Some businesses have reported big successes from implementing
ERP, while others have been badly damaged by the experience.
The difference between the two camps depends on the gap between
ERP in theory and its implementation in practice.
Theory
Theory, in the sense used here, refers to what is possible
if all goes well. The following benefits may be realised from
a successfully implemented ERP project.
ERP can provide advanced levels of information visibility
to a business. Once the data is entered into the system,
then everybody can have access to it. No more waiting on
the end of telephone lines to see if another department
has received an order. No more angry clashes in the boardroom
disputing the basis for making particular decisions. Less
waiting around for items to arrive.
A lot of inefficiencies in the way things are done can
be removed. The company can adopt so-called "best practices"
-- a cookbook of how similar activities are performed in
world-class companies.
A company can restructure its processes, so that different
functions (such as accounting, shipping and manufacturing)
work more closely together to get products produced.
An organisation can align itself to a single plan, so
that all activities, all across the world, are smoothly
co-ordinated.
Information and work practices can be standardised, so
that the terminology used is similar, no matter where you
work in the company
Getting down to brass tacks, a company could do a lot
more work for a lot more customers without needing to employ
so many people.
Practice
In practice, there are huge problems in achieving any of
these goals, and how successful a company is in achieving
these aims will depend to a large extent on how well the company
overcomes these problems. ERP is a pretty traumatic event
for any company in a number of ways.
First of all, multiple methods of doing something are
often whittled down to just one way - resulting in a lot
of people with their noses out-of-joint when they are forced
to give up their tried and tested procedures for a standardised
one.
Secondly, the sharing of data globally threatens the
many fiefdoms that exist in any large company, particularly
the ones that jealously guard their information from other
parts of the organisation.
Thirdly, implementing ERP takes a lot of time - between
1 and 3 years - and a lot can happen in any business during
that time. Management could change, new markets could open
up, increased competition might force the company to change
course.
Fourth of all, ERP is very complex. As the company gets
into the project, new understandings will continually come
to light, which might in some cases require significant
changes to the project timescales.
Lastly, ERP is hugely expensive - it is not unusual for
ERP budgets to overrun wildly, as companies fail to account
for all the non-software costs, particularly the costs of
training, back-filling key staff, overtime and the aforementioned
creep in timescales.
Overcoming the problems
The bottom line is that managers who engage in ERP need to
be able to hold their nerve over long periods of time. They
also need deep pockets in order to cope with the sheer cost
and scope of the effort. To deal with the significant people
issues presented by such a widespread change two complementary
approaches are common. First of all, significant numbers of
non-IT staff are deployed full-time onto the projects. This
helps to sell the project to non-involved employees, while
getting stronger levels of ownership and participation from
the business. Secondly, a change management structure is put
in place, where issues such as job security, resistance to
change and training needs can be tackled. The change management
team will normally have an influence on how training takes
place, how the project is communicated to the staff, and how
managers should behave in their dealings with staff on sensitive
subjects.
