What's more, these costs need to be finely managed. A missed payment here or there isn't as simple as making a back payment. In many cases, taxes and operating fees need to be reimbursed immediately or else steeper fines and additional interest will be added to what companies already owe. Consequently, it's extremely important for businesses to track every dollar and cent that they're obligated to pay.

Enterprise resource planning can help with this immensely. Besides helping to account for all other sorts of company costs, ERP systems can track tax payments, operating fees levied by local governments and other payments. In fact, business software suites of applications are powerful enough to treat these costs as the price of doing business and can radically simplify the entire process. Here are some examples of how they can help.

Compliance
Most companies are going to spend their entire existences working within the bounds of the law, but others need to be prepared for minor slip-ups when it comes to government regulation. For instance, companies that deal with hazardous chemicals should take every precaution to avoid spills or mishandling, but pretending that accidents will never happen is a mistake. Therefore, penalties and payments should be worked into any accounting scheme, and enterprise resource planning software should be used to help monitor such costs.

Digital rights
ERP systems and other kinds of expansive commercial software aren't simply purchased on CDs and installed on computers. Rather, they're planned out and designed closely with software vendors who lease the rights to use programs on many different computers. These rights can become expensive and often need to be renewed, so be sure to use an ERP system to track the costs associated with them.

Fees
Operating costs are determined by the prices of materials and services that companies need to pay to make whatever goods they sell to customers and clients. However, they might not account for things like fees for the use of facilities or equipment, especially if those uses are irregular and infrequent. Use ERP systems to track such things as if they were necessary resources to keep operations running smoothly.

The technology is making even further leaps and bounds thanks to a better understanding of how these kinds of applications function. For example, the proportion of businesses that go over budget is shrinking mightily. According to Panorama 360 ERP, the number of companies that went over budget with their ERP implementations in 2011 was around 56 percent. This is significantly down from the previous year's mark of 74, representing a significant decline.

It should be pointed out that going over budget doesn't necessarily mean that a company didn't want to spend more money. In many cases, it may be that organizations simply decided to add more functionality to their application suites while the process of planning and implementation was underway. Nevertheless, any budgetary reductions that can be made should, so consider the following ways to stay within one's pre-ordained economic constraints.

Greater IT spending
Lots of companies that decide to invest in enterprise resource planning do so having never really used a great deal of technology before. Therefore, when they begin to plan and install any kind of business software, they run the risk of letting their inexperience cloud their judgement and keep them from understanding how to go about embracing new technology. Make sure that IT departments are properly funded and supported (or exist, at the very least) to improve business software adoption.

Estimating better
The phenomenon of going over one's budget for particular products might seem disastrous, but it may simply signal that a hard budget wasn't agreed upon at the outset of a project. Avoid this by working closely with a software vendor to determine the concrete needs a company has.

Tightly managed scopes
The surest way for an ERP budget to harmfully balloon in size is for the scope and focus of it to spiral out of control. Companies should make lists of things that need to be improved before an implementation even begins and content themselves with improvements in those fields. When an ERP system has been completed and existing issues addressed, other functions and services can be bootstrapped onto existing business software suites of applications.

Sage enforces its strategy to win mid-market customers thanks to worldwide products like Sage CRM or Sage ERP X3, formerly known as Adonix X3 that was acquired in 2005. Since 2010, Sage ERP X3 has been carefully placed on the German market and is positioned as a competitor of Microsoft Dynamics AX and SAP ERP.

Over 3,300 customers with 180,000 users worldwide currently use the products that can be bought directly or from Sage’s 220 partners – with a total of 1,800 consultants worldwide. Sage targets companies with more than 200 employees, who’s ERP solutions are either obsolete, aging solutions or that are looking for alternative systems for their subsidiaries.

Other positives are that Sage ERP X3 is available in 10 languages and 14 legislations with customers in 55 countries. This year Sage will launch versions of the software dedicated to specific industries. A Cloud offering is planned for next year in the V7 roadmap.

It is likely that the biggest challenge for Sage is to increase the number of qualified distributors and trained consultants. Sage wants to increase that number to compete with SAP ERP and Microsoft Dynamics AX.

Customer Relationship Management

Customer Relationship Management starts with the initial contact and is often first tracked in a Contact Relationship Management (CRM) system or module. Basics such as name, address, telephone, and other contact information is recorded and tracked in anticipation of the initial sale. In my experience, Customer Relationship Management goes far beyond that initial contact. Once the initial contact is complete there may be payment terms, contracts, or other agreements to track. Favorite items, shipping preferences, or special instructions may also be vital to the relationship. An effective ERP system accommodates all of this information and pulls it together in a centralized fashion along with purchasing patterns, customer service information, information on returns and credit history.

Supplier Relationship Management

Managing the supplier relationship is larger than it seems at first glance. As anyone who has ever done it will tell you, purchasing is far more complex than simply placing an order and receiving goods. In today’s economy businesses like yours need to take advantage of the best pricing, delivery, and incentives available from various vendors. Additionally, lead times, quality control and payment terms such as EDI must be considered. Vendor performance and accuracy ratings are critical to the overall success of your business. An ERP system integrated across purchasing, receiving, quality monitoring, and disbursements with electronic funds transfer capabilities simplifies these processes and provides overview or detailed analysis allowing you to manage all aspects of the supplier relationship.

Sales and Order Fulfillment

Whether your business is a heavy manufacturer from raw material to finished goods, a light assembly plant, or solely distribution, you require some level of sales and order fulfillment. Included in the mix could be processes as complex as engineering and product development, shop floor control, or manufacture-to-order. Certainly every type of operation requires the ability to process orders either from a web site or through a sales force. Inventory and stock levels must be managed. Quality controls have to be in place. Returns are a reality of life. Physical distribution, packaging and tracking, and logistics must be scheduled and monitored. All of these activities can and should be tracked and monitored by the ERP system. Closely integrated modules, business intelligence views, and reports provide a comprehensive view of material flows, stock statuses, work order progress, delivery dates, and logistics performance – making the management of Sales and Order fulfillment seamless and convenient.

Performance Management

Overarching every aspect of your business is performance management. Performance management answers the bottom line questions:

• Are our costs within expected norms?
• Are our profit margins sufficient?
• Do our production lines operate at peak efficiency?
• Is our productivity adequate?
• Where can our quality be improved?
• Is our customer satisfaction rating where we want it to be?
• Is our workforce fairly compensated and sufficiently prepared to perform their functions?

Once again, the ERP system provides the means to determine these critical answers.

• Costing calculations from production operations or purchases are pulled together with sales results to allow profit calculations.
• Scheduling and productivity reports and analysis provide insight to efficiencies.
• Quality review and returns analysis provide data to help identify possible areas where quality might need improvement.
• Customer relationship management and returns analysis offer clues as to customer satisfaction issues.
• HRMS provides compensation and benefit management, plus training and advancement planning.
• Financial Reporting assesses the overall fiscal performance of the enterprise.

The implementation of an ERP system provides the structure and tools to coordinate, monitor, and manage a successful Supply Chain Management enterprise.

Many of these variables aren’t things that are going to derail an entire implementation. Nevertheless, they may be the sorts of nagging issues that cause planners to wish that they had fixed them in the planning stages rather than leave them for the future. Consider making the following tweaks to an ERP system well before it goes live to avoid minor headaches in the future.

Standardization
There are all kinds of horror stories about poorly standardized systems, both in the private and public sector. For example, a Mars orbiter failed to land properly and was subsequently damaged on the Red Planet simply because one team responsible for the device’s operation used metric units and the other used traditional English measurements. This is a very extreme example, but it illustrates the importance of making sure that the right systems are being used. Additionally, units should be clearly articulated and marked so that grams are never mistaken for kilograms and liters never recorded when they’re obviously milliliters.

End users
Most implementations will see a lot of time and effort going into preparations for eventual users. Training programs often begin well before systems are even finished, and the input of end users can be invaluable when it comes to ensuring that ERP applications can be quickly and easily used by employees. However, the problem that often arises is knowing who the end users will ultimately be. Obviously some of them are going to be the workers at a particular company, but there could be external collaborators and even customers who will eventually need access to company data on occasion. Be sure to take into account a particular enterprise’s practices to determine if this will be the case.

Process documentation
Companies that create ERP systems likely want to be familiar with the inner workings of a suite of applications, but what might be more important in the future is the documentation of the actual planning and creation of an ERP system. If upgrades are necessary in the future, the path that a system took when being built can be very valuable for improving functions and connecting to other types of business software.

The problem: Our tactical approach to our finances verses strategic is causing poor insight into our cash flow . i.e. using out of date spreadsheets to understand our expenses, income, and budget.

“Tactical: Involving or pertaining to actions, ends, or means that are immediate or short-term in duration, and/or lesser in importance or magnitude, than those of a strategy or a larger purpose.”

The solution: Breaking my husband’s addiction to his much beloved manual spreadsheets. And build a strategy that provides real-time visibility into our cash flow, as well as track metrics that will allow for future investments and eventually the illusive retirement in style. Oh and the catch point, the process must be efficient (time is money) and repeatable by me (self-confessed math phobic and manual spreadsheet labor phobic).

The 12-step process that we created:

• Step 1 – We admitted we were powerless over our addiction – that our finances had become unmanageable through manual spreadsheets
• Step 2 – We came to believe that a process greater than spreadsheets is most likely available  somewhere and could restore us to financial sanity
• Step 3 – We must make a searching and fearless inventory of spreadsheets and methods we were using today to manage our finances, as well as create a list of key performance indicators and metrics that should be tracked real-time
• Step 4 – Turn to the internet and other resources to find an solution that could help us automate the above metrics
• Step 5 – Admitted to ourselves (my husband to me, mostly) the exact nature and details of our wrongs (and rights!), and outline a process to implement utilize newly acquired software to get the results we outlined in step 3.

Alright, so we agreed on only using 5 steps to break the spreadsheet addiction. The first 2 steps may seem unimportant; however, admitting the problem and believing change is possible is necessary to the process. Your employees need to agree that change is necessary, or they will simply avoid a new process and resort back to their scandalous spreadsheet addiction. It took discussing the pain points to make them real.  We had to agree that:

1. What we are doing today is not working or helping us with success.
2. The time involved in what we are doing today is unacceptable. It may take time to investigate change and learn a new solution, but the result will be worth it for all of us.
3. We wanted to begin with the end in mind and have a clear vision of what a successful solution looked like, so we could agree the ROI was worth it and measure the result.

Next week we tackle step 3, defining our vision of success, as well as key performance indicators that we want to track.  Perhaps you are not sure where to start? It’s alright, many of us are not trained to recognize the symptoms of addiction. You can find more information on signs to look for in your company in this Growing Pains whitepaper .Getting agreement across departments that change is needed is a key step to a successful ERP implementation strategy.  Which department in your company is the most dependent on manual processes and spreadsheets? How much are manual processes costing your business? And share stories or resources that have helped you automate key areas of your business…

However, before planning a detailed addition to a company’s entire set of operations, it’s very important to actually understand the structure behind a business’ operations. The process of analyzing what a company does, how it does so and what resources are consumed and produced is called business blueprinting, and it must be accomplished before any such system is laid out. Here are some important areas to focus on when engaging in business blueprinting.

End-to-end processes
For a company to have a firm understanding of its own internal machinations, it must be able to say with confidence when and where certain items or goods enter a system and where they leave. For example, a production facility that uses large quantities should be able to account for a pound of bauxite as it winds its way from raw material to component in a product. Additionally, the cost of every step along the way should be knowable and recordable.

IT environments
After years of existence, many companies will likely have added information technology resources and professionals in a haphazard fashion. That’s because new devices and processes are constantly being developed, making it hard for an overarching structure to have been created or to even have emerged organically. Blueprint all of the software and hardware that a company has so that planners can see just how all the pieces fit together and more important, how much they all cost when considered as a whole.

Returns on investment
Businesses spend a lot of time thinking about returns on investments, but it is often the case that their maintenance can fall by the wayside. For example, the addition of a new piece of machinery might have been expected (or hoped) to have produced a positive return on investment after its purchase. However, the adoption of other machinery or the use of altered processes might have muddied a company’s ability to actually discern whether the machinery was worth procuring. Perform honest ROI calculations on all operations before putting more software to the test.

We’d like to thank Nick Castellina for this guest blog post. Nick is a Research Associate in the Aberdeen Group’s Enterprise Applications practice. He joined Aberdeen in 2010, and since then he has been involved with research pertaining to the capabilities that manufacturers, as well as all other small and medium enterprises, are implementing along with the benefits that these businesses are seeing from their Enterprise Resource Planning (ERP) solutions. He is currently involved with a series of studies pertaining to the recently increased willingness of businesses to consider Software as a Service (SaaS) as a deployment method for their ERP solutions.

Late last week I attended the Sage ERP X3 Global Sales Convention in Paris, France. Although it was a whirlwind trip from here in Boston across the sea in less than 36 hours, I was able to come back with several key takeaways. First, I was struck by the enthusiasm of Sage and its channel partners about Sage ERP X3 and its potential to help mid-market organizations to run their business. One of the reasons Sage X3 is successful in serving the mid-market is because Sage is putting a real emphasis on the usability of its software. Aberdeen’s ERP in SME 2011: Setting the Stage for Growth found that “ease of use” is the second leading criteria for SMEs when choosing an ERP. From this standpoint, Sage is arming its partners with a product that will appeal to businesses that are taking their first steps into the world of ERP.

But what I found even more interesting was a presentation given to us analysts from those in charge of strategy for Sage ERP X3 in various regions around the world. We heard from leaders from not only areas such as North America and Europe, but expanding territories such as South Africa. For ERP vendors to be really successful in new territories it is important to do more than simply translate the software to a new language. In the report referenced above, functionality was the　top selection criteria for SMEs when choosing ERP.

For example, in countries such as France, where tax and reporting laws vary greatly from region to region, Sage has been successful by ensuring its software features the functionality needed to fully run a business.  As Aberdeen continues to expand its global research, I am going to be interested in hearing more from Sage’s customers in emerging markets such as South Africa.

I really enjoyed my brief trip to Paris last week, and am excited to see more from Sage as they roll out the future roadmap we were presented with.

For more from Nick Castellina, take a look at his SaaS and Cloud ERP Trends, Observations and Performance 2011.

The pre-implementation period may be almost as important as the period that follows. That’s because it will determine the essential course of the business software’s development. Make sure to come to some essential conclusions regarding an ERP system’s size and shape before implementation begins. Otherwise, companies will find themselves trying to answer fundamental questions when they should be dealing with complicated minutiae instead.

Tiers
The organization of an ERP system can be very different from one business to another, and this has to do with the fact that there are different set-ups and tiers available. Decide if a company will use an overarching application for all affairs (better for a small organization) or if there is a pressing need for an entire suite of applications for different divisions or facilities within a company.

Sizes
The extent of an ERP suite of applications is something that needs to be laid out before an implementation begins. Some organizations decide they want to fundamentally alter how their business operations are conducted, while others might simply wish to improve upon some existing processes. Decide which is more appealing so that the ERP suite can better be customized.

Market
It’s important to remember enterprise resource planning can fundamentally alter a company’s market position. Some groups find themselves better positioned to take over additional niches because of the improved functionality that ERP systems grant them, while others are better poised to expand geographically. Pick one over the other well before a software vendor is selected. One’s mind may be changed, but the thinking behind this determination will likely help an implementation down the road.

Functions
The single most important question for a planner to ask oneself is: what will an ERP system actually do? In a very general sense, all of them will record information and provide detailed records of activity. However, more specific probing is necessary, and it must be germane to a particular company. For example, “make communication between the Akron and Sugar Land facilities” is a much better answer to have conceived of before implementation than, “help departments run better.”

The world of software is changing fast. Here are some of my predictions for what to expect in 2012 relating to ERP software:

1. Cloud is comfortable. Businesses will get increasingly more comfortable with having their ERP data reside “in the cloud.” However, vendors will continue to have to work on gaining the trust by fulfilling uptime, security, and service level promises. 　

2. More choice, better fit. Businesses will have more choice in how to deploy their ERP software, with options including on-premises deployment, online solutions offered by the vendors, and hosting software with independent datacenters or platform-as-a-service providers. Depending on the available budget, internal IT resources, and functional requirements,　businesses will have more choice in finding a deployment option that fits their needs.

3. Consumerization of software pricing. How ERP software is paid for will start looking a lot more like paying for consumer goods or services. Businesses will be able to not only purchase the software outright, but they will be offered a variety of options including subscription pricing, easy financing terms, pay-as-you-go, or pay-per-transaction. One thing is sure: there will be a pricing option that’s right for everyone’s wallet.

4. Mobile makes ERP available to the masses. The wealth of information stored in ERP systems will be made available to a broad range of users through mobile and web access. Executives, travelling sales reps, and service personnel will be able to view and update information more easily thanks to the smartphone and tablet revolution.

5. Electronic payments become pervasive. Money is the lifeblood of a business. Electronic payments will become a common choice for collecting from your customers and paying your vendors and employees. Seamless integration with ERP will dramatically reduce the need to manually enter and process payments.

6. Googlization of support and sales. Users that need answers about using or buying ERP software will have increased access to instant information through Google searches or by asking peers in online communities as 　ERP vendors continue to share knowledge about their software more transparently through open access to knowledge bases, active participation in communities, and by creating and sharing videos and other interactive learning content.

7. Hybrid will be hip. Businesses with existing ERP software will increasingly evolve to the cloud through hybrid solutions– where on-premises software is connected to cloud-based services — allowing businesses to reap the benefits of the cloud without any disruption. Look for web-based sales tax calculation services, tax e-filing services, and cost effective e-marketing services to lead the way to mainstream adoption of cloud services.

8. Long live integrated CRM. The lines between CRM and ERP applications will continue to blur. Seamless user interface integration will provide front office employees in sales, marketing and service easy access to information, and will make CRM integrated with ERP the preferred choice for small and medium businesses.

9. Businesses will “get” with BI. Business Intelligence (BI) will become even more critical for businesses to turn ERP data into actionable information. Microsoft Excel will continue to be the most popular BI tool as it is a tool that most business managers already know how to use.

Share your thoughts and predictions using the options below.