On the other day, I was invited by Entrepreneur Development Cell of Osmania University to address a session on “ERP as a business opportunity” to the participants of Entrepreneur Development Programme.
Mostly, I take pleasure in addressing such sessions. I consider it as an excellent platform to share my experience so that some one may benefit in the process.
Notwithstanding the other traits and requirements that a prospective entrepreneur should possess, I would like to highlight here some important factors that pave way to take up ERP as a business opportunity.
(1) The first requirements from an entrepreneur:
- He should have appreciable experience in the ERP line (SAP / Oracle Apps. /Microsoft Dynamics or any other ERP flavor).
- Otherwise, he should partner with an individual who has similar expertise
- Lastly, he should be starting the enterprise with sound financial background so that he could endure the hassles of technical management, business management and sustenance till he achieve encouraging results.
(2) ERP in itself is a multifarious business opportunity. A single organisation generally can’t provide the entire service range in ERP technology. The opportunities that exist in ERP could be classified as:
- Software reseller in ERP like SAP Value Added Reseller (VAR)
- Implementation of ERP
- Support and maintenance of ERP
- Development of ERP
- Consulting in ERP
- Training & Education in ERP
You, as a first time entrepreneur, could choose any single or combinational opportunities from the above. For example Consulting and Training & Education in ERP is a complementing business opportunity. Similarly, VAR & Implementation could be clubbed as one business objective. Development is entirely a different discussion. Otherwise, you could be an exclusive ERP support provider.
(3) The other important decision should be determining the focused industry / business sector for which you will be providing the ERP services. Your or your team’s technical expertise and experience should determine the focus sector. You may serve several sectors too, depending on your and your team’s expertise. It is not right to propose services for various or all sectors based on borrowed expertise. A true expertise in SAP like ERP is not readily available.
(4) The next important thing should be deciding on the costing of services. As a first time entrepreneur or as a new entrant in ERP services, you should be able to compete with other existing players in terms of expertise, cost benefits, service quality, and so. Every metric related to this will reflect on the end-user price that you extend. You should be able to give reduced TCO to the client.
So among other things, you should consider the following elements while you decide on the costing of your services. These elements are neither exclusive nor conclusive. The actual costing could be decided once we have the clarity of service range, sectorial focus, expertise availability, geographical issue and other factors.
- Cost of marketing and lead closing efforts
- Cost of change management efforts (business process analysis, determination and deployment, transition of data, integration of data, interoperability factors with the existing legacy applications)
- Cost of software licenses
- Cost of infrastructure (if it is turnkey solution where you need to upgrade the IT infrastructure of the organisation to match the ERP deployment requirement)
- Cost of implementation (resources, customization, going live)
- Cost of support
- Cost of end-user training
- Cost of AMC (if not included in the software license cost)
- Resource mobilization cost (logistics, diversion of resources, borrowing SME expertise …..)
- Management cost
- Cost of Risk management and mitigation
- Cost of capital (initial budget allocation, payment terms, currency fluctuations in case of foreign client …. will influence the cost of capital)
- Other overheads and incidentals
(5) Marketing strategy. The prospective customer database, customer geography, market competition, service delivery gaps in the existing market, the cost effectiveness that you could provide would be some considerations to design an effective marketing strategy. The strategy should be short-term and long-term while combining the brand positioning effort. This should also address developing professional marketing collateral. Based on the functional hierarchy there could be a separate Brand Management team or one brand development expert associated in the marketing strategy.
(6) Delivery strategy. It is essential to stratatize service delivery. Whatever technical strengths, cost effectiveness and customer relations that you extend, if you don’t deliver the committed service to the client, the entire efforts and goodwill go in vain. Delivery strategy is to be designed with the help of technical, financial, sales and operational team. The comprehensiveness of delivery strategy depends on the service scope and corporate hierarchy that an organisation has in place. The single objective of delivery strategy is to extend the committed services to the customer.
(7) Process excellence in the organisation. It is essential that you follow functional and operational process excellence in the entire organisation. This will automatically pave way for effective monitoring, better control, transparency and accountability leading to corporate excellence. It in turn will create confidence in the stakeholders.
In this direction, you yourself could go for ERP implementation in the organisation while following ISO, Six Sigma, CMM or other any other process maturity provisions. In absence of any of these things, you should at least have clear methodology defined for each organizational function. That is a set of formats, proformas, check lists, report structure and likes for every department.
(8) Project Management team. It is imperative that you designate a special team of two members or more (depending on the size of your organization) who are specialized in project management as per global standards. This team will help in right guidance in planning and managing a given project. This team will be able to help the ERP team in the right direction for effective project delivery. This team will also act as a brand ambassador for the professional service delivery by the organisation. The EPR project manager will be one of the members in the team.
(9) Research & Development. I strongly recommend for every organisation irrespective its size and age to have R&D; function even if it is one member department. This could help the organisation in extending the best practices, process excellence, subject matter expertise, risk mitigation measures, business research, market economi
cs, matured documentation and so. The team should always work in coordination with the other departments concerned. The cardinal objective of this team is to act as a supporting mechanism in delivering ‘service excellence’ to the customer.
I suppose the above are some of the measures to take up ERP as a Business Opportunity.
I will provide more inputs to the desired aspirant. Invite your feedback.