Automation ERP Project Mgt Part I

What are ERP Projects and how are they used? Are they really IT projects or CEO projects?

ERP Project Management Basics, Part I

ERP Project Management Basics, Part 2

What is ERP? - a "business system for an enterprise - integrating the various parts." Since it is a
"business system...it is a CEO project, not a CIO project or any other persons. Why?
Because it requires the highest level of cooperation from senior and middle management which
will NOT be forthcoming if it is a CIO or someone else's project per se. It must be the CEO
because of at least two major reasons: first, ERP projects must have responsive and cooperative
corporate management and employees. The only way to achieve this is through the CEO;
secondly, it requires support and understanding at the highest level due to the expense and the
absolute need to manage expectations throughout the enterprise - the CEO and Board. Anything
less will result in an IT scapegoat for the failed ERP project.

Let's remember this really is a glorified MRP2 System, i.e. Materials Requirement (or Resource)
Planning used in manufacturing with all that entails. Sometimes it is misused!

Enterprise resource planning software, or ERP, doesn’t live up to its acronym. Forget about
planning—it doesn’t do much of that—and forget about resource, a throwaway term. But
remember the enterprise part. This is ERP’s true ambition. It attempts to integrate all departments
and functions across a company onto a single computer system that can serve all those different
departments’ particular needs.

That is a tall order, building a single software program that serves the needs of people in finance
as well as it does the people in human resources and in the warehouse. Each of those
departments typically has its own computer system optimized for the particular ways that the
department does its work. But ERP combines them all together into a single, integrated software
program that runs off a single database so that the various departments can more easily share
information and communicate with each other.

That integrated approach can have a tremendous payback if companies install the software
correctly. Legacy databases are the most difficult in planning and execution.

Take a customer order, for example. Typically, when a customer places an order, that order
begins a mostly paper-based journey from in-basket to in-basket around the company, often
being keyed and rekeyed into different departments’ computer systems along the way. All that
lounging around in in-baskets causes delays and lost orders, and all the keying into different
computer systems invites errors. Meanwhile, no one in the company truly knows what the status
of the order is at any given point because there is no way for the finance department, for
example, to get into the warehouse’s computer system to see whether the item has been shipped.
"You’ll have to call the warehouse" is the familiar refrain heard by frustrated customers.

ERP vanquishes the old standalone computer systems in finance, HR, manufacturing and the
warehouse, and replaces them with a single unified software program divided into software
modules that roughly approximate the old standalone systems. Finance, manufacturing and the
warehouse all still get their own software, except now the software is linked together so that
someone in finance can look into the warehouse software to see if an order has been shipped.
Most vendors’ ERP software is flexible enough that you can install some modules without buying
the whole package. Many companies, for example, will just install an ERP finance or HR module
and leave the rest of the functions for another day.

How can ERP improve a company’s business performance?

ERP’s best hope for demonstrating value is as a sort of battering ram for improving the way your
company takes a customer order and processes it into an invoice and revenue—otherwise known
as the order fulfillment process. That is why ERP is often referred to as back-office software. It
doesn’t handle the up-front selling process (although most ERP vendors have developed CRM
software or acquired pure-play CRM providers that can do this); rather, ERP takes a customer
order and provides a software road map for automating the different steps along the path to
fulfilling it. When a customer service representative enters a customer order into an ERP system,
he has all the information necessary to complete the order (the customer’s credit rating and order
history from the finance module, the company’s inventory levels from the warehouse module and
the shipping dock’s trucking schedule from the logistics module, for example).

People in these different departments all see the same information and can update it. When one
department finishes with the order it is automatically routed via the ERP system to the next
department. To find out where the order is at any point, you need only log in to the ERP system
and track it down. With luck, the order process moves like a bolt of lightning through the
organization, and customers get their orders faster and with fewer errors than before. ERP can
apply that same magic to the other major business processes, such as employee benefits or
financial reporting.

That, at least, is the dream of ERP. The reality is much harsher.

Let’s go back to those inboxes for a minute. That process may not have been efficient, but it was
simple. Finance did its job, the warehouse did its job, and if anything went wrong outside of the
department’s walls, it was somebody else’s problem. Not anymore. With ERP, the customer
service representatives are no longer just typists entering someone’s name into a computer and
hitting the return key. The ERP screen makes them businesspeople. It flickers with the customer’s
credit rating from the finance department and the product inventory levels from the warehouse.
Will the customer pay on time? Will we be able to ship the order on time? These are decisions that
customer service representatives have never had to make before, and the answers affect the
customer and every other department in the company. But it’s not just the customer service
representatives who have to wake up. People in the warehouse who used to keep inventory in
their heads or on scraps of paper now need to put that information online. If they don’t, customer
service reps will see low inventory levels on their screens and tell customers that their requested
item is not in stock. Accountability, responsibility and communication have never been tested like
this before.

People don’t like to change, and ERP asks them to change how they do their jobs. That is why the
value of ERP is so hard to pin down. The software is less important than the changes companies
make in the ways they do business. If you use ERP to improve the ways your people take orders,
manufacture goods, ship them and bill for them, you will see value from the software. If you
simply install the software without changing the ways people do their jobs, you may not see any
value at all—indeed, the new software could slow you down by simply replacing the old software
that everyone knew with new software that no one does.

The KEY is good Planning and Execution. Planning takes a special approach. We use PERA. ERP is
considered the highest level of automation within the seven levels of automation.

How long will an ERP Systems Project take?