First Impression: Advantages and potential pitfalls in implementing ERP

There are a few reasons why ERP implementations 'fail'. I've been told of a few companies which invested millions in their ERP before reverting to the system of the good old days. I'm no expert, but I've definitely picked up a few dos and don'ts along the way.

Before you look into ERP make a list of all the issues you are currently facing in your company -both IT and non-IT.

If most of the issues are individual or process related, you might be able to make a few changes internally to smoothen things out.

If your list has issues like system overload, unreliability of information or glitches in streamlining of processes then ERP might just be what the doctor ordered.

One McKinsey Quarterly article suggests that the benefits of ERP should only be assessed on a 'hard-return' basis i.e. tangible benefits.

These would include reduced headcount, or a drop in costs as a direct outcome of streamlining operations.

Other intangible, or rather immeasurable benefits will be increase in revenue or employee productivity, which will definitely up the level of work the company churns out, but are not solid enough to measure in a cost-benefit analysis of a package.

During implementation it is easy to get carried away with all the razzle-dazzle that the package offers.

Companies very often get sucked into the temptation of trying to fit their processes to match the tailor-made ones the system offers, usually to disastrous effects.

It is true that the package incorporates best practices and there are good reasons that the company should integrate them in their workings, but implementation is not the time to do it. Sometimes, these very workings could be the core competence of the business, which gets affected with change.

Moreover, while setting a target date for implementation, it will be useful to have mid-point targets by which you want a certain aspect of your implementation to be complete.

Realistic target

Set realistic target and even if your goal is to go-live within a year, keep your expectations of the initial process to the bare minimum, or even less if possible.

Aim to only implement the bare bones of the package at the start or else you will be constantly prolonging your go-live date to set a package that shines. What you will get instead, is one that whines.

Speaking of whining, the key decision makers in a company will often face criticism from the Senior Management about how the change in system was unnecessary and a waste of money.

Involving these people in the selection process of the package and demonstrating its uses and benefits to each division often helps allay those fears early on.

Crucial part

Getting each division to separately work on a plan as to how they plan ERP to affect their lives will incorporate ownership into the entire process. Include them while looking at the cost benefit analysis and ask them to sign off on the projected cost savings, so you have something to measure against in the future.

Training is a crucial part of going live as the users must be correctly trained on the uses of the system. In fact during training, it will highly benefit the company to explain to the heavy users why the change was necessary in the first place.

Most of these people are not aware of how ERP will change their working life and might even be scared of it, fearing redundancy.

The more comfortable the users get with the system, the easier it will be to have a smooth system running post the go-live date. Also, since one of the main uses of the ERP is to get accurate information, the users must understand data input -the fundamental basis of making the system work.

"Garbage in, garbage out" was often chimed to users during our implementation and we only understood the meaning of that post go-live. When the crap hits the fan (as it usually does) it is hard to accept it was caused by an unknowing guy sitting at his desk, using the wrong method of inputting data. C'est la vie.

Now that I've listed a few advantages and potential pitfalls, let me state one thing: If you know what you want out of it, ERP can really be a wonderful thing!

So hopefully, in the near future, I'll be able to sit at my trusted laptop, slam away on a few keys and monitor or analyse the key performance indicators related to each department within my company.

I will know exactly how many TV's have been sold, from where and how! (and dare I say to whom?). I'll have quick access to reliable data online, real time!

I'll know who owes me money and when I'll get it back! Information is King, and I'm the Queen of the information tech-highway! Ha! Take that, competition.

The author is Director of Marketing and Communications of Jumbo Electronics.