ERP Software:  A Solution Looking for a Problem?

One of the biggest mistakes on many ERP projects is not taking the time to build a common understanding of how business is conducted today and potential improvement opportunities (before design and set-up of the system). This is not a luxury, but a necessity when anything more than incremental improvement is expected.

Often times the thought is “Let’s get on with it.  Why bother to analyze our current processes and issues?  It is all going to change with the new software.  Also, the consultants claim they have tools and industry templates to configure the system to meet our requirements.  It should be that easy, right?”

Well, things will change for sure, but if we do not have a common understanding of current processes, how will we agree upon what must change?   Secondly, without a shared definition of the problems and opportunities, how can we design the right solutions (or know what potential solutions are even relevant)?

Of course, software can enable many improvements, but it cannot “forced” best practices.  ERP software is not plug and play, such as using Microsoft Office products, a smart phone app, or ordering a widget on the internet. The only best practices here is pushing the right button.

Some ERP packages consist of over a thousand programs, many of which are highly integrated. These programs should be utilized in conjunction with new policies, procedures, roles, and performance measures.  This makes all the difference in the world.

Many of these changes are necessary to take advantage of the software capabilities while others have nothing to do with it.  Many fail to realize the latter can yield the most benefits.

Without a more holistic perspective of the current business issues and potential solutions, we are simply rolling the dice. Remember, the organization will fit (or force) itself into the software one way or another.  

Understanding Fragmentation

I must admit, any statement implying organizations do not understand their business processes sounds a bit ridiculous.  For this reason, many view “As Is” process analysis as an unnecessary exercise (or gloss it over).

Of course, collectively employees do understand the processes, but individual views of the same reality can be very different.  This must be reconciled and actually leads to better solutions.

The challenge is major business processes across departmental boundaries and activities, information, and issues within the workflow are interrelated.  

Take Order Fulfillment as an example. Within this process the Sales, Customer Service, Warehouse, Accounts Receivable and Deduction departments are all involved.  Within each department, managers and employees are very familiar with their slice of the world but their perspectives are somewhat limited.

Furthermore, each department is responsible for only a piece of the overall process resulting in a narrow focus of concern and conflicting agendas, and what you get is fragmentation.  

Fragmentation renders managers within each department powerless to affect systemic change (hence the “silo effect”).  For lack of a better choice, employees go about their daily functions; working around the symptoms of broken processes, do what is best for them, or tweak what they can control. Do you blame them?

Over time, sub-optimization becomes a way of life and the only way.  In fact, employees are trained to sub-optimize because it has become part of the standard operating procedure.  We are now reinforcing broken processes. No wonder “change” is so difficult!

Do the "As Is" Analysis (no matter who tells you otherwise)

The lesson is you need to do the "as is" process analysis and do it right.  It is a valuable input into the design phase and an important part of change management (fosters employee involvement).   Do not let consultants or the implementation methodology steer you away from this.

Also, consultants are not required to define your current business processes. Save yourself some money.  Any decent consultant can simply review the final deliverables prepared by the client and ask the right questions for clarification.