Tuesday, April 15, 2008

ERP White Elephant

ERP and the white elephant

It is difficult to establish how much money companies have spent on the implementation of the ERP systems solution, and the actual benefits being realized.

It will be good for the community to begin collating information about the costs and benefits, in order to develop the knowledge and methodologies on how to have more cost effective implementation for future projects.

The general consensus is that many ERP projects fail to provide the expected benefits. More so if the implementation has been technology-driven, and the management and key users are expected to adopt and adapt to the “best practices” incorporated into the ERP.

The “best practices” are at best what the ERP developers have acquired through the initial design, subsequent revision and joint efforts with some selected customers.

From the various sources of knowledge, it is generally believed that the following steps may produce more cost effective implementation:
a) top management commitment
b) BPR champion
c) Executive Education
d) Project Team and Key Users education and training
e) Business Process Conceptual Model and Mapping
f) Establishing systems requirements and RFP
g) Gap Analysis and Systems Configuration
h) Key Users Validation of Prototype
i) Implementation Master Plan for progressive roll-out
j) Performance management to fine tune the ERP, systems and people
k) Continuous improvement through Performance Management

The conceptual model building is crucial to ensure that top management, operations management, project team and key users work together to define the appropriate processes to support the decision support, operations and execution needs. The more efforts spend at the design stage, the more benefits can be realized leading to better success in implementation.