By Ian M. Marlow
March 4, 2015
An ERP is an enterprise resource planning system—a computing ecosystem that plays a large role in the operations of many types of companies, including real estate and property management firms. As we discussed in a previous post, this system-wide application represents the homogeneous balance between all your systems and how they interact with each other.
The array of available applications create more efficient operations and can help improve profitability; when properly sourced and implemented, they integrate with your accounting/general ledger system for a broader, more cohesive solution.
If your organization is considering implementing an ERP system, it’s a great time to examine and evaluate your internal processes and computing and operational needs; this will help you and your IT services provider make smart decisions about your ERP system’s design. These 10 factors are crucial considerations during the planning phase.
1. Understand what an ERP system is—and what it is not. Contrary to a popular misconception, an ERP system is not a general ledger system. Rather, it is the holistic grouping of many independent systems and modules working together that provide all your services across the board. In real estate, an ERP could include the general ledger program, automated payables and receivables, a work order system, payroll, a module for printing rent bills and more. You can read more here.
2. Understand your company’s existing internal process and make sure it is optimized. Without efficiencies already built into your physical process, a new system will not work as anticipated—nor will it resolve your inherent problems. A new ERP system will be designed to work with the more efficient system you create so it’s important to review your processes to ensure they’re optimized.
3. The ERP system must be a cultural fit for your organization. Different systems can be tailored to the culture of an organization and its users. Some people are more about back-end technology while others are more about the look and feel of a system. During your evaluation process, it’s important that your users get to experience each product to determine comfort level with various modules.
4. Ascertain your data’s integrity. If the quality of the data in your old system is inaccurate, it will remain so in the new one. It makes no sense to invest in designing and implementing an ERP system, only to feed in questionable information. Therefore, determine which data sets are reliable and which are not in advance, and plan a remediation for those that cause concern.
For example, in the commercial real estate realm, lease abstracting information is often a problem. If you are not comfortable with your lease abstracts, now is the time to plan to redo them so the ERP you eventually put into place delivers as expected.
5. Know which functions must be real time and which can be batch. It’s important to determine and understand the frequency of the various data going through your system. For instance, certain entries might be booked on a monthly closing basis (batch) while credit card payment processing in real time is important. These insights will determine your ERP system’s integrations, such as having a live data link that’s always on for real-time transactions or having an export/import module that pulls in data in batch.
6. Self hosted or cloud based? This is very important. In cloud-based, software-as-a-service systems a company’s data is not 100% in their control. Is your company comfortable with having your ERP system hosted inside or outside? What you need and your comfort level around this informs the product choices within your ERP system. Bear in mind that some IT companies will only allow you to have them host it so be sure to ask.
7. Consider realistic timelines. The entire ERP process can take a year for new systems (about 90 days for an upgrade). The process includes discovery/research, system selection, software license negotiations, and ERP design, building and testing; then system migration, implementation and training and creating the necessary documentation. Your team must also verify the data integrity (data validation) and correct any faulty information or operational processes. Therefore, set realistic expectations and start your project early enough.
8. Determine the difference between Day 1 and Day 2 items. Day 1 items are those programs that absolutely must be running the day the system goes live, such as the general ledger, payables and receivables, and core reports you use. Day 2 items can wait, as they provide greater efficiencies but are generally less critical to day-to-day operations. It’s best to determine and break these down in advance, as well as into prioritized milestones as your IT services provider phases in different modules.
9. Plan for quick wins. Determining progress milestones to show users and owners really helps maintain forward momentum on the project.
10. Get corporate buy-in and collaboration to ensure success. An ERP project is long term and expensive with long-range ROI, and requires ownership support to stay on track. It is imperative that corporate executives sponsor the value of the project or it will fail. The CEO, key management, and/or the board of directors must be willing to partner with your IT consultant, who will need information on an ongoing basis in order to keep the project on time and within budget. Remember, your IT consultant is committed to meeting timelines so internal support will make the project a success.
An enterprise resource planning system can do many things well for a company when it’s done right, right from the start. Contact us at email@example.com with any questions you have about planning for your ERP system.