ERP Wisdom in hindsight

Many companies embark on an ERP project believing they have all the bases covered and their IT people know what they are doing. Internal projects, steering committees and executives champions are all in place and the project proceeds.

Very few problems emerge in the early days of projects as it is really a preparation stage of gathering data, migrating data, training, software configuration, process review and procedures.

Somewhere down the line when the nitty gritty of what the software does and how an organisation can use it issues start to arise. Data that is not available in the form required needs to be obtained, unbudgeted for, data is not in an acceptable form and needs to be changed and cleaned-up, unbudgeted for, training is proving to be inadequate and more is required, unbudgeted for, changes to software and scope creep start to emerge, unbudgeted for and decisions need to be made, that are resisted by departments, are not made, all add to the ERP environment and potential disaster.

Add to these a blow-out in consultant costs, all seemingly legitimate but expensive and you have a recipe for disaster.

Thirty five years of experience in integrated MRPII and ERP systems I have seen a repeat of the above over and over and continuing to this day. The amount of money that goes into these projects, and lost, is staggering to the point organisations can be seriously financially and operationally compromised.

The blame game starts when the costs begin to hurt the organisation. The finger pointing starts in earnest! The vendor misled us, the company didn’t do what they said they would do, management wouldn’t get involved and make decisions, the software doesn’t work, we were not permitted to make process changes, the consultants were incompetent and lied to us and so on.

These are issues that have been around since the early days of MRPII. Are we really that slow we have learnt nothing? The statistics on failure are there for all to see! As high as 70% of organisations attempting to implement ERP fail to achieve the results expected. Massive cost blow-outs are the norm. Some companies have gone bankrupt attempting to implement ERP.

The solution is really quite simple. Do the work up-front pre-software purchase. Identify the issues that will need to be dealt with and design a model for how the software is to work and test the software through that model. Identify the data required and commence clean-up before you buy software etc.

Look at the 26 steps that must be covered to get it right the first time. Go to http://www.atkoglobal.net.au for details of the 26 steps. It’s free no cost and no obligation. We will even give you a free self-assessment program for you to look at what you are doing and evaluate yourself against. It could save you millions of dollars.

If this were a new technology we could understand teething problems in getting it implemented and working. Could you imagine continuing a space program with a failure rate of 70%? I think not!

We have all of the experience to ensure that every implementation should be a success learnt through many past failures. This hindsight should be a template for the future. Unfortunately it isn’t!

Experience worth listening to!

Ray Atkinson

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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

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