On May 26th Smart ERP Projects LLC took part in the ERP Day conference, which is dedicated to ERP solutions development trends and an exchange of experience applying popular solutions in Russia, and organised by Russian analytical agency TAdviser.
The event was made interesting by the exchange of opinions between independent experts, IT company employees and end-users of the different ERP solutions available on the market
Based on this dialogue, our experts drew the following conclusions:
1. Frequent changes in legislation are still common in Russia and CIS-states, so ERP systems have to be flexible and quickly adjustable. Therefore, most clients expect ERP solution vendors to independently integrate all changes in legislation into the product within a specified timescale. In the opinion of most of the participants at the event, 1C company manages this task with optimal update costs and response times to changes (the CEO of 1C company, B. G. Nuraliev is the head of the working group of the Agency for strategic initiatives under the project “Improvement of Tax Administration”, a member of the public council for the Federal Tax Service, a member of the advisory board of the Ministry of Telecoms and Mass Communications of the Russian Federation for the development of information technology industries, etc.).
2. During the evolution of the ERP systems for CIS-states companies it was recognised that the systems’ focus has shifted from accounting to managerial functions, in parallel with the replacement of most of the manual user actions in the ERP system by automation and integrated solutions for the collection and input of data from various devices.
3. With the spotlight on the functionality of ERP solutions, along with traditional tasks such as transaction-level and general resource planning, more and more of ERP’s clients expect to see not just the information supporting their business process performance, but its automated management – right through to ensuring that automated solutions interact directly with the company via ERP solution functions on the one hand, and automatically with suppliers on the other. This approach is still new to CIS-states and was first adopted by enterprises in highly competitive markets. The automated service allows you to minimise personnel costs, and also provides an elastic form of reaction to changes in client demands that is especially important in changing economic conditions.
4. Comparing actual installation experiences, it was found that installations of ERP solutions from Western vendors are still accompanied by either a parallel installation of local 1C solutions for accounting, or an upgrade of the company’s existing 1C solutions.
This is because Western ERP solutions are not fully compliant with some aspects of Russian business processes and need significant customisation. Additionally, solutions based on 1C functionality adjustments need considerable man-hours to implement them. Based on a comparison of real user experiences of SAP, MS Axapta and 1C we can conclude that the differences between these solutions in terms of customisation lie in the purpose and the nature of the changes required.
As a rule, solutions developed by Western vendors are not flexible enough and require simplification or the extension of user rights, and the adjustment of settings to satisfy local legislative requirements. In turn, 1C-based solutions are flexible and fully compliant with legislative requirements, but during installation the company accounting process will need to be formalised and the range of user action options in the system limited.
The second reason for the extensive use of 1C solutions alongside Western ERP systems is the complexity of implementation and user training in different regions, and the lack of availability of consultants to support foreign systems. It is clear that national vendor 1C has a much larger network of regional partners to carry out installations, and covers the entire territory of the CIS-states. Currently integrating of Western ERP solutions and 1C is not new and helps to build an effective data flow, using the accounting functions in both systems.
5. According to reports from clients using different solutions, the costs of the professional installation and maintenance of ERP systems from all vendors in the central part of Russia are nearly the same. However, 1C-based ERP solutions still have a considerable cost advantage – including the cost of licenses for installation in the “on-premises” mode together with a software update subscription, and the option of renting cloud-based 1C modules.
6. Separate attention was given to how best to implement ERP solutions: in-house or using external consultants. Having considered all the opinions and approaches this seemed the most flexible to us: regular maintenance work and small adjustments to the system can be similarly effectively executed both by in-house experts and external sources. However it is advisable to source external consultants whose methods and technologies correspond best with your organisational culture and processes, so as to achieve essential breakthroughs. As a rule, local consultants are ready to tackle local legislation and the automation of both accounting and tax accounting, leaving the project team free to apply themselves to the objectives of the main project.
7. Comparing different solutions “through the customer’s eyes”, the participants noted that there are significant differences in the criteria for choosing ERP solutions to suit companies of different sizes. However, all the known vendors are trying to work with all customer segments simultaneously, which often causes misunderstanding and subsequent difficulties with implementation.
Our experts were able to draw the following conclusions:
· Where the organisation does not yet need really large amounts of data to be processed and is not impacted on by the risk of system performance limits, the implementation of “heavy” systems will not give any tangible advantages over solutions for medium to large enterprises. On the contrary, there may be significant costs associated with modifying and subsequently developing the solution.
· Where the company operates in a highly competitive market, a choice should be made in favour of an inexpensive and flexible system that allows for the modification of business processes quickly and inexpensively. The system should also be easily deployed in all enterprise’s departments without geographical/functional limitation, etc. It will have the key competitive advantage over other market players.
· As the business grows, “anchoring” the most typical functions (e.g. corporate financial accounting) may be done by installing a “heavy system”, however, a more cost-effective and flexible system can still be used at the operational level.
At the end of this review we offer both Russian and foreign companies an opportunity to find out more about the options given by our flagship 1C-based solutions – the national standard of accounting in CIS-states – ERP 2.0, as well as how to approach integrating this solution with Western systems.
Visit our website http://www.up2erp.today/ or contact us by phone or email.
We will be happy to answer your questions!