Panorama Consulting’s latest newsletter reviews how they did on their 2009 predictions for the ERP market – and as usual, Eric Kimberling seems pretty well on the mark
One thing caught my eye in Prediction 2 – where Eric states “… we are starting to see more ERP implementation failures surface now as a result of under-investments in ERP implementations and cut corners along the way.”
For years, in the industry we’ve been using the common metric that 80-86% of all ERP implementations will fail when measured by budget, time to go-live or expected functionality. So starting from a baseline of 80% failure and ‘now we’re starting to see more.’ Are we in the 90% failure rate? 95%? What is MORE?
It should be a WAKE UP CALL to anyone considering ERP projects. Folks, this is no territory for the average company to go it alone. You need a consultant to handle the business analysis, software selection and evaluation, purchase and implementation.
Fact one, most companies simply select a few key department managers to head the selection committee effort. OK, fine, someone needs to represent the business issues – and no one knows them better than the people doing the day-to-day management. Great. Now, exactly how many times have these same people done this particular task – selecting ERP? Maybe one or two have been through a ERP transition at some time in their careers? Sort of like the eye surgeon you just selected for your Lasik surgery who’s done it once or twice when he worked at some other clinic several years ago – oh, your eyes are too valuable to trust to the non-experienced? Well, your business, your livelihood, your career, and everyone on the payroll is depending on how well this ERP thing turns out – you might ought to have someone on your selection committee that knows something about the task at hand – even if you have to bring someone in-house for a few months.
Fact two – the recent trumps the average. Here’s the story – Joe in Accounting is a fine accounting manager. Been with the company for years. Good guy – kind of outspoken sometimes, but everyone appreciates his passion and dedication. Joe’s kinda PO’d today, you see, the new clerk messed up – a whole Batch of purchase orders – nearly 75. So Joe has spent the morning going in and reversing each of these 75 PO’s because no one can tell which is the offending record. So Joe shows up late and flustered at the 1pm ERP Evaluation Committee meeting – he sits and stews for a few minutes as everyone reviews the requirements – and suddenly, Joe’s booming voice erupts – “I don’t care what else this new system does, just as long as it can reverse a batch entry PO’s with one click.” And Joe gets his back up – he’s not looking at anything without reverse batch entry or batch reverse entry or whatever.
Now the point is, the ability to reverse a particular batch of entries may well be nice to have – and many systems have some way of accomplishing this. But while this bad batch of PO’s that has Joe so PO’d happened this very morning – – it hasn’t happened in the previous two or three years – which no one is really sure, because it happens so infrequently no one can remember. But it’s now a key ‘must have’ in the next ERP system. And while Joe’s going on about a transaction that happened once in the last few years, Bill in the warehouse is prevented from speaking about reverse putaways, something that’s happening 20 times a week…
The recent Joe experience has trumped the average Bill experience – and because Bill is dealing with this EVERY DAY – he’s immune to the time wasted, the labor costs, the over ordering of inventory to cover for shortages created by incorrect pulls – and so on.
But…if you had a decent Value Analysis, you’d see the reverse putaway feature could save your company $223,000 per year, and a reverse batch PO entry could save your company $233 a year – your selection criteria would likely be somewhat different.
Again – only if your ERP Consultant could tell you that there’s even such a thing as a reverse putaway feature – because no one on your ERP Evaluation Committee has ever heard of such a thing.
Coming next week – checklists on how to select the right ERP Consultant, how to set up the ERP selection process, some budgeting tips, etc.
If you don’t hear from me, remind me at firstname.lastname@example.org.