Implementing ERP: A Process-Centric Approach

There is a prediction that over 70% of the
world’s business applications will move into the ERP format over the next decade or so,
which can be a cause for considerable excitement for the product vendors, implementers and
trainers that proliferate in large abundance in the ERP industry.

However, the reality is that the
implementation of ERP in many business organizations has run into rough weather, not so
much because of deficiencies in the software product, but because there has often been a
gross under-estimation of the time, projects are initiated either because ERP is seen as
today’s buzz-word, a few million rupees are spent in acquiring licenses of the most
popular product of the day and then the implementation runs into tough weather because the
organization is unwilling to commit itself to the process of making the product really
work.
Let us follow the typical implementation cycle to see what really can and does go wrong.
In the first instance, ERP implementation is seen as just another software package and is
let in the hands of the cio or systems manager. Since most ERP products are sold as being
highly flexible and adaptable to the needs of the firm, there is a belief, particularly in
Indian companies that the product can be bent any way to suit the particular and peculiar
processes of order procurement, planning, materials control and distribution that the
organization has always followed and it’s just a question of getting the people used to
electronic instead of paper formats. As the implementation progresses, the number of
changes that have to be made to eliminate non-value adding and vestigial tasks and
activities prove to be so many that the line managers harden their attitudes and pronounce
the ERP product as just one more in the long list of disastrous computerization
experiments and business reverts to usual and the systems head moves on to greener
pastures.

While this cynical view may not be
happening in many cases, it is not because the process is planned better, but simply
because the investment in ERP has normally been so high that it cannot be wished away and
all the managers try to make something happen. Even if the real benefits are not achieved,
some of the control systems are put in place so that the organization can at least claim
to have implemented some of the features. The sad reality is that implementing less than
half of the features typically results in benefits that are less than a tenth of the real
benefits of customer satisfaction, productivity improvement, cycle time optimization and
worklife enrichment that could and should be attained through ERP.

Catharsis
So how does one successfully
plan an ERP implementation in any organization? First and foremost, get the total
understanding to percolate among the entire top management team that ERP will involve a
catharsis, where every existing process and sub-process in the supply chain as well as the
entire customer-oriented business cycle will have to be put under the microscope. Every
process will need to be put as close to the theoretical optimum methods as possible, which
eliminates all unnecessary duplications, reverse work flows and orthogonal. To take a few
examples, an existing process that involves a document going to and from the sales office
to the factory to the office before a proposal can be given to the client will have to be
questioned to see whether an empowered sales person could not undertake the entire process
without all the delays. Similarly, a process that involves looping between two peer
departments like design and production will have to be streamlined and excessive delays
for decisions to be taken by bosses which call for information flows that are orthogonal
to the desired work flow will have to be simplified.

Call this Reengineering or Process
Rationalization, the basic necessity is applied common sense. What was required and
possible in a supplier-oriented shortage economy cannot be afforded in the cut throat
competition that pervades all industry segments in present times. It would be truly
disastrous to attempt a force-fit of an ERP product till the implementation team is
confident that the processes are as close to optimal as possible. Once that is achieved,
the correct ERP product can be put in with some customization which will be more driven
through change of a few parameters than an attempt to revisit the fundamentals of the
process.

The argument that is being made here is
that it is not the "ideal ERP Package" or multiple man-years spent in
customization and training that will drive the success of an ERP project in any business
organization. If the processes are elegant and streamlined and enough effort is put in to
make sure that all possible rationalization and reengineering is done, half the battle is
already over and the organization can truly hope to see the pot of gold that is expected
to lie at the end of the ERP rainbow.

pen.gif (928 bytes)Ganesh
Natarajan,

MD, Aptech Ltd, and
Director, Hexaware Group.
ganeshn@aptech.ac.in

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