Posted by: S R Balasubramanian
business case, business value, enterprise resource planning
I have been trying to find answers to this question. Many organizations choose enterprise systems ranging from ERP, CRM, SRM, PLM to SCM and the like but have sometimes very little idea what they are getting in to. Many who purchase feel this is the in-thing and take comfort in the fact that many others have gotten into the same game. Some complain about the failed experiment but others feel content or are indifferent. ERP is the most used among enterprise systems and therefore I undertook an informal survey to find out how these companies took to ERP. Reasons that emerged were varied and often funny. Let me list a few of these situations.
Replacing legacy systems – This is the case that I come across most often in companies. When the old legacy systems start creaking at its seams and are unable to address business requirements, the management, users or the CIO deem it appropriate to replace the old systems with an ERP. If the main purpose of ERP is replacement of earlier systems, the outcome of implementation will always be limited to replication of old features in the new system. Bigger Issues like transformation, business process improvement or new ways of doing business, don’t find traction. Since they start with humble moorings, they stay happy with what they get.
Where users dominate – There are few organizations with a federal IT structure, where strong business or functional heads call the shots with respect to the IT solutions they need. They argue in favour of the best-of-breed packages and keep their focus on what they need. I have known organizations where users in HR chose Peoplesoft, IT & Finance chose SAP, Plant maintenance chose IFS and Marketing went for Siebel systems. The poor IT manager was left with the task of integrating them.
CEOs diktat – Here the CEO takes the call. This could be after a consultant filled his ears with the grand concept or when he finds himself out of place in a party where his friends discuss ERP. So he comes back to his office and issues a terse command asking ERP to be bought. I remember of one instance when this CEO went on an official visit to their collaborators in Germany and on noticing them using SAP successfully, called up his CIO from there and told him that he would like to see SAP running in the organization on his return the following week. Fast decisions are always welcome but in such cases no one knows what to expect out of such systems and are left grappling with it for long.
Managements’ informed decision – This is the most desirable of all cases. Here the seniors consider the market trends, the competitive situation and strategies for growth. They feel the need for enhancing organization’s capability and decide on ERP after discussing with consultants and informed sources in the industry. The whole project then proceeds as per plan and with clear objectives. They achieve breakthrough and bring about significant improvements in the way they conduct business and leave many others far behind. Other companies try to emulate their success.
When CIO proposes – God save such companies – these are usually from the SME sector. The CIO strongly recommends an ERP and gets away with it. His sole interest is to enhance his profile and having dabbled with the system for a few months to a year, finds another opportunity and coolly abandons them leaving the company in the lurch.
Many companies complain that they have not got enough from their enterprise systems. They however need to ask themselves if they made themselves aware of the intended deliverables before approving the project, like they do it for other business projects, and if they had at all enquired or lent a helping hand when the project was in progress.
I have dealt with quite a few companies either as a CIO or as a consultant but except for two instances, I got into these companies after they had decided on ERP or other enterprise systems like CRM, SRM, BI, PLM etc. Incidentally even as a consultant I am usually called in by clients for help after they have begun implementation or later when they want to get more out of the systems implemented. I only wish that companies call in advisors before they begin so that they take the right direction at start rather than doing course correction later when it is too late.