ERP – Buzzword or Panacea
By Chandran R, October 13, 2017
ERP implementations are approached with a fanfare by each and every organization in the world whether they are ready for it or not. It is touted that if you implement ERP all existing organizational issues in operations will be resolved. It is both, a yes and a no.
ERP – is an application system designed to cover all the aspects of organizational operational processes, end-to- end. It is truly a system which can help you remedy most of the manual processes that have already been established. With a manual system, the information is in the hands of few and there is no control. In a manufacturing organization, typically the information on WIP, finance availability, inventory of parts or manpower resources is essential to be available at the right time for you to take necessary actions.
Surprisingly, more than 70% of ERP implementations have failed or have not met the expectations of what is needed. This is because requirements are not defined properly. The people do not follow the standard processes available in the application. They want their manual processes to be replicated in the system. Even after the requirements are frozen and configurations finalized, the changes are brought in at the testing stage. The sign-offs are not given if the changes are not made by the consultants.
The telling aspects are that, testing is not comprehensive, people are afraid that all their information is out in the open, etc. And when the system goes live, it is found that the application is not what it should be; a phenomenon, seen all over the world. As a panacea to this, ERP vendors brought in Industry wise solutions that can be implemented in 3 months. This brought better discipline in implementations, and more implementations became a success.
ERP implementations generally fail, because there is no proper involvement from the top management. Since, it is software, it is considered once again as an IT system. ERP implementations have a pre-defined process and the consultant comes up with a time-frame for each stage in the process. This is where the problem starts. First of all, a full time core team (functional) is not put in place.
When the To-Be process documents are created and presented, the sign-offs take their own sweet time, much beyond the defined timeframe. Even after you receive the sign-off documents, and configuration is done as per them, the processes are found to be improper by the users, since the To-Be process documents have not been read through properly, or there is no common view among the users on defining a process. This keeps going in circles. The top management also dithers in taking any decisions on these and comes back to say that, that is why we did not want IT to implement such systems. These were the initial hurdles that exist. Overcoming all this, if ERP is implemented and go-live is announced, that is the day that all other problems start. There are always complaints that it does not meet the users’ requirements and has not been implemented properly.
First of all, the users, although training is given, want ERP to handle all their manual processes. They just want it as a replica. They force the consultants to device the application to fit their processes.
This is done in most of the cases. i.e., many a times ERP software is not what it is designed to be but it has been changed to fit the requirements of the users. Although the users are told future versions will come up with better processes, this is not taken into consideration. Hence, in most cases, the ERP systems exist in pre-historic stages.
It is considered another IT implementation, with the result, that the users keep asking for all kinds of reports which depict their manual process.
When all this is done, the system has to go live. During the testing process, the users are asked to test with the actual data. That is when all the problems explode. Data is not proper. Legacy data is available in all kinds of formats. Nobody is prepared to give appropriate data. In fact, the consultants, at the start of the project itself insist that data is the most important aspect for the completion of an ERP implementation. It is taken lightly by everyone including top management. Finally, a compromise is arrived and the testing is done with whatever data is collected. The system is declared live. But the problems persist, because the data is not proper and processes are not defined properly.
The answer to the question, “Is ERP a panacea or buzzword?” depends on the top management’s support and users’ attitude.
(This article was published in the CIO Review Magazine, October 2017 – https://www.cioreviewindia.com/magazines/cio-special-october-2017/)