Have you ever heard this statement, Yes I’m sure you have heard this infamous statement from your friends in the Industry.
The statement is supported by various surveys which suggest that globally 56% of all ERP Implementations fail to meet management expectations, and the figure is close to 70% in India. So the numbers put their weight behind the statement as well, but the real question for me is, how do we define the success and failure? What do we mean by management expectations?
Does it mean that the technology used for ERP is not good, or does it simply implies that the screen do not look great? are we doubting the basic calculation and reporting generated from the ERP?
For majority of the implementations, its turns out to be that management were expecting moon(or were sold one), but they abruptly landed on earth and that to exactly the same place, along with another crying baby on their laps!
Does this sounds familiar ? If it does, then spare me 3 more minutes, I will try to first bring some objectivity to this question itself, what does a management or employee means when they say “Maja Nahee ayaa”.
The reason why this subject needs some detailing and objectivity is because I believe this one questions is the most important one for an organizations journey towards scale and next level, I have been hearing this from past 15 years of my ERP career.
To answer this questions, I would like to start from the very beginning – ERP selection process and why was ERP implemented in the first phase?
Did your organization actually needed the ERP in the First Place?
With so many products available did we select the right product?
Did we select the right team, and the SI (system Integrator) experiences?
Each one of the above question is a subject of various studies in itself, I will try and explain each one of them. But let me tell you that most of the ERP failure do not happen because of the product, but due to your internal process and team (both internal and external). Let me elaborate on this further.
People and Process are THE Most important pillar in any Project, and ERP implementation is no exception.
Every ERP journey should start with a big WHY and move towards what and how.
Every organization should first answer the question on why do they need an ERP?
Is the need generated due to the growth, volumes, spread, controls, duplication, compliance etc?, or
Are we just going for it because our peers have bought one or your team is demanding one?
Your need and requirement should be very clearly defined, take help if required but just don’t jump because it sounds correct. While answering this question, also keep in mind the maturity of your team and process (people and Process will always come before any technology).
Always ask this question — Whether 2+2 =4 invented before or a calculator?
The answer is for this question is obvious 2+2. But many a times organizations start imaging that they will be able to re-engineer or implement a process by using the ERP – this where the danger starts – each organization should put this test to most of their process, and this one simple questions, are my current process ERP Ready – Do we have Gaps (Gap Fit Analysis), do they need any changes bases the new environment, and only then take a call on the need for ERP and which ERP. Don’t blame the ERP if your house is not in order. Also in the similar context, assuming calculator is required for your kid, who is in grade 5, which calculator should we buy normal or scientific ? This will give some solutions to your which ERP.
Once you have answered this question and assuming we have decided to go ahead with ERP(calculator), the questions which is asked is
- Which ERP should we select – the complication of this question is described below
should it be an enterprise level, or a smaller one ?
should it an off the shelf product, or custom to your requirements ?
should be on cloud or on premise ?
local or global ?
SaaS or Perpetual ?
The above questions also becomes more complicated once we add the limitation of various pricing options available – spending money is never challenging for an Entrepreneur but he / she would always want to understand the value which will be reinvested back in the system. One is always hitting a bullet in the future at a price point of today, hence the confusion.
Assuming you have selected the ERP Product – Service Provider – then come the next questions, how do we manage the Change – what to change, what not to change, will your team come up the speed quickly or will they stay in love with their Tally and Excel. Also will You or the Management will be able to change their habits as well, because change should always flow from top, who will manage the deliverable, how do we provide the data for the go live, who will do the testing, is my team trained enough.. etc. this takes time and effort, any thing from 7 months to 2 years, depending on various factors.
Lets come back to the base question, how do we define is my ERP implementation success or a failure. Try answering the following business questions
Does your inventory reports generated from the ERP believable , do they reconcile with your actual physical stock
Does the global standard practice three way checking working in your company (PO -MRN – Invoicing)
Can a user punch an vendor Invoice beyond the PO or the MRN quantity, even by mistake
Do you have duplicate customers, and is your team spending time reconciling them
Do you have duplicate vendors and are there mis-match of vendors payment
Do you review your customer aging from the Reports from ERP or is the same provided separate by your AR team
Is your asset Register available in your ERP
Do you know your production losses and wastages from your ERP , or is it still managed in Excel ?
Success is not defined by getting Yes to all the above questions, but definitely most of them should be Yes, and one should start believing the numbers as we believe the simple additional answer coming out of a calculator and never second guessing the same, and every one supposed to use is using the same calculator for their respective activity for deliver one single object for the organization.
We believe that the % of success can be not only improved but significantly altered by following some very simple steps. Both PRE or POST ERP phase, depending where your organization is as this point of time . we love this subject and would love to believe that we can add immense value to your organization given an opportunity. Would love to get invited for an coffee to express this in more detail.
Lastly please also ask your ERP team – Is your ERP GST ready ?