Chapter 7: Configuring your ERP system
Based on the discussions earlier, and the gap analysis conducted, Spindl finds itself ready to begin configuring its ERP system.
Lyn gathers the team, along with Saf and Mel, to discuss their steps moving forward. Configuration, Lyn explains, simply means they’ll be personalizing their ERP system with their own branding, SOPs, and any data gathered and tracked so far. Once this is done, the system will be ready to use, and the old system can be rendered defunct. This step is the culmination of all things that have been done so far:
- Creating goals for the implementation
- Evaluating various ERP systems
- Conducting trials/testing
- Setting up an Agile implementation
- Identifying Key Performance Indicators based on the business goals
- Identifying the Project Champion and the team
- Conducting a gap analysis
All of the above tasks have sufficiently equipped Spindl to proceed with the configuration. However, efficiency is key. Configuration cannot haphazardly take place, Lyn points out. It needs to be systematic and logical.
The first task is to set up basic identifying information about the company. Spindl's logo, name, trademark, etcetera falls under this category.
Branding gives the ERP system a unique identity. Any documents that are stored and printed, sent to third parties, or for interdepartmental communications will all be branded as such if the details are set up.
User roles and permissions
Not everyone is privy to the same information. Employees, based on their departments and their roles, only require access to certain documents. Setting up the right permissions is a great tool to avoid any sort of mismanagement of data. Moreover, it aids the users of the ERP system by keeping their instances decluttered with unnecessary information.
In the case of Spindl, Dex, who runs manufacturing, does not necessarily require access to accounting documents such as the balance sheet or payroll details. On the other hand, Ren from accounting requires access to various documents from the procurements and inventory department to keep track of expenses and assets.
Roles can be highly varied. Setting up the correct permissions for the defined roles can be laborious at first. However, once the ERP system is used regularly, this ensures smooth sailing.
Tax and statutory compliance
Many variables influence tax and statutory compliance (e.g., the industry, country, state/local laws and standards, etc.). Using the accounting tool also makes it much easier to calculate taxes. The goal of configuring tax and statutory nuances in the system itself works toward streamlining business processes. It also significantly lowers the margin of error, since the guidelines/templates that are set will apply to all transactions that take place using the system.
Migrating existing data is the next key step in setting up a business on ERP software. This process is meticulous; it takes all the data currently tracked by the company and puts it into its ERP system. Most ERP systems have data migration tools which make the process easier. As with all steps so far, following a certain plan makes sure that the transition is seamless.
Chart of Accounts
Lyn provides Ren (from accounting*) with templates. First and foremost, they will migrate the *chart of accounts. The reason it takes precedence over other data is that it forms the blueprint of Spindl, an organization. The CoA helps the system (and those using it) to understand:
- What is Spindl worth?
- How much debt has Spindl taken?
- How much profit is Spindl making (and hence paying as taxes)?
- How much is Spindl selling?
- How are Spindl's expenses broken up?
The chart of accounts* is an umbrella term for the names of the *accounts of a company* that are required for accounting and bookkeeping. It also is a way of classifying accounting Entries (mostly based on statutory, such as tax, compliance laws, etc.). The *balance sheet*, *profit and loss statement*, *account heads/ledgers, and other account types all comprise the chart of accounts.
Each of these, when put together, creates a solid picture of the company’s current state. As such, it’s highly recommended that you start with this before moving on to the next step.
Importing master data
As the final step in the configuration process, Lia from QA*, Dex from *manufacturing*, and Max from *procurements and inventory* each compile existing data from their respective departments. This is the *master data—a collection of all valuable information that has been stored, tracked, and shared within Spindl so far. This is the data that will be stored in the system, and continue being tracked by the departments as they begin as they start using the relevant ERP modules.
Your opening stock (e.g., your current inventory, its location, expiry, etc.) balance should be updated as part of this process.
Lyn, after making sure everything is in order, gives the implementers the go-ahead for importing the master data into the company’s almost-complete ERP system.
This final task completes the configuration process. Spindl finally is ready to use its ERP system.
The beginning of something better
Saf, Mel, and their team reflect over the past months.
They find themselves at a peak—the first of many. They’ve successfully implemented an ERP system. Each of Spindl's departments has fully functional modules. After a few weeks of settling into using their new ERP system, Saf and Mel decide it is time to pull the plug on their old, now-defunct system.
There is the occasional hiccup. Sometimes things don’t work quite as expected. Sometimes there are human errors. They maintain a healthy stream of communication with the implementers when they need and manage to keep working through any issues that may arise.
It’s been a long, winding path to get here. Not all of this can be attributed to their ERP system; at the end of the day, it is a tool that they actively utilized to reach their goals. But their journey isn’t quite over yet. They’ve built the foundation for stabilizing their business, yes. Instead of treating this as the end of their journey of strengthening their brainchild, Spindl, they treat it as the beginning of a new chapter.
In the next chapter, A Deep-Dive Into Modules, we’ll explore how Spindl's various departments implement and use individual modules, along with the challenges they face.