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OM in the News: 3 Rules of Thumb for ERP Implementation

September 17, 2013

ERP-GraphicIn our discussion of ERP in Chapter 14, we write: “ERP systems are expensive, full of hidden issues, and time-consuming to install.”  Adds Apptricity (Sept. 16, 2013):  “ERP implementations too often turn into their own little hellish experiences for companies large and small.” Getting all of a company’s various data systems to talk to each other efficiently, accurately and instantly share data makes great sense. But many companies still don’t have effective and efficient ERP systems in place. So what can a firm that do to successfully implement an ERP system?

Apptricity provides these 3 old adages:

  1. Look Before Your Leap.  ERP systems are complex, touching on every department, worker, business activity, form, and data set. That means that every need, contingency, possibility, and potential barrier must be addressed in the planning process. Failure to do that invariably leads to frustrating and expensive delays.
  2. Too Many Cooks Spoil the Broth. Managing an ERP implementation presents similar challenges. If there are too many chefs involved in development of the ERP system, the end result is likely to be system that can do lots of things only moderately well – and often at a much higher cost than anticipated. But if the planning doesn’t include the CEO, CFO, and CIO, the result is likely to be a system with gaping holes. It is critical that these execs properly define the scope and budget of an implementation and then assemble a team that includes the right workers.
  3. Be careful what you ask for. Many companies choose a vendor to design and install a system based on the dual promise that what it is being bought is a proven, bolt-on system that can still be customized to meet the company’s needs. The problem is that instead of bolting on a proven system and customizing only 15-20% of it, what typically happens is that 50-85% of the bolt-on ERP system ends up being customized. That dramatically inflates the cost of the project and creates lengthy delays.

It all goes back to the planning process. Once a company determines what its scope and budget for an ERP system should be, management should firmly commit the company to staying within that scope and budget.

Classroom discussion questions:

1. Why are ERP systems important?

2. Why are the systems hard to implement, and why do they fail to deliver so often?

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2 Comments leave one →
  1. September 17, 2013 2:03 am

    After 15 years of consulting on data systems, I have found two types of clients. One client knows their business is different, and has engaged me because they know they need significant work. The other type of client is unwilling to admit their business is unique, and is convinced that some pre-packaged software will meet their needs “with just a few extra features.” On more than one occasion, I had to walk away from the latter client.

  2. March 1, 2014 11:14 am

    Nice Blog !!!
    It looks like you spend a large amount of time and effort in writing the blog. I appreciate your efforts.
    ERP is vast as it integrates all the business processes of different departments and functions across a company onto a single computer system that can serve particular needs of the different departments.
    Thanks for sharing such a nice post…

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