ERP - The concern of 'unknown people'

The term 'ERP' has been penetrating into business life (DN) but there are still many people who understand it vaguely. From the practice of an IT consultant, the author has recorded and answered some of the concerns that customers often ask.

What is ERP?

Businesses may have seen presentations on some ERP solutions at home and abroad, but most of this little time is used by PM to introduce the 'strengths' of the solution they will provide. Businesses don't even understand what 'ERP is', so most don't understand what the vendor wants to present. So what is ERP? Why does ERP mean so much to businesses that businesses have to spend a large amount of money to buy ERP?

There are many different ways to understand ERP concepts, here I will discuss in the simplest way you can imagine about ERP.

Source: illustrations.fr ERP is software (PM) on computers that automate the work of staff of enterprises in order to improve operational efficiency and comprehensive management efficiency of enterprises. In other words, ERP is PM serving the computerization of the whole enterprise. This is just an 'easy to understand' way about the ERP concept. In fact, the concept of ERP according to international standards is limited to the planning of resources and resources including human resources (human), physical resources (assets, equipment .) and resources (talents) main). The workload in planning and using resources of enterprises accounts for a large part of the entire business activities, so ERP is a very large PM system. Many ERP solutions only perform functions in this scope. However, in fact, the ERP concept has been greatly expanded in many foreign and internal ERP solutions. For example, CRM module (customer relationship management) is also integrated in many international ERP solutions, although CRM is a different concept than ERP. In terms of business processes of enterprises, CRM manages the first stage in the main business operation process of enterprises. It is the job of building a customer system to produce results - sales contracts and this is the starting point of all the next activities of the enterprise (purchase, production .) so if the module This is integrated within the ERP system, which is understandable. In fact, the management needs of enterprises are 'extremely rich' and not limited to the scope of resource planning. For example: Joint stock companies have a great need for PM modules 'Stock management and shareholders' and this module has a close relationship with the accounting module but not in the ERP concept. If we understand ERP in terms of 'overall' PM management, this module should also be integrated into the components of the ERP system.

In short, you should only understand the ERP concept in the simplest way: ERP is the enterprise management overall PM, in which the resource planning is the basic part. What is most important in the operation of the enterprise is managed by ERP, and for each business, each enterprise, the modular architecture or the function of the ERP system can be very different.

The fundamental difference of ERP compared to maintaining many discrete management PM

The most fundamental distinction of ERP application compared to many other discrete management PMs (such as PM accounting, human resource management, warranty management .) is integration. ERP is just a single PM and its modules perform the same functions as discrete management PMs, but these modules also do more than that in an integrated environment. Integrity of ERP systems is called 'organic totality' because modules have a close relationship with each other as parts of our bodies. Because of this fundamental difference, our approach to building ERP systems and our understanding of PM ERP is also different compared to conventional PM understanding. ERP is PM that simulates and manages business activities according to the process.

How to organize personnel according to departments and departments of all businesses is now the way to organize personnel according to each group that enterprises consider to be the best for easy operation and management, serving the objectives of completing tasks business production of enterprises. How to organize by room, this board is also very different for each enterprise, even for businesses operating in the same industry. The concept of 'process' in the operation of enterprises is understood as follows: if the organizational structure according to the departments of enterprises is shown vertically, the steps of the process are organized horizontally. An operational process of an enterprise consists of many steps, each step of performing a certain function, each step has an information system or input data and results in an information system or output data. The input of this step is the output of the previous step; The output of this step is also the input of the next step . It is easy to recognize that a business process, especially the main processes, can involve many departments. of enterprises, that is, for the operation process to take the final steps, it is necessary to have personnel participation from many departments. Discrete management boards often serve the operation of a specific department (such as sales department, accounting department, human resources department .) and as an 'oasis' for departments of departments other. Transferring information from room, department to room, other departments is done manually (text transfer, file copy .) with low productivity and not controlled. ERP modules also serve departments, but more than that, it addresses the relationship between departments when simulating the work of staff according to the process. Information is automatically rotated between steps of the process and is strictly controlled. PM ERP reports can get information from multiple steps in the process and even from many different processes. This approach creates high productivity and effective information management for businesses.

When building an ISO quality management system, you will see the most obvious processes. For each enterprise, processes are divided into the main business processes and auxiliary processes. Business processes are the first to be simulated on ERP systems. One thing to say is that many Vietnamese enterprises, even though they have been operating for many years, still do not have documents on their operating processes and these documents are only built with the help of companies. consulting to build ISO quality management system.

Why is the price of PM ERP systems high?

The trend of ERP implementation of enterprises may actually begin in 2007, when Vietnam officially joined WTO. Those who are brave pioneers will have a competitive advantage over their competitors and whether they succeed or not, in return, businesses will gain the necessary experience. It is important to think that the slower firms will likely pay the price for this delay.

For software companies, ERP system construction is much more difficult than single PMs. The biggest value and also the most difficult thing for PM companies is to build integration on software. ERP both serves the detailed work of each employee, while solving the overall relationship of all departments and employees in the enterprise. The database of ERP will be very large and thereby create more difficulties for PM companies (to solve the problem of storage and processing speed of the program).

Another difficulty is to build PM ERP, PM companies need not only knowledge and skills in the field of informatics but also need to be knowledgeable about the operation of enterprises in many different fields and industries. In addition, a good ERP PM only decides less than 50% of the success of an ERP deployment project for businesses. Subjective factors of each enterprise (such as awareness and determination of management board, management system, staff level .) decide over 50% of the success of the project. ERP is a PM system with a wide management scope throughout the enterprise, so the project implementation time can be very long (usually from 6 months to several years). All of the above factors push PM's expenses very high in order to complete the project implementation for businesses. Therefore, the prices of ERP systems are much higher than the single PM equipment combined.

Business concerns

Many questions expressed the concern of enterprises on the threshold of 'computerization of enterprise management', specifically, should ERP systems be deployed? And if implemented, how to choose the solution? Once businesses do not understand the nature of the ERP system, as well as what businesses will gain when equipping ERP systems, enterprises cannot decide on ERP implementation. Many businesses only vaguely 'need to believe in enterprise now,' or before the trend of integration and WTO accession, enterprises are very eager to upgrade their management system by 'buying PM ERP as quickly as possible!' . But ERP is really a complex system, having many abstract concepts that can not be easily understood and decided to deploy. In fact, Vietnamese enterprises currently have more demand for consulting services than the immediate implementation of ERP systems. However, 'supply' is much lower than 'demand' because there are not many professional companies operating in this field of consultancy. However, businesses can consult directly with the ERP solution providers themselves.

One more thing that makes businesses very anxious is that there are not many enterprises successfully deploying ERP in Vietnam so that other enterprises can take the role of 'mirror' and 'follow'. They just heard that ERP is something 'very complicated' and there are more failed ERP deployment projects than success. Therefore, at the present time, any Vietnamese enterprises that decide to implement ERP will be really pioneers and very 'brave'. This also happened with previous PM accounting. And businesses pioneering in applying PM accounting are successful businesses. Everything has its price!

Nguyen Van Khuong ( EFFECT Company )