ERP Implementation: Catching the Bull by the Horns
A combination of improved enterprise applications, increasing demand for better market response times and weak in-house technical skills ensures that mainstream firms will embrace packaged ERP software. It’s important to note that each ERP application suite has its own architecture, customization features, installation procedures, and level of complexity. Therefore, you can never approach the installation of all ERP packages in the same manner.
Take, for instance, Oracle. Companies implementing Oracle use a variety of implementation strategies:
- A step-by-step approach, in which one Oracle module at a time is installed, tested and integrated with other systems.
- A “big bang” technique, sweeping away all old systems at once and replacing them all at once.
- A “hybrid big bang” approach, in which various modules are implemented at one time, piloting them in one area of the company and then extending the program throughout the firm.
Most companies use the last approach above . Even if the implementation strategy is right, setting up the ERP solution is a highly challenging task. Numerous obstacles—many of which are not even technology related—hinder the organization’s ability to move quickly. There is always complexity involved in translating strategy into execution.
Often times, members of the project team are technologists who don’t understand the business side of what the ERP application is supposed to accomplish. For example, in a manufacturing business looking to implement an ERP, it is not enough to assess how many people worked on each assembly line and the volume of parts and materials ordered by each plant to calculate the manufacturing costs. But the numbers proved far too vague for operations executives, who needed an accurate gauge of the cost of making each product. They needed to know labor and unit costs and waste rates at each plant. It takes a while before the ERP application starts doing what it was meant to do: keep materials flowing, log orders in, send bills out, highlight the most efficient operations, and red flag the least. To build an e-business blueprint, enterprises need to automate all the key functions like manufacturing, sales, and distribution, supply chain so that enterprise data starts flowing seamlessly across the organization for ready retrieval and analysis paving the way to enhance enterprise wide decision making capabilities.