Why my ERP Implementation failed..?

Target Audience – Business Owners of Small and medium enterprises in India.
Why my ERP Implementation failed..?
My assumptions:

  • We a family owned business.
  • ERP will solve my routine issues.
  • ERP shall adapt to my old methodologies
  • My Business process is unique and best suited for me.
  • I am solely responsible for all the decision making in my organisation

If the above are true, an ERP is not a solution for you (at the moment). Your requirement is ‘Transformation and Process re-engineering.’

Let us understand ERP a bit more; ERP’s are built after studying thousands of varied Business processes, their applications and success rates so that the ‘Industry Best Practices’ are identified and preconfigured to suit businesses.

Now, let’s look at the assumptions once again;
1. We are a Family Owned business. – What this actually says is that you have a success story built on one man’s intellect, the founder. When businesses grow beyond a certain point they have way too much information that goes missing from the eyes of this Founder. Result -profitability exist but no one knows where they lost money. Simple examples are stock outs and man power Planning.

2. ERP will solve my routine issues. – Issues are often mistaken as the problem areas. In fact they are just a symptom of a bigger underlying problem. That’s the reason you have not been able to get rid of it. Some examples of this is that there are huge deviations from your physical stock and system stock or FIFO violations.

3. The ERP shall adapt to my methodologies. – ERP’s are created to support best practices. Best practices don’t happen. If you have not invested in optimising your methodologies you will end-up with a huge list of GAPs that your Implementation partner shall hand out. In most cases they expect you to fix it but, the problem is that you have no clue on how to fix it. So, the next best thing comes in – Custom Built Process (Please read as ‘Poison.’)
You spend 3 times of what you should, to get custom work done on your implementation because most have no idea, how it should have been in the first place.

4. My Process is Unique and best suited for me. – This might sound similar to the one above but trust me this one is even more dangerous. To understand the difference we need to know the difference between Planning Production and making your product. How your product is made could be a unique formula but how your production is planned can never be unique. An ERP help you plan your Production but it is your trained people that will make it for you. In most cases planning techniques are missing leaving huge GAPs in the process. For example, you expect MRP to plan your material but you have never done a Consumption based analysis for standard items. So, you have incomplete information that is used to generate your material masters causing huge deviations from what is required and what is available.

5. I am solely responsible for all the decision making in my organisation. – Delegation is the key to success. Delegate not only jobs but also powers to execute them. If your people do not have sufficient powers to execute the job they will not be able to deliver a successful implementation.

Most failures are not software failures, but process failures caused by people and their lack of knowledge of the subject. If you know what to expect you will never fail. Sales representatives set very high expectations during the sales pitch. Everything they say is not a white lie but it’s too far- fetched at the first go.

If you want technology to help your business do it the right way;

  1. Do a GAP analysis
  2. Get your Consultant to fix those gaps, on the shop floor, with Industry best practices.
  3. Ensure your people are comfortable with the change.
  4. Ensure your business has benefitted from the change.

Once you have accomplished this, you need a system to help you control these practices, analyse how things have been moving along and plan ahead using this analysis. It is now that you need an ERP to run your business.

ERP systems will definitely benefit your business but not unless you have done the hard-work first.

 

“Your business runs on an ERP, the ERP does not run your business.”

Author: Rohan Ranadive