Automation ERP Projects - 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.
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.
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info@projectexecutive.com
713-255-8350
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