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The ERP Mindset
Monday, March 25, 2013

In a recent visit to a new clients premises that are considering implementing an ERP system I was surprised to find a CEO asking me questions like; what software should I buy, who were the best people to implement it and how could he implement it without bothering his own staff.

Wow! This takes me back 35 years to the early days of MRPII. The CEOs wanted to buy a solution and the business wouldn’t be disrupted in any way but great benefits would flow. With all of the information on ERP success and failures and the countless articles on the issues that will confront organisations, I am a little stunned that such a simplistic approach to an ERP project is still around today.

I have seen, and continue to see, many companies taking a technology approach to ERP. Whilst ultimately a computer system will form part of any ERP project it is only a small percentage of the success factor.

The change an organisation must undertake for ERP to be successful across the entire organisation requires collaboration of the entire company including managements involvement in the decision making and project management process.

This must start with an education program as distinct from training on the software. The education must take a much broader business approach and not only examine the philosophy for operating the systems part of ERP but also the corporate decisions that must be in step with acquiring and successfully implementing the technology.

These decisions must begin with a definition of the strategy behind the decision and exactly what the outcomes expected are.

I have been told on occasions that this is too much of an academic approach to ERP and they just want to get the software and implement it. ERP software vendors just love companies like these as they are rich for the pickings.

To counter this I have asked on what basis the budget and go-live date has been determined? Answers vary from a figure they think they can afford to some estimates of the cost involved and when the live running would be most convenient to some future event. Like the beginning of the new financial year!

On digging a little further into the budget decision there has rarely been any investigation into the quality of data available and how much work it would take to clean it up for entry or migration into an ERP system. Typically companies respond with they have a plan put together by the software company where everything fits and shows the live running date achievable.

A project plan showing a live running date and then everything squeezed into that time frame is meaningless if the resources are not available or time to do the work is simply unachievable. The plan looks perfectly reasonable and achievable with everything fitting at a plan level. It is the execution of the detail of the plan that brings it down. Is this the fault of the software vendor and their implementation project manager with the company project team who typically puts the plan together?

The answer is yes and no. The ERP vendor is responding to the requirements of the customer and has put together a project plan showing what needs to be done within specific time-frames. It is left to the customer to actually do the work. This is where the reality of the project plan comes to light. More often than not the project plan for most ERP implementations ends up being a document that makes the project look professional but underneath the façade it isn’t happening.

The flow on from this is missed deadlines, shortcuts and end result chaos and another company joining the statistics of failed or underperforming ERP.

This can all be avoided by taking a more professional approach to an ERP project. You wouldn’t attempt to build a bridge or any other project without realistic achievable plans up-front. Slippage can occur but it can be managed. A bridge that falls over when built even if it was on time on budget is not a good outcome.

Cost justifications, budgets, resource plans constructed at a theoretical level without the back-up of detailed research is simply an exercise in futility. Organisations that take the time to understand and plan based on real information will always be successful in their ERP projects. Unfortunately these are few and far between but it doesn’t have to be this way. The change in approach can only be driven by management who take the time to understand and not be intimidated by the technology component of the project.

If you face this situation in your organisation ask the simple question: what are we doing in our company that is different to the 55-70% of organisations that end up either failing or with an ERP system that doesn’t produce the expectations we thought we were getting. Start with the 26 steps that cover the project from beginning to end. They are logical and cover off each step necessary for a successful outcome.

The definition of insanity is doing the same thing over and over again and expecting a different result.