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Thursday, September 04, 2014

Many organisations implementing ERP believe that by implementing ERP systems they will achieve dramatic improvements across the entire organisation. The results reported in numerous surveys are indicating that these improvements are a myth and are falling far short of expectations.

An issue that attracts little attention is the corporate structure that has its roots back in the days of the industrial revolution. These structures compartmentalise different activities within an organisation and within these structures sub-hierarchies and cultures exist that protect their own structures and activities, often at the expense of the overall organisation efficiency.

This has been recognised for some time now and attempts have been made to reengineer processes to deal with the emerging technologies and streamline organisations. The problem is; whilst processes have been reengineered, some successfully, some not, the structure of organisations has generally been left in place. The basic manufacturing process of design, marketing, sales, planning, procurement, inventory control, production despatch and accounting must all flow smoothly to ensure the overall process works efficiently and effectively.  Often lip service is paid to recognising the silo mentality in organisations but in most instances the structures are left intact.

An analysis of numerous organisations operations that have implemented ERP systems shows significant issues between different areas of the organisation that can be traced back to the structure of the organisation and habits that prevent maximum efficiencies being obtained that the technology is capable of. Examples of these are problems are in  engineering designs and engineering data impacting procurement, inventory, production and customer service, but not being dealt with in a timely manner causing conflict and bottom line impacts.

Our historical evolution of corporate structure is simply not conducive to obtaining the most from an integrated technology that requires a major shift in corporate structures that is slow in evolving.

Solving the problems that exist within the overall process is compounded by the lack of skills within organisations that understand the entire process and not just their own area of expertise. In addition there is rarely anyone in the organisation that has both the skill set to tackle problems and the mandate to allow them to deal with the issues across the departmental boundaries.

The disappointing results achieved by organisation implementing ERP systems will continue until we can solve the issues that exist between technology capability and corporate structures.

Experience Worth Listening to!
Ray Atkinson