ERP is old hat, an acronym that’s already stodgy. Newer ones such as ERM (enterprise relationship management) and SFA (sales force automation) have been capturing the software industry’s attention.
Yet, no one will argue that ERP, however it’s defined, will be around in some configuration for a long time. The new ERP model being heavily touted by analysts is fast-track ERP. Simply put, it’s an inexpensive ERP system that can be quickly implemented. Equally important, it’s designed to provide optimal efficiency.
But fast-track ERP is not new, either. It’s been around a few years, according to Randy Nelson, managing director of the Wendover Group, an executive search firm specializing in IT in Houston. Prior to launching his headhunting firm, Nelson was an interim CIO hired by companies on a contract basis to install ERP systems.
“It started to ramp up more aggressively in 1999 when the concept was touted by the ERP implementers,” he explained. “SAP, for example, had a fast-track system which it called ASAP or Accelerated SAP. The thinking then was more along the lines of speeding up ERP without offering much customization. In other words, install the system just the way it comes in and change all [the company’s] processes to fit.”
That premise has been greatly refined, yet the major difference between ERP and its older sibling is still preconfiguration. This approach can translate to millions of dollars in savings and incredible efficiencies. It can make a huge difference in a tottering economy that has yet to show signs of a turnaround. It’s a scaleable solution for companies that don’t have the luxury or the budgets to invest in traditional ERP. And speed is of the essence, especially for companies struggling for survival.
A fast-track case in point
Survival wasn’t the motivation for installing fast-track ERP last year for James McCullough, CIO of eCompanyStore, an Alpharetta, GA, company that builds online stores for its customers. It was just smart business for his growing company of 120 employees. No one had to sell the concept of fast-track ERP to McCullough. The former CIO of Delta Airlines remembers what it was like to have a $500 million IT budget and several teams of IT professionals. Money was no object then, and a fast-track ERP implementation was hardly a consideration. But the picture changed when he joined eCompanyStore.
He quickly concluded that fast-track ERP was a direct and easy path to efficiency. It offered smaller businesses with fewer than 5,000 workers (with revenues between $200 million and $500 million) access to applications and functionality similar to what their Fortune 500 counterparts have enjoyed for several years. “Fast-track ERP was the only solution if we intended to grow rapidly,” he said.
“Many companies don’t have well-defined processes or efficient ones,” Nelson added. “So there was a clear marketplace for fast-track ERP.”
Proving the merits of fast-track ERP
The decision to go with fast-track ERP typically originates with the CIO. Making a case for it often means convincing senior management.
“But once the CEO understands its benefits and supports it through the difficult implementation stage, the process moves quickly because he or she has made an investment in making sure it’s done right,” McCullough said.
The size of McCullough’s eCompanyStore made it a prime candidate for fast-track ERP. “Implementing fast-track ERP for a company of 30,000 employees would be a real challenge,” said McCullough. “First, it would mean replacing many systems, bringing in new ones, and then training employees on how to use the new technology. Put it all together, and you’re defeating the purpose of fast-track ERP.”
Fast-track ERP has already proven itself at eCompanyStore. It took about three months to implement. “We kept customization to a minimum and did extensive testing,” McCullough added. “The results are a 10 percent savings on operating costs using the same operating systems, more work being processed with the same staff, and company processes that are more efficient than they were before the new systems were installed.”
Implementation is even faster with a hosted fast-track ERP solution, which is another attractive inducement for small companies. “The whole nine yards is rented and delivered right to your desktop,” said Nelson. “What could make better sense for overworked staffers and executives? It offers extremely integrated applications through different modules—manufacturing, management, distribution, production planning—using one proprietary database.”
Overall, there is no question that the hosted ERP model is attractive for small companies, according to David Alschuler, vice president of business and enterprise application at the Aberdeen Group, an IT research consulting firm in Boston. “It eliminates the issue of establishing a hardware and networking infrastructure,” he said.
The downside, according to Alschuler, is you give up control of your systems. But it does eliminate what Nelson calls “non-value-added jobs,” which is a plus for the organization. “The fast-track ERP eliminates the need for clerical jobs requiring checking and monitoring of costs and spending,” said Nelson. “Many displaced employees are redeployed to other jobs; the less fortunate ones are laid off.”
Factors in your decision
Fast-track ERP doesn’t meet the needs of all industries.
“It’s best for dynamic industries undergoing rapid change,” said Nelson. “At the top of the list are technology industries, followed by retail and services, telecommunications, and, most recently, gas and electric utilities [due to its changing and uncertain regulatory environment].”
Nelson rates the transportation, railroad, and chemical industries as nondynamic.
The last and most crucial question is how to choose the best fast-track ERP provider.
McCullough advises lookingat many fast-track ERP suppliers. “If you think you’re getting a great deal, keep on looking. There might be someone cheaper who offers the same efficiencies and quality of service,” he said. “And don’t skimp on the testing phase. It’s worth the time to make sure there are no bugs and the staff is comfortable with the technology.”
Alschuler recommends finding an expert systems integrator who has proven experience with your industry.
Like any major technology, careful planning is essential. The CIO must cover all bases, McCullough cautioned, so that fast-track ERP meets its expectations.
Is your company a candidate for fast-track ERP?
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