Tuesday, March 06, 2007

Lessons Learned posting 2 + Maha Shakir

Laurent Feltz Tuesday 6th March 2007


Lessons learned posting n°2

So I will start this posting with the matter I learned about the need for ERP.

The most important thing about the companies need is the definition of strategic need. All the needs for ERP in a company must be strategic:

  • Develop the reactivity in the business processes like fulfilling customer demand
  • Facilitate the share of information and thus the reporting, the control of margin and sales and the development of new products
  • Speed up the processes (like order and invoice data capture/input)
  • Improve the processes efficiency

The need for ERP should not come from the trend of the global competition to acquire ERP, because there are also reasons for not implementing an ERP system.

The business can work efficiently without such an investment. All the more so since ERP investment can cost a lot of money (in the basic application, in specific modules and other bolt-on, in customization, in support and in employees’ training) and would require from a lot of employees a lot of time which could not be use to do other strategic activities. Moreover the problem must me taken from the end-users’ point of view: if there are some reasons for them not to use it, the implementation or the design of ERP should be revised. What is more the use and especially the support of such a system require resources (employees in IT department for example) and knowledge that are likely to be missing before the implementation.

I wrote previously that the need for ERP should come from strategic needs, that is why it is so important to do analyses before looking for that material. The classic analyses are the SWOT and GAP analyses, because they allow pointing out the strategic goals of the company and then its objectives. At that time it is possible to link the advantage of an ERP system with the objectives of the company. These links are usually made in what we call the elevator speech (which is supposed to be short enough to be entirely said to an executive in an elevator).

This speech contains real benefits, improvement opportunities, the benefit category achieved, the development of future state process through integration and also the increase in sales (or margin or return) expected.

Another point of the class was the choice between 1 and several ERP for Corporation.

I think this question is linked with the question of the connection between subsidiaries. Actually it depends of the type of corporate administration. In simple terms, if the holding company tends to separate clearly the different subsidiary companies, the choice will clearly be several ERP!

I will finish this post with a brief analyse of the paper “Decision Making in the ESI of ERPs” by Maha Shakir.

The different phases of an ERP project are the evaluation, selection and implementation; and understanding who make the decision in each of these phases could help manager in the preparation to such a project.

In fact the decisions are not always financial ones. Strategy, processes and the stakeholders involved actually influence a lot these decisions. Without considering the theoretical decision-making models, it is important to understand that during a great part of the project phases the decisions are basically political (i.e. decisions are based on personal objectives rather than organizational purpose). The decision-maker often being the consultant, he has a big decision power in the ESI of an ERP, so I can even conclude that the choice of the consultant is primordial.

I also thought this paper was interesting because it has taken into account the main ERP project phases that I remember to have learnt one day in a Pr. Carugati’s lecture.

No comments: