Happy Birthday ERP
In 1990, an emerging application software methodology was officially dubbed ‘Enterprise Resource Planning’ or ERP. While not a completely new concept, changes in technology made it more of a reality and allowed vendors to change the architecture of application software from stand-alone systems to integrated suites.
In 2011, ERP is all grown up – 21 years old. Like proud parents, we watched ERP develop from infancy to promising youth to the mature format for business applications that it is today. So is it finally time to tell ERP to start earning its own living instead of mooching off mom and dad?
Now that ERP is old enough to drink, does it continue to drain resources from your I.T. budget without the paybacks you anticipated when you first brought home that bundle of joy.
Sure, there were high hopes of fast returns on the ERP investment – but like sending a child to college the tuition was not the only cost. Application fees, dorm furniture, books, computers, meal plans, and even though you swore you wouldn’t buy them a car – parking, gas, repairs and traffic tickets have all added up to way more than you put away in that 529 plan.
Implementations, like college degrees, tend to take longer than expected for an additional delay in return on investment. Oh, and that merit scholarship for promising to go paperless – ERP lost it due to poor grades back in sophomore year.
Yep, that’s today’s ERP system. More work and money than anticipated and fewer returns. However, like your kids, you don’t want to throw out the baby with the bathwater. There is still a lot of potential for that ERP to pay off.
Three Steps towards ERP improvement
1. Re-Design your business processes
Many organizations implement software without changing business processes. Like the customer who purchased the first automobile and hitched it up to his horse, failing to redesign processes may actually hinder productivity and miss out on advances like workflow, self-service and pushing work out to the source instead of passing paper. Changing business processes is as important as the software to improve productivity, reduce errors and dare I say – cut administrative overhead.
2. Make use of that shelf-ware
While a few customers try to bite off more than they can chew by implementing all modules and functionality at once, most take on core processes first and are more successful with their first phase. Unfortunately, they neglect to come back and add those features that attracted them to ERP in the first place. Many found that implementation was such a challenge that they are reluctant to go back for more.
What customers fail to realize is that those secondary modules often give the greatest pay back when it comes to saving work, reducing costs and speeding the flow of information. They also tend to be the least expensive to implement because the core system is already in place.
3. Get rid of customizations
Remember why you purchased package software in the first place?
Perhaps you were tired of being held for ransom by the IT staff, who designed, wrote and maintained the code that was your organization’s lifeline with little or no documentation? Proud Motto: It was hard to write – it should be hard to understand.
Large numbers of customizations to package software puts you back in the same situation. Supporting those customizations means that every upgrade, every software patch and every configuration change costs extra in time and dollars – even more so if customizations were made in a widespread and invasive manner rather than the preferable bolt-on type.
ERP in its mature state has vendors focused on fine-tuning and filling gaps in functionality with features that could, with a little creativity, replace some of those costly customizations. Many of the reasons you customized during implementation are probably gone – as are memories of your legacy system, which some customers try to make their ERP resemble to avoid too much change.
Business process re-design, deploying those unused features and dropping customizations make excellent phase two or phase three projects that can be small and more manageable than that large-scale implementation you endured. If not phase two, upgrades to a new release are perfect opportunities to re-examine those modifications as well as revamp processes and procedures.
Think of phase two like graduate school for your ERP system. It will not cost as much as that first degree and may actually pay its own way this time.