Success factor in ERP implementation

Management is getting its hoped-for results from ERP less often than not, and this begs an explanation for ERP's often-poor performance. What many manufacturers fail to realize is that extensive supply chain improvement requires that management begin to redefine its business in terms of strategic opportunities.

The purpose of ERP technology is to support the business processes that support the company's strategic opportunities. There are some basic tenets of ERP that should guide management's actions and decisions.

There is no magic in ERP software. ERP's benefits are a direct result of effective preparation and implementation, and appropriate use. This seems obvious, but nine out of 10 companies don't get it right the first time around. Expecting a quick fix, silver-bullet solution is a dangerous mindset.

No amount of advanced information technology can offset the problem of a flawed business strategy and poorly performing business processes. This area, in particular, is something that ERP software implementers may not fully address because it can slow system deployment.

Define a business strategy that will give you a competitive advantage or, at the very least, make you competitively equal. Then, analyze your current business processes and develop your objectives. Once this step is done, the following steps for preparation, ERP software selection and implementation can support your strategic and process objectives better.

Acquire flexible ERP information technology that can accommodate rapidly changing business conditions. The high-velocity flow of information needed to support action up and down the supply chain is a major step forward for most manufacturers. It will be mandatory in the future just to compete, much less stay ahead of, the competition.

Have the implementation led by a senior executive who has the authority to make changes happen and happen quickly. Make sure there is a sense of urgency and true accountability for completing preparation and implementation activities on time. Moving away from functional silos and creating effective cross-functional processes that are truly integrated via an ERP system is not an easy task. When ERP is not fully integrated into day-to-day business operations, however, it is not likely to be very beneficial. If enterprise integration or more advanced supply chain management strategies are to have any chance of complete success it will be due, to a large extent, to the removal of traditional cross-functional barriers. These silos comprise the organizational boundaries where information flow, and often cooperation, stop. You must ask, "How will we use the ERP system?" Some not-so-obvious issues will surface as you try to answer that question. For example, will you combine demand-based flow and lean manufacturing techniques, which will negate the need for some traditional ERP functionality? Focus on your business strategy and not just software selection and implementation. Many problems are reinforced by contradictory objectives and performance measures that actually create inconsistent value and belief systems, to the company's detriment. No amount of information technology will correct these problems. Management must aggressively remove them once and for all through business process redesign.

Assess your skills and prepare

Management too often plunges into ERP less than fully informed, with limited knowledge of what to expect. Often, there is a misconception that the skills necessary to select and implement ERP already exist in the organization. That may be partly true, but few organizations have the skills they need to implement ERP effectively within a reasonable timeframe. Consultants may be able to fill some of the skills gap, but given the high risk involved, it's important to make sure they're genuinely qualified. Another commonly overlooked area is the issue of information technology change. Often, the IT infrastructure changes required to implement a new ERP system are not given the high priority these technology issues deserve.

Certainly, implementing ERP should be driven by business issues, not technology. But it is IT's understanding and skills that support the technology that improves business processes. Ignoring the preparation and education new information technology requires is asking for trouble. Further, IT personnel often must make the technology transition quickly. If the technology and infrastructure transition are not done well, the project, at the very least, will be delayed. One of the biggest problems with implementing ERP is misunderstanding what ERP is all about and underestimating what it takes to implement it effectively.

Senior operating management cannot relegate critical decisions to personnel who may not have the background or the temperament for this type of decision-making. Companies need a well thought-out, comprehensive process to help plan, guide and control the entire ERP implementation effort. Starting an implementation with an undocumented, skimpy or untailored implementation methodology is an open invitation to disaster or, best case, a long, drawn-out implementation. Everyone from the boardroom to the stockroom needs to understand his role and responsibilities for implementation.

Implementation leaders should encourage dialogue to get people focused on business objectives and early identification and correction of any problems. Who will be accountable for results, and when, must be an integral part of this understanding. An implementation that's going astray becomes recognizable when repeated schedule slippages surface. As time moves on, the missed schedule problems start affecting implementation quality as the almost-inevitable response is to start taking shortcuts and bypassing critical business issues. The slam-and-cram method of an ERP software transplant is now in high gear.

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