Friday, August 31, 2012

Should ERP be a Technology Project?

There is a good article in the Wall Street Journal talking about some common pitfalls of Enterprise Resource Planning (ERP).  The author makes the analogy in the headline about diets not working.  This is true.  A diet alone will not achieve long term goals, only short term results.  Diets have a see-saw effect on the body.  It is only when someone looks at their entire lifestyle and make adjustments will they achieve a healthy life.


Some key thoughts from the article:

·         Executives see ERP solely as a technology project.

·         Buying new software system will make inefficiencies magically disappear.

·         Before executives make a big investment in a new information-technology system, they need to rethink the way their organization is designed.

·         The effort to redesign business processes is typically the most expensive part of an ERP project.

·         Companies stumble with ERP, because they are afraid to abandon old ways of working.

·         The ERP effort was overly ambitious or unfocused, resulting in much-higher-than-expected initial investments in training, testing and time.

·         Some companies allowed their ERP projects to split into several smaller projects.


“They need to treat ERP as a transformation effort involving three areas of their business: processes, technology and spending.”


Solution Objectives:

1.       Create a common language.  Frame the project as an organizational transformation, not an IT project.

2.       Apply the 80/20 rule.  Focus on transforming the business activities that matter most to your organization.

3.       Keep the best of the old, discard the worst of the new.  Don't change things just for the sake of changing them.

4.       Develop enterprise metrics.  Measure the performance of your organization as a whole to determine whether ERP is working.

5.       Plan for the long haul.  Cast the ERP effort as a long-term project, not a quick fix.

There is not a lot to add to this article.  It is well written and makes several good points that I write about a lot in my blog posts.  ERP solutions are not the same as off-the-shelf boxed software.  An organization needs to use a Trusted Advisor and look at all of its processes.  Like the diet analogy, efficiencies that last do not come from quick fixes.  If you are bleeding use a bandage.  If you want a healthy life, then make changes in your lifestyle.

Enterprise software looks at the enterprise, so that means all levels of people from top executives to the guy who sweeps the floor at night need to be considered.  All suppliers and vendors, customers and business partners need to be integrated.  There is a lot to consider and a phased in approach under a global plan with realistic benchmarks should be developed. 

Probably the most important piece of the puzzle is your relationship with your trusted advisor and the partnership you develop with your ERP provider.  These relationships, especially with the ERP solution provider are critical.  If you like the solution, but do not feel that you are developing a close relationship, yes relationship, with the ERP provider, then be forewarned.  You do not have a partner.  You have a store/customer relationship.  There is too much involved in an ERP implementation to not have a partner in the process.

Dolvin Consulting works with Manufacturers, Distributors, and Specialty Retailers to help them streamline their computer operations with ERP solutions so they reduce costs and become more profitable.  Contact us today to see how we can help you find appropriate solutions for your challenges.  We are here to help.


1 comment: