companies, including managing multiple subsidiaries, multicurrencies, multi-accounting standards, and tax requirements.
ImpactFirst has the mission to provide solutions for business leaders that solve real problems, especially in SMEs. We proposed a solution through a wide range of modules and functions that form a complete suite of tools to accompany any business need. Not only selling ERP systems, but we do care to solve your problems with our business consultation services. With our easy-to-customize modules, user-friendly interface and affordable price, we believe that our services are the best solution for your real-problems.
Choosing a Vendor
Congratulations! If you have chosen the right ERP system for your business, it means you are ready for the next step, choosing a vendor!
An ERP Vendor will help and give you consultation for solving your problems. Again, there are so many vendors that are available nowadays. Here in this section we will give you the guidance.
Quality and Reputation It could be determined by their track record of services, you can see it in their website, google it, or ask for a reference from other companies that already used their services. Next, you can identify from their team, their track record and its success story
Services and Support A good vendor is a vendor that could see both from the technology side and your side (business side), they will give the best solution and are willing to solve your problems, not a profit oriented or tech oriented only. You can assess them from the way they respond to your question and problems, and answer these questions:
Do they give you a fast response?
Do they understand your problems?
Do they give you real solutions to all your problems and requirements?
Do they have the best solutions for your problems?
When you get good services, don’t forget to make sure about the technical details, their implementation support. Those are, how long it takes for the implementation (a make sense timeline), pre and after implementation support, and also guarantee of implementation.
3. Price and Budget
Now we are coming to the final stage of your decision to choose a vendor. After an initial discussion and first ERP demo from the vendor, you will get the proposal or a quotation for the ERP implementation based on your requirements. At this stage, you can also compare the pricing and benefits with 2 or 3 other vendors that are most suited with you. This is consideration points that important:
Return of Investment (ROI) ERP Implementation is a transformational process, it is a very good long term investment for your company. That’s why you have to calculate the long term impact to your cost and income, you can refer here to see how the ROI of the ERP implementation. By implementing an ERP, you could save your cost for about 58 million per month or 702 million per year. Not only a cost efficiency, with ERP you can also decrease human error and increase your success rate (impact on income).
Budget of your company. After calculating ROI, now you can discuss with the finance team about the budget spending for your ERP implementation. Once again, this is a long term investment, so you have decided your budget correctly. Impact or future benefit. Last but not least, Impact, from the budget that you like to spend, what is the impact list that you will gain after the implementation. Discuss with your vendor, list down the benefits, and give the good news to your team.
Choosing a Plan
When you are done deciding the ERP system and the Vendor, now is the final step, choose the right plan for ERP Implementation. Choosing a plan means deciding an ERP package and also the timeline of implementation.
An ERP system must be a complex function and solution. They must have many packages that are offered for their users. But, you have to choose what you need only. Here we give you some simple tips:
Make a List of Requirements and Problems
Gather the key person in your company based on their function/department. Ask for their opinion, also facts about problems that they have faced related to the management system, and list it down. It will be better if they give you the priority from the biggest to smallest impact to their works and results
Prioritize Based on Impact and Effort (or Price)
When you are done with the list and priority from them, make the overall priority. First choice, you can use pareto diagrams for this step. Pareto diagram helps you to identify most problems source that is caused most problems (80% of the output problems in a given situation or system is produced by 20% of the input/source).
Diagram 1. Pareto
Choose The Right Time
Actually, you can start the implementation as soon as possible, but, there are some consideration for you such as, – When you need the implementation to be done? – When is the right time to start the transformation? For the first consideration, it must be based on your request or requirements complexity, you can ask your vendor to work on prioritizing modules (e.g. implement accounting modules first, then HRIS modules next). For the second consideration, there is the possibility of obstacles to start the transformation, it is about your company timeline. Make sure when you start the transformation, all employees are ready and available to transform their work and get the training. Do not choose peak seasons such as closing dates or some other busy season that could disturb your company’s activities.
Most Common Implementation Failure and How to Avoid Them
1. Focus on Technology, but Forget About The People
Often, companies equate innovation with new technologies but have a very limited viewpoint. Digital transformation is more than just a new technological invention. Digital transformation is a state of mind—an attitude. It is a culture. It is an ongoing approach that connects personal passions with business goals, and it must be interwoven throughout every aspect of the organization, every day. This mindset must come from the people of an organization, not from a flow chart. Clients should focus on their people and processes too, and keep in your people mind’s that the goal of creating a system is to help improve the efficiency of the workers so that business flow becomes more structured and tracked.
2. Business Leader is Not Committed to The Implementation and Doesn't Even Know The Real Problem is
The executive team may have approved the project budget, but their job is far from over. Executive involvement ensures the ERP implementation doesn’t become a technology project but fits into the organization’s overall strategy. ERP is not just a digital transformation of business processes, but part of the business strategy itself. Leaders must jump right into this project, thinking about the real problem, the real solution and the long-term effects of using ERP.
3. Over Customization
Many companies see ERP software as the magic bullet solution to all their problems, but don’t take sufficient time to define the specifics of what they’re trying to accomplish. This is what we call with unrealistic expectations. This is not completely wrong, but sometimes ERP customization becomes a burden when you customize functionality that should be standardized. For example, many back-office processes are not competitive differentiators, so standard software functionality is usually sufficient.
4. Lack of Investment
Enterprise Resource Planning (ERP) software can be a critical component of business success. But customizing and implementing these complex systems can be difficult and extremely expensive. There are often cases where companies only use the standard version of ERP without customization or just using ERP for certain divisions because of financial reasons. Keep in mind that ERP can run perfectly and has maximum impact when used for overall business lines. This is not wrong but will reduce the efficiency and impact of ERP use itself.
5. Expect Instant Results and Returns
The implementation phase requires a long process, starting from the discussion, development, testing until it runs perfectly. The implementation process also involves both the client and the vendor. From the client-side, implementation also depends on the condition of the company’s business at the time and the quality of the user system itself, and also remember that system requires a long term commitment to using it. Business leaders must also anticipate various benefits that are not visible but will have a major impact in the future.
There is a food retail company that has 120 employees, 10 branches, and 2 warehouses throughout Indonesia. Company leaders want an accounting and finance system to recapitulate the entire sales process in all branches to find out the company’s current financial condition. However, after discussing with the consultant, many problems were found, for example, there was often a delay in sending raw materials to the branch because the buying process from distributors was always late. The company also currently has many complaints about crew shortages in several branches, but business leaders are confused in determining the right number of crew for each branch.
How We Fix it
In the pre-implementation stage, the client will discuss with the consultant about the existing problems. The decision of the company leader to use the accounting system is correct, the retail food business is a very dynamic business, so the decision of the business leader must be made immediately by knowing the current market situation. But seen from the other problems that arise, there are some other solutions that should be done. For example, for the problem of delays in purchasing raw materials, retail business leaders can use the Point of Sales (POS) module, so they can find out more in detail about what products are sold, then if the POS module is connected to the warehouse and inventory section, inventory will always be updated about the stock of goods in the warehouse so that if there are indications of raw goods will be exhausted, the company can immediately make a purchase schedule in the purchasing module. This solution not only overcomes the problem of delay in delivery of raw materials but also problems assuredness quality raw materials in the warehouse, it is important for the retail food which has a lot of raw material with a quick expiration date.
For crew problems, the company can also see the conditions in each branch of the existing financial statements. The branch with the highest profit certainly requires the highest number of crew, but to decide which crew in the branch should be laid off or mutated. Company leaders must have started thinking of using the HR system because the number of employees has reached hundreds. With the HR system, company leaders can see the performance review of each crew and can optimize the company’s budget by reducing employees but with valid and transparent data.
Problem That We Have Avoided
From the above case, we have prevented various problems that can occur. First, the involvement of a company leader in revealing the real problem by discussing it with consultants who understand the business side. This is related to the second failure that often occurs, which is the lack of investment. By knowing the real problem, the leader of the company will be more concerned with the long-term solution than the budget being spent on the system how many returns of this implementation. Third, Insufficient training/support. Problems that may arise in the early stages of implementation is how to use the system itself, therefore we provide consultants or trainers. Because the system is not only be understood but also being used so that it can be continuously used by the crew. Four and five, Over-customization and Lack of testing. Furthermore, in the testing phase, it is likely to find various problems or even new innovations that have not been thought of before. Clients can request changes to the system to match the needs of the company in this phase. This is very good compared to a custom system prior to implementation, because there are often many functions that will be unused and increase costs.
Who We Are
ImpactFirst is a one-stop solution business consulting company with a focus on Business Transformations, Market Entry, Business Process Outsourcing, and IT Consulting. We assure you to give the most impactful solution with the highest quality product and the best price ratio. By lapse of time, we have assisted our clients, especially small and medium-size company to grow their business by improving their operational efficiencies.
Being a leader among a plethora of business consulting to helping business leaders solve their real problems
Our business stands on the mission of people who have years of experience as business advisors, human resource management and legal advisors. Years of facing various kinds of clients from various industries triggered us to make a product innovation that could handle all the problems with a single product, so was born ImpactFirst. A product that can provide “everything” for you. It makes us different from our competitors because ImpactFirst is not just a digital transformation product or ERP vendor, but a business transformation itself because it gives a touch of business and people in every solution we provide.
We understand that every business is different. An ERP system that works well for one company may not be suitable for the other company. Using ERP products from overseas vendors also will be different if used for businesses in Indonesia, for example in terms of the payroll system, our payroll system has been integrated with the applicable tax regulations in Indonesia (Pph 21) and BPJS of employment. We also have e-faktur that will facilitate the businessmen in Indonesia in reporting Output Tax Invoice. Awesome right? this really helpful feature is only a small part of our service, Explore the detail more here.
Is the system not the solution to your business problems?
Do you want to escalate your business but constrained by your knowledge of existing regulations? You already have a system but it doesn’t work well? feel this is the right time to go public but you don’t how? You want to restructure your company but you don’t have time to take care of it? Don’t worry, just focus on your business and let us help you.
- M&A Advisory
- IPO and Restructuring
- Post-merger Integration
Business Process Transformation
- Company Regulations and SOP
- Organizational Restructuring
- Business Process Optimization
- Custom ERP
- Odoo Consulting
- ERP Implementation
Human Resources Transformation
- Talent Management
- Cultural Transformation
- Compensation and Benefits
Lenny Sutandar, CPA
Lenny Sutandar was a Director in PricewaterhouseCoopers Indonesia with experience of more than 15 years, before joining Impact. Her experience includes financial due diligence, carve out, restructuring and financial audit.Lenny handled various industries in the past, including retail, e-commerce, logistics, manufacturing, plantation, healthcare, F&B, plantation, mining, oil and gas, etc.Selected clients served: Triputra Group, Mitsubishi Corporation, Garudafood, Itochu Corporation, Sriboga Group, Northstar Pacific, Rajawali Group, General Atlantic, Siloam, GIC Special Investments, Nippon Indosari, LG Intl. Corporation, Dharma Satya Nusantara.