20 December 2009

The right ERP software

    Reading an interesting post in Panorama Consulting Group’s 360 ° Blog on Top Ten ERP Software Predictions for 2010, I was struck by the syntagm “choose the right software for their organizations”. I know from my own experience that this is a quest for Pandora’s Box, no matter how much we like to be confident and connoisseur about it, in the end is just philosophy.

    Putting myself in the position of IT Manager or whoever implied in taking decisions related to software adoption I would ask myself: “what’s the right ERP software for my company?”. In theory things are not complicated, I evaluate my requirements and the functionality provided in the various ERP solutions, the costs involved with them, the amount of time and resources I can afford, and in the end I choose whatever may seem appropriate for my business model. It sounds simple, isn’t it? Of course, this supposing that I understand my business as a whole, its infrastructure and its culture, the issues it faces, the short term needs vs. the long term needs, that the requirements are defined upfront, etc.

    In order to be sure that I’m doing the right thing, I even discuss with the sales representatives of the ERP vendors, have maybe one or two presentation sessions supplemented by a Q&A session in which my most experienced workers from each department express their concerns, ask for details, etc. Now jumping over the fact that the presentational skills and convincing tone of the sales representative might be a decisive factor in choosing a solution, I realize that the most important ERP solutions offer relatively similar functionality, most probably the differences rely in details. Now, there are a few questions that might occur to me… How much the people in the room, who maybe never worked with an ERP system, would understand what an ERP system is about? How much can they articulate their needs, identify which are the details that makes the most important impact on the business? How much the sales representative has understood my business and the overall context? In definitive he’s just trying to sell a product, how much he’s willing to dive into my requirements, analyze them and identify feasible solutions? Actually for that a few presentation sessions are not enough, it might take weeks, a whole team of resources, multiple iterations until you’ll come up with a feasible solution. Even then, once the ERP system is in place you observe that it doesn’t look exactly with what you wanted, with what you team intended, but that’s normal for IT solutions, unfortunately.

    Sometime after Go Live, most probably the employees will understand what an ERP system is about – sticking to the processes, data ownership, more time spent on data entry and data management, unified implementation starting with the strategic planning and ending with the booking of revenue, dealing with issues not considered during implementation, functionality that is not so easy to use as expected so Excel or MS Access seems to be a more flexible solution, difficulty of changing the system and processes when needed by the business, more systems need to be integrated with it, that the 360 ° overview of the business is just a myth, and so on. From my experience I observed that the users have great expectations before and during implementing an ERP system, though the reality brings them down to earth, almost no magic behind the software the whole company was talking about, just a different way of approaching things!

    The fact is that the decision of going with one ERP solution is validated only by the final outcome considered on long term, the impact it has on the business, the overall adoption and the degree to which it will fit the business needs, the flexibility of modifying it when needed. On the other side, if the ERP system doesn’t impact the business in a negative way, then the system can be considered successful, even if creepy things come to the surface from time to time. Was it the right decision? That I will not know for sure unless I’m moving to another ERP solution and I can compare the outcome with what I had in place, otherwise we just consider hypothetical situations. Actually the comparison might not be well founded because in such situation I benefit from the experience of already implementing an ERP system, I better understand the issues I was confronted with and eventually better address them in the new implementation.

    The important point I would like to highlight is that a company needs to have a certain maturity when going with an ERP solution, situation that needs to be addressed by vendors or/and organizations themselves in order to increase the chances of success, otherwise the mixture of acronyms like ROI, CIOs, SMBs, SaaS, ERP, CRM in vision philosophies are just nice stories to read before going to bed. Of course the learning by doings syntagm can be applied to ERP implementations too, though the costs are too high for such a scenario. The state of art in ERP world – the vendor wants to sell you a product and profit on customer’s expense also after doing that, often not being interested whether the product fits the purpose as long more issues lead to be more income, while on the other side the customer wants an affordable flexible solution that allows bringing the business to higher level of performance. Most probable something must be changed in how the two parties work, and this might be, at least from my point of view, the most important challenge for the next years.

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