ERP Renewal - Part I

I  received a call this week from an old friend and fellow consultant.  He lives and works in Mexico.  He called to catch-up a but also to ask a specific question.  He had a client who was had installed an ERP system.  They were concerned they were not getting the full value out of this system and wondered what to do.

I asked a few questions:

• Are they doing a lot of work in spreadsheets.  Answer:  Yes.
• Are they running S&OP?  Answer:  No
• Are they using any of the ERP planning functionality?  Answer:  No

As much as one could surmise in this one minute  cursory analysis, I knew for certain that the company probably had an issue.  My friend asked what they should do.  My advice was as follows:

1. They have to clean their data.  If they are operating outside the system in spreadsheets routinely, there is a very high probably that their data has neither been maintained or managed.   People were not comfortable with the system and began to operate outside of it.  As they did this more and more, there was no need to manage and maintain their data.
   
   
2. They need to implement a continuous improvement process in place specifically for their ERP.  They need a program to create and maintain power users in each all functional areas.  The need to make ensure that these power users understand how the process works in the ERP.  The more successful continuous improvement programs are surveys/training initiatives.  Changes must also be made to the system to accomodate the needs of the power users.  These changes tend to be minimal and often involve reporting capabilities. 
   
   
3. They then need to cycle through the Plan - Do - Check - Act improvement cycle again.  This must become part of the company culture if they truly want to get the best results from their investment in a sophisticated ERP.
   
   Actually, do #2 first and make #1 is part of conitnuous improvement program.

Companies invest a lot of time, money, and man hours to implement an ERP.  They need to get a return on that investment.  The management team must demand as much and not leave this under the sole direction and ownership of IT.  IT is best suited to lead the implementation of an ERP and best suited to manage on-going system issues and upgrades.  But, IT cannot be in charge of operational effectiveness of the system.  IT must play role but only to aid and facilitate operational effectiveness.

Operational effectiveness and return on investment must be driven by the business functions.  The power users of the system do not work in IT.  They work in the business functions.  Power users must be nurtured and educated.  Their use of the system must be assessed and improved upon through audits and on-going training.  Power users get promoted or leave the company so there must be a on-going effort to find and develop new power users.  Power users all need to have one or two people they are training themselves.  Think of these small groups as the modern day ERP equivalent of Quality Circles.   In short, an ERP continuous improvement program must be in place.

All is not lost for my friend’s client.  They can turn it around.  To do so, they will have to establish improving the ROI on their ERP investment a priority.

Questions:  Are you experiencing the same in your company?  What have you done or not done about it?

Comments

[Stoven Shamrock]

As a lot as one may surmise on this one minute cursory analysis, I knew for sure that the company in all probability had a difficulty. My buddy requested what they need to do.
http://www.baseinformation.com/