Ultimate ERP Implementation Guide for SMEs

Updated: Mar 5, 2021

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.

Table of contents

A. Is ERP Right for You?

  1. What is ERP?

  2. Types of ERP

  3. ERP Modules

  4. Why Do I Need it?

  5. Is ERP Worth it?

B. How to Choose The Right ERP?

  1. ERP Comparison

  2. Choosing a Vendor

  3. Choosing a Plan

C. Implementation

  1. Most Common Implementation Failure

  2. Case Studies How to Avoid Them

D. About Us

  1. Who We Are

  2. Our Product

  3. Business Consulting

  4. Consulting Team

  5. Contact Us

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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.

  • On-Premise ERP 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.

  • Hybrid ERP 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 Modules

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

  • Inventory 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

  • Purchasing/Procurement 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 HRIS module covers all the functions associated with your talent including personnel management, personnel task, organizational management, and payroll

  • CRM 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.

Table 1. Actual cost and expected saving (in Millions Rupiah - IDR)

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?

ERP Comparison

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.

Table 2. Comparison between the best ERP in the world (2020)

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.

  1. 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

  2. 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