Our ERP Doesn't Work
Wednesday, November 27, 2013
We have visited many organisations that have implemented ERP only to find that they are having significant problems in operating the technology as they expected. In fact they have now turned off or ignore outputs from the system as the information is incorrect.
There are a number of reasons for this state of affairs;
Lack of education in how the ERP system is supposed to work
Poor software selection in the first place
Poor data set-up
Shortcuts taken in cleaning up data migrated to new system
Poor data integrity on dynamic data (ie. Inventory control)
Lack of effective system operations training
Poor operational procedures around processing operations
Whilst all of these are recognised as mistakes made during implementation and running the ERP less consideration is given to the customisation and modification carried out on the system during the implementation stage. Changes are made to the systems for a variety of reasons. Chief amongst these is the “must have” some function that was available in a
previous version or system that is seen as a show stopper. When a number of these changes have been made they can have unforeseen consequences on the overall operations of the systems to the point the systems do not function in the way the designers intended.
ERP systems are fully integrated systems that enable data entered into one part of the system to flow through the organisation through processing and output to other parts of the organisation to use and onward process. An example of this is a sales order that is entered, translated into a schedule for manufacture, processed through materials
requirements planning using inventory records, bills of materials and routings and ending up as planned orders for the factory and purchasing the materials to support the manufacturing.
Modifications that may seem simple at one level can have an impact anywhere in the process and end up causing incorrect information to be output due to some issue with the changes made to software. Add these issues to the issues identified above and you have a poorly functioning ERP system. Users have no choice but to seek other means of operating the systems.
ERP has been built around a defined logic. When changes are made without an understanding of this logic then the risk is you will affect something in the systems logic that will cause the system to have problems. The best way to avoid this is to define what the requirements are, pre-purchase of software, and test the software fully (not a simple demonstration) prior to purchase of the software.
The construction of a model, as part of the pre-purchase activity, will ensure you are able to identify any shortcomings in the software and get the fit you want and need.
With the many problems being experienced over 35 years seemingly repeated over and over again we are either incapable to learning the lessons of failure or are somehow being conned.
The cost overruns in ERP project go across a spectrum from 25% to 1000% of the original budgeted cost. The work done up front on effective modelling and risk analysis can assure an effective ERP outcome every time without the hugh cost blow-outs.
With 50% - 70% of organisations reporting significant problems and failures and even thoseorganisations claiming success reporting an average of 50% of the benefits expected, a new approach is badly needed.
Experience Worth Listening to!