10 ERP Success Failure

ERP Implementation

How and why of ERP failure & tips for successful implementation

BYJYOTINDRA ZAVERI

(COMPUTER ENGINEER GERMANY)(COMPUTER ENGINEER, GERMANY)IT CONSULTANT.SINCE 1975

www.dnserp.com How and why of ERP failures 1

Education

Not understanding what the new 'system' is designed to achieve). At least 100 hrs of training is required for key users. Preparing masters / transaction on practice d b h f l l d i i ff i databases to get the comfort level and singing off is highly recommended. The CEO can make this happen, if he / she personally take interest, otherwise if left to users the quality training does not happen and if left to users, the quality training does not happen and then chances of success are reduced. In one company, the training was given after the system was live. Users were busy with ISO implementation and most Users were busy with ISO implementation and most people saw the data entry screen for the first time when the legacy was removed.


Lack of Top Management commitment (management being involved but not dedicated).

If the owner is not spending enough quality time, then the ERP project is likely to be unsuccessful. In one organization, the MD unsuccessful. In one organization, the MD hardly took part in the discussion with ERP vendor and delegated the task to the General Manager who in turn never wanted the ERP Manager, who in turn never wanted the ERP system, so he created all the roadblocks, and the vendor got frustrated and finally left


SRSInadequate SRS or System Requirements Specification: Current processes are not adequately addressed. User must write down th i t hi h t ki t ti the requirements, which means taking out time and extra effort. The user usually explains casually, verbally, and hurriedly, then how the ERP can succeedERP can succeedIf sufficient time is not given for preparing the SRS, ERP is likely failChopping and changing of program codes afterChopping and changing of program codes afterthe ERP goes Live is observed, if SRS exercise is not done properly.


Poor ERP Package Selection

The package does not address the basic business functions of the clientThe package should be totally integrated The package should be totally integrated, including accountsSome organizations are so comfortable with h / l ktheir Rs. 10,000/- wala account-centric package

that they do inventory and other functions in ERP but ask for data transfer from ERP to such accounting package!Please do not connect bullocks to the car!!


Internal Resistance

Resistance to changing the 'old' processes. This is perhaps human natureUnless proper confidence building is done (during Unless proper confidence building is done (during training) the user will still want to use the old method (or the legacy way)One ERP user (in a Mumbai based company) was One ERP user (in a Mumbai based company) was so adamant that the MD had to ask him to resign (and he was the works manager who was expert in fire fighting but MD wanted to prevent fire in fire fighting, but MD wanted to prevent fire altogether).


Give me moon

Unrealistic Expectations of the BenefitsA user starts expecting moonO t d li b One must draw a line, be satisfied, at least in the first phase, and let the system take off.


Return on investment. ROI?

Unrealistic Expectations of the ROI. People forget to quantify the intangible benefit or they simply expect returns overnightp gMost users do not know even, what the ROI isFor example ROI b d i i t l l b t ROI can be reducing inventory level by x percentage or ROI can be preparing of Excise (TAX) Invoice quickly

and accurately ROI i t t th t t i l i t or ROI is to get the correct material requirement

planning. JIT.


Time Frame

li i i iUnrealistic Time Frame Expectations. ERP is like changing the wall itself (and not changing merely the paint of the g g y pwall)CEO / CFO expect things to happen overnight when they have not taken overnight when they have not taken trouble to define (in writing); to what extent customization will be allowedO h t l t t f ll t t One has to learn to put a full stop to chopping and changing.


TCO - Money

l C f O hi iTotal Cost of Ownership is not understoodERP vendor money is not paid in timeERP vendor money is not paid in timeThe ERP implementing company is treated like any other supplier and ERP project goes into a kind of negative project goes into a kind of negative cycleE.g., Think of a mobile phone:g , pWhen the SIM card charge is over it stops

working and needs to be charged by paying additional amount.


Budget is not sanctioned.In one company (Rs.40 Crore turnover), the MD was from old school. He never sanctioned the money required for the Server, etc. for nine months even after going live. His vice president was keen, but project did not take off, because MD was not convincedTCO of ERP (Total Cost of Ownership) is not understood.


.By-the-way we will do ERP also.

User / top management safely assume that certain procedure should be present in ERP. If the procedure is not explained in the beginning, legacy is not given which it may not reflect in the Business Blueprint (these reference guidelines) or in in the Business Blueprint (these reference guidelines) or in the POCIf it is not in the Business Blueprint, it will not be there in ERP programp gERP project is taken as by-the-way project; whereas in true sense it should be the only priority during implementation phase. Do not take ERP casually


h i l d ( hA Bottom-Up approach is employed (the Process is not viewed as a Top management priority).

In other words if architect has not shown the door and window, the room will not have them. Due importance to these documents should be given. For instance, ERP has many different types of sales invoice and several types of purchase vouchers, but which one is applicable in a particular business is known to that businessperson only. Some time should be spent in the test run known as CRP run. Later, modification will not only cost in term of money but also time. Moreover, that time blame game starts and project suffers. It is strongly recommended that all key users take the Business Blueprint seriouslySystem Requirement Specification (SRS) should be reflected in the reference guidelines. Every page of this Business Blueprint g y p g pdocument should be signed.


ERP is long term investmenth f f il i hAnother reason of ERP failure is that user

ignores the long-term business goals to be achieved and only focuses on the immediate needs As a result asks for unnecessary needs. As a result asks for unnecessary customizations. For example, it is necessary to enter correct opening stock for each item for each location (including third party for each location (including third party inventory)However, user takes a unilateral decision that this can be done later Users will start this can be done later. Users will start entering various transactions and goes live. Even asks to remove the negative issue lock from the system


y

Tight linking (integration) is good

Another example, one user from marketing, did not appreciate the link of quotation and the sales orderthe sales order He asked implementer to remove the link. Later,

after six months, he realized his mistake and asked to provide for the linkto provide for the link

Sometime Director or CEO of the company does not share his or her long-term vision of gthe company, with the middle management or lower management.


It i t id tif lf d It is necessary to identify yourself and map the same with the scope of ERP modules.

Follow the checklist given below:What vertical (s) are you involved in? List them. E.g.,

Make to stock or make to order. E.g. Continuous Make to stock or make to order. E.g. Continuous process production or discreet production

What ERP modules are you looking for? Write it down from the scope list of ERP modules given by ERP p g yvendor.

Are you planning on replacing legacy software applications? Within the next 3 years? Which ones? Make list and plan to phase out out-dated software ASAP.


What is the big picture?Write your expectations - all of them. What objectives that you wish to achieve by deploying ERP? List them out in detail and discuss with users. Make department wise list of reports expected from ERP Once the list is wise list of reports expected from ERP. Once the list is ready, share with the ERP vendorERP vendor should meet more then 80% of your essential requirements. Be informed that rarely ERP q ywill meet 100% of your wish listThere are some areas, which are not automated and will have to be done manuallyMay be in second phase, after one or two years, you can plan to automate some additional business processes.


Information Technology and IT Information Technology and IT infrastructure

What databases and operating systems do we have expertise? What will the IT department agree to and what is the long-term plan? List themIf you are not sure, consult I. T. expert. For instance, in one corporate company EDP manager was asked to select ERP. She was trained by Red Hat on Linux. She i i t d th t ERP h ld b Li l tf D i insisted that ERP should be on Linux platform. During the ERP deployment, seven moths down the line, she left the organization for greener pasture. Nobody knew anything about Linux ERP project was abandonedanything about Linux. ERP project was abandoned One year later the company deployed ERP on Microsoft

platform.


Look at all of your optionsIn the implementation phase, we must educate users not to become greedy and ask for everything. Because this will effect his or her satisfaction level! What is the i f ERP i i ? Th i i impact of ERP on your organization? The impact is tremendous. It is like using a car instead of bullock cart. A poor implementation could end up with major delays in outbound shipments or even stoppages An delays in outbound shipments or even stoppages. An excellent implementation on the other hand is a blessing. However, this comes only when all stakeholders (users) and ERP implementation team stakeholders (users) and ERP implementation team follows proper implementation methodology.


Learn about TechnologyTechnology has advanced, therefore the selection team members will need to learn about workflow, TCP/IP, and many other issues involved. ERP coordinator should be trained in the following areas: basics of SQL. ERP can give g gintelligent alerts automatically by email. This needs understanding of email management settings (e.g., MS Outlook or MS Exchange Server settings). It is expected that ERP coordinator or I. T. support person knows about pp pnetworking of computers (LAN). If necessary, plan a separate training for the Information Technology and new techniques that are akin with ERP. E.g., UPS can be connected to Server to shut give messages to users that g gbattery backup is low, so users can logout and shutdown properly. E.g., using RFID technology and so forth. Embrace technology with both hands. Do not be afraid of using new technology. May be attending seminars and train people


gy y g p pcontinuously.

DAILY BACKUP

Make a disaster management plan. Nobody wishes that accident should happen. Nevertheless, it is necessary to have a written document in place. Especially, mention about the backup and restore procedure Do a rehearsal exercises the backup and restore procedure. Do a rehearsal exercises. For instance, one factory was near river. Floods came. ERP server was on the ground floor and was damaged. Fortunately, backup CD was taken home everyday. They could restore the data on another computer and start the work.

Selecting ERP.

Invest lot of time in the ERP selection process. It is not like buying a mobile. If you do not like a cell phone, you can discard, and buy new one. ERP is like a long-term partnership (marriage, shall we say). There are going to be difference of opinion with the spouse.


This can be sorted out. Similarly, one cannot keep on changing ERP.

DO YOUR HOME WORK WELL. COMPARE ERP MODULES OFFERED BY VARIOUS ERP COMPANIES

Do not get carried away by impressive PowerPoint presentations. Marketing people are trained to give Rosy picture. The chief of ERP (main g y p (sponsor) should know the limitation of ERP and its customization. ERP implementers cannot deliver Moon. Although sales team will promise Moon and g pJupiter also. .


ERP is not bed of roses.

Business transformation is a painful process. Do not underestimate. It is like that scene of Jurassic Park II movie She that scene of Jurassic Park II movie. She is amused when she is looking at the Dinosaurs for the first time. She is told that in beginning, it is always wah wah but it ends up in screaming!


It is said that ERP implementation is a It is said that ERP implementation is a journey and not the final destination

THANKSTHANKSPRESENTATION BYJYOTINDRA ZAVERI

(C t E i G )(Computer Engineer, Germany)I. T. CONSULTANT .. SINCE 1975

email j zaveri@dnserp comemail [email protected] www.dnserp.com

98909 42042


10 ERP Success Failure

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