The Conference Room Pilot for ERP

Most ERP implementation plans include a conference room pilot whereby data

sets are transacted through the system to give everyone confidence that the

ERP system actually works. Successful conference room pilots are the basis for

the go-live decision to turn the system on in the real live operational

environment of the business. As the conference room pilot was a success there

is a high level of confidence in turning the system on ….. only to find that there

are massive problems with the system producing incorrect information,

creating chaos.

So what has gone wrong? The system was tested with some real data sets that

we chose for the pilot and the system worked during the pilot!

The conference room pilot was conducted in a lab type setting with limited

amount of carefully selected data.

Let’s go back a bit! Given the huge cost over-runs experienced in the majority

of ERP implementations a conscious decision was made to take shortcuts.

These shortcuts may well have been in the area of data clean-up and

migration, or structure of bills of materials, or not quite getting the inventory

accuracy issues sorted out.

There is no impact immediately in making the shortcut decision as no

processing is taking place during the implementation stage of the project.

Now that the system is turned on the implications of these shortcuts become

immediately obvious! The system is processing numbers that are incomplete,

wrong or simply not there because the decision was made to clean it up later.

The costs you thought you were saving by making the shortcuts has now come

back to bite you and the impact on the business operations, that are now

relying on the system for numbers, can be quite dramatic and cost you millions

in losses and confusion.

We visit many companies that complain that the conference room pilot was a

success but when the system was turned on it didn’t work. The system is

actually working but the data that it is processing was not cleaned up and the ERP system is generating correct numbers based on the data it is processing.

The problem is the data is wrong!

The conference room pilot may give you confidence the system works but this

does not guarantee a successful outcome if you haven’t cleaned up the data

during the implementation preparation stage.

If you have this situation there is no option but to clean-up the data and this

could be very disruptive and costly post-live running of the ERP system.

Ray Atkinson

Atko Global

for further information on ERP go to http://www.atkoglobal.net.au

Experience Worth Listening to!

Our ERP Doesn’t Work

For more ERP Blogs goto http://atkoglobal.net.au/member_area.php

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 clearly, pre-purchase of software, and test the software fully (not a simple demonstration) prior to purchase of the software.

The construction of a model 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 those organisations claiming success reporting an average of 50% of the benefits expected, a new approach is badly needed.

For further information on ERP goto http://www.atkoglobal.net.au

Experience worth listening to

Ray Atkinson

Atko-logo-SM

The State of the ERP Industry

For more information visit: http://www.atkoglobal.net.au/member_area.php

ERP failures are not slowing! The complexity of ERP implementations and issues involved are simply not understood by most organisations and ends up as minor or major disasters.

Many organisations are oblivious to the problems they will face or believe that ERP is simply a technology project that the computer people will deal with, until the disaster happens. The growing demand for expert witness services or mediation in disputes between software vendors, integrators and clients is a good indicator of ERP problems and we do not see this dropping off any time soon.

ERP success and failure depends on where you sit in the equation. From an ERP software vendors and integrators perspective the project is a success if the software is installed and running, from the clients perspective they want the technology implemented and working for them on time and within budget.

Half implemented and abandoned ERP projects litter the landscape. Most ERP systems we are asked to get involved with are poorly specified, lack clear objectives, are late and are way over budget.

Shortcuts taken during the implementation stage always come back and bite during live running of the system and can result in crippling the company and costing ten-fold the cost of doing the job properly in the first place.

The message on risk of ERP projects is getting through. More and more organisations are spending more time researching ERP and how to approach it to ensure success. Unfortunately these organisations are overshadowed by the majority of organisations who simply believe they can pay a cheque and ERP will happen.
For a very small investment our book “Enterprise Resource Planning (ERP) The Great Gamble” A guide to understanding and ERP project, outlines the issues that all CEO’s managers, and implementers should understand about an ERP project. The book is available from all book outlets and can save an organisation millions in preventing ERP failures.

Some other blogs available on our website include:

ERP Implementation Goals

ERP Vendor Integrity

ERP Expert Witness Services

Ray Atkinson

Experience worth listening to!

Atko-logo-SM

ERP Consultants, which one?

For more information visit: http://www.atkoglobal.net.au/member_area.php

Implementing ERP systems is a major challenge for any organisation! Selecting a consultant to assist in the process requires an understanding of the terms installation and implementation.

Installation refers to the installation of software and training of users in how to use it. Implementation takes a broader view of implementing the technology and operating it in a manner that will yield the results for the company.

Each of these require different skills. The installation skills require a knowledge of software and the sequence for installation. The installation skillset does necessarily require knowledge of the particular industry beyond the configuration and basic project management requirements.

The implementation skillset requires a knowledge of the type of industry the technology is being implemented in and what needs to be done to make it work for the company beyond running software. E.g. manufacturing industry.

The type of skillset I am talking about here is one that comes from someone who has actually worked in a manufacturing company in a discipline that provided first hand knowledge of ERP processes such as planning, MRP, bills of materials (BOM’s) and structuring of same, inventory, shop scheduling, master scheduling, product costing, procurement, just-in-time and manufacturing line layouts.

The benefit of having a consultant experienced and skilled in the particular industry beyond software can make a huge difference to the results of an ERP implementation as they are able to draw on their practical knowledge learnt in the real world and not some theory from a book.

With somewhere between 55-70% of all ERP implementations not producing the results expected, massive cost blow-outs and time delays, a different approach to the people we look to assist in the implementation process may make the difference between software running and the technology implemented to get the best results.

Check the proposed consultants CV’s to see what experience they bring to the table. You may be surprised what you find!

For more information visit: http://www.atkoglobal.net.au/member_area.php

Experience worth listening to!
Ray Atkinson – Atko Global Pty Ltd