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Only 32% think ERP systems add real value
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- Reported
In a recent poll only 32% of professional respondents thought ERP systems added real value.
Enterprise Resource Planning systems include for example Oracle, SAP and PeopleSoft.
What is your view and why?
John McGrann
ERP's
Posted by Elaine on Thursday 21 May 2009 19:24- Reported
ERP's
Posted by Lee Hawthorn on Saturday 23 May 2009 11:48I have experienced ERP systems in 3 large companies. In my experience ERP systems add value. The real issue is that due to the complexity of ERP there is always some kind of problem and when people are asked they tend to remember the problems.
Success can be difficult to measure or people tend to forget about the success and interpret it as ‘business as usual’. In my experience the problems arise not from a lack of training but through a lack of power users in the business.
To have any chance of success there needs to be an appropriate level of local power users for each functional area. And ensure there is effective succession planning in place.
ERP systems facilitate a greater 'value adder' when it is accompanied with a Business Intelligence system (BI). BI can be difficult and expensive to implement without the ERP system. Done in the right way BI can lead to a real competitive advantage.
I for sure wouldn't want to go back to the world without ERP or BI.
Here's a real example...in the company I work for we have SAP ERP with SAP BI.
I saw an opportunity to push out the Accounts Receivable information (Aged Debt) to the sales force to aid collection. Whilst SAP ERP had the data I couldn't achieve my goal with ERP alone as it would require costly IT development. But because the ERP data was loaded to a Data Warehouse it was relatively easy to disseminate the information by utilising easy to use web reports. I couldn't have done this so easily if the AR data was held in some disparate system.
This also facilitated sending Aged Debt summaries by customer to the sales agent's mobile device so they were armed with information prior to meeting the customer.
The point I'm trying to make is that to assess the value of ERP it's better to consider the wider context and the opportunities it presents. It's possible that ERP is not exploited by the users to achieve the maximum value; however, I don’t think this is a failure of ERP or is it?
- Reported
ERP's
Posted by Shraddhanand Desai on Thursday 28 May 2009 10:53I agree with the point made by Lee above. However, even on a stand alone basis ERP's (whether readymade like SAP or home grown) do add value due to their "Integrated" feature. This feature benefits from following major aspects -
1. removes duplication of work due to workflow - output of one process/function automatically becomes input for next process/function. Since everybody works on ERP, all these inputs are available on a real-time basis. e.g. as soon as stores prepares GRN, the same is available for Accounts for booking the purchase (as against this, in the good old days, Accounts would have to wait for the physical copy and then enter the necessary details)
2. facilitates system-based controls - since all the facets of the process (input-processing-output) are driven by the system, it is easier to build in system-driven controls in place of manual controls (e.g. purchase booking quantity = GRN quantity). This ensures consistant practices as well as reduced risk.
3. availability of real-time data - since all the processes reside on the same server and use the same technology, any information is available on a real-time basis. Thus, ERP's provide a great power of information.
However, there is a catch! In such an integrated scenario, you cannot expect to complete a process unless all the preceeding processes are completed. This is a loss of flexibility in ERP. Power and flexibility are in inverse proportion. If you want higher power (higher quality of information) you should be ready to loose the flexibility (all the processes must be completed at the right time with highest level of accuracy).
Many companies do not appreciate this golden rule while implementing / developing the ERP. They are not ready to loose the flexibility and try to build in the flexibility in the system either by modifying the programs or by bypassing the system in some way (I have observed at some place that since the system was not allowing normal purchase booking due to non-availability of documents, the accountants started booking the purchases through JVs). As soon as they do this, the power of the ERP is compromised. However, they don't understand the real reason for such a loss of power and start blaming the EPR for the same.
In a nutshell, I think ERP systems can add value if one wants them to add value and is ready to support wholeheartedly. If one wants extra flexibility, then one has to live with less power and not blame ERP for the same.
- Reported
New Group - ERP Zone
Posted by John McGrann on Thursday 04 June 2009 18:42- Reported
ERP's
Posted by tobja on Saturday 18 July 2009 22:02A lot is to do with an accountant or other employee learning the new system.
They are so tuned in to the old way of doing things that its difficult to get them to accept the new procedures for what they are. You more often than not cannot do things the old way on a new ERP system, it just doesn't fit.
Some of the problem is not getting the proper buy-in from the people that matter by leaving them out of the project or not giving them enough of the important tasks to do.
- Reported
ERP vs Back to basic Business Sense
Posted by Goh Pei Loong on Monday 24 August 2009 08:32ERPs / BI / MI
Posted by Andrew Ketley on Monday 21 September 2009 15:57Completely agree with Lee Hawthorn - reporting and analysis is where the real value lies in ERP systems. To generate real ERP, an ERP must be more than a convenient tool for recording transactions and preparing financial statements - it should enable the organisation to understand itself better. I can think of five preconditions for this:
1) Robust data integrity controls - switching off core program controls for short-term administrative convenience (all too common, as Shraddanand Desai points out) is a big no-no.
2) Treat data categorisation as a core project deliverable, and not an afterthought - the chart of accounts (for the general ledger) and the commodity coding system (for procurement) can make or break the quality of reporting delivered by the system. There is a fine balance to be struck between the granularity of the coding system and the ability of staff to use it accurately.
3) Buy and implement a dedicated reporting package. Economising in this area will cripple the usefulness of the system.
4) Spread the information widely. As a general rule, write access should be the minimum necessary, read access the maximum possible. Even the best people are little use without access to the information they need.
5) Senior management must be prepared to accept inconvenient truths. The best ERP and reporting solution will be useless if the role of the finance department is seen as delivering politically palatable answers.