Article Transcript

The ERP (Enterprise Resource Planning) market in India has seen a big growth in the past three to four years with most large companies either joining the ERP Bandwagon or planning to do so. A recent Emst & Young survey has revealed that of all the issues that confront a CFO today, ERP integrity ranks third in importance after shareholder value and business strategy.

In fact, making a success of an ERP implementation ranks higher than putting together an effective financial structure or working capital management. This shows not only the importance of making ERP implementation a success, but also how very few have probably managed to do it.
Most companies admit privately that they have not achieved what they set out to do. The euphoria that ERP will serve as an answer for all their corporate ills has vanished. Most senior executives today are not even sure what they had set out to do and why they have failed.

Losing sight of the big picture: Most project managers today admit that they did not have any clearly defined corporate goals before the start of the project. ERP implementation was treated like any other software project and the only goals at best were that during the implementation within the desired time frame.

Top Management Commitment:
ERP should be treated more like a new business venture since the future success of the entire organization depends on a good implementation.
So adequate focus and attention of the entire management as well as regular hand-holding and feedback sessions by the top management should form a part of the implementation.

 

 

Most companies conveniently forgot about this and allowed projects to be driven by the IT or finance departments.

Penny-wise pound-foolish: In a typical ERP implementation, hardware and software costs are much higher compared to consultants ‘fees. However most companies realized that having selected the ERP, the cost of hardware and software became virtually fixed costs. So they cut costs in an area they should never have, and compromised on the quality of implementation partners.

Quality of data: Well into the implementation, most project managers discovered that an ERP requires a lot of data to be entered into the software, which is critical to the ultimate quality of output.
However when this realization dawned on the teams, they found that data was neither available nor was it possible to collect accurate data in such a short period. This led to a lot of master data being entered on "experience" and "assumption". A successful ERP requires accurate cost data in the first place.

Involvement of the entire organization:
In most companies ERP projects have started as top management initiatives, driven by the IT or finance departments. When the teams were formed, too much importance was given to the teams without realizing that the involvement of the actual users was no less critical in achieving successful implementation.

Importance of training:
Most actual ERP users, if questioned, reveal that they did not have any formal training in ERP Systems and neither do organizations have any training systems in place for new joiners.

 

 

For accurate and comprehensive maintenance of ERP Systems, it is crucial that each user understands the need and use of such data.

Inadequate preparedness: When an organization decides to change from traditional systems to an enterprise-wide system, it means that it should be prepared to undergo many changes. The biggest change that affects the lowermost level of employees is the large volume of data that needs to be entered.
There is usually much resistance from supervisors and sales personnel in entering volumes of data that they fee don't add value to their work.
ERP is more a way of thinking which means more input data and finally working and taking business decisions on the output data. Before going live, it is critical to involve the entire company and explain what it means to them and how the organization needs to change and why.

Secret of Success:

So what is the secret to successful implementation? It is one thing to say that all the above issues should be taken care of, but quite another to actually achieve it. The best chance for an ERP to be effective is to select the right package, which suits the business needs and then sell it internally to the employees through extensive training. The training should not be about the package how the package will transform the company in the marketplace. And yes, the champion has to be the CEC himself.

PINAKIRANJAN MISHRA
The writer is a senior consultant witi
Emst & Young India