ERP Systems - Finding the Value.
February, 2008


We started the new year with a return to some IT Strategy Basics, blocking and tackling.Catch up on the basics.

This month we return to another ERP Critical topic, one that every ERP user, potential user and vendor wrestles with day in and day out - Finding the Value in an ERP Implementation.

ERP Systems - Finding the Value. By Paul Sita, Principal, Innovative IT Consulting, LLC. Paul can be reached at 631-549-1685 or psita@innovativeitc.com.

The drive behind ERP. ERP implementations are typically driven by a desire to achieve certain benefits or to deliver certain capabilities that an organization lacks. Ones commonly heard are “real-time P&L visibility”, tighter integration between sales and operations, reduction of inventory – the list goes on and on. Each of these warrants their own discussion about how to achieve those objectives. Additionally, there is an entire body of work about how to quantify and measure these kinds of changes.

Regardless of the specific benefits you are seeking, this month we want to focus on some basic notions about HOW to find value in your ERP implementation. This is a crucial topic because there is increasing sentiment in the marketplace that ERP implementations are incapable of delivering value, that they are just another version of IT touting the latest and greatest new technology or approach. We disagree strongly with this opinion. But we also understand why it is prevalent.

1. Look at issues as part of an overall business process, not as isolated factors. Companies flourish and productivity rises when cross-functional communication and decisions become the norm not the exception.

70% of ERP users do not believe that their organizations are getting the value they could from their ERP system. Want to be part of the other 30 % that do? READ ON!

2. Mandate putting all critical information inside your ERP. No more spreadsheets and Access databases and applications that lack corporate visibility and end up creating subsidiary IT departments. The ERP is the truth. The spreadsheet can be the output, not the other way around.

3. Integrate ERP thinking into every critical business initiative. If you routinely hear that “IT isn’t needed for that discussion” you’re in danger of missing value opportunities. If IT is considered the “owner” of the ERP system, that in itself could signal a problem to getting value from it.

4. Commit to ongoing education. Notice that I did not say "training". We're not referring to which keys to hit to enter a transaction. We're talking about training in inventory management techniques, analytical tools, teamwork and communications.

5. Focus on information, not technology. The value in ERP comes from reliable, predictable and focused information available throughout the organization integrated with the company’s critical business processes and decision making. Technology is only the enabler. NEVER CONFUSE THE TWO!!!

ERP Value arises from thinking, planning and executing as an enterprise, as opposed to a set of loosely connected departments each with their own set of goals and measures.

Catch 22. Every major decision has its own Catch-22. You need experience to land a good job, but you can’t land a good job without experience. You need ERP to facilitate a disciplined organization that shares a focus on one set of goals, but you can’t effectively implement ERP without discipline. ERP will force you to work more like an integrated enterprise, and reward you for working more like an integrated enterprise

Summing up. Effectively using ERP has to mean getting value from it. It’s a process, not a project. It’s a strategy, not a milestone. It’s a long term commitment, not a short term activity. Accept it for what it is. Follow these principles and as you get better at it, you’ll be better at identifying the value opportunities, quantifying them, and achieving them!


Tip of the Month

The Only Constant is Change.
By John Pellegrino, Principal, Innovative IT Consulting, LLC. John can be reached at 631-549-1685 or jpellegrino@innovativeitc.com.

For several years I have touted my self-invented proverb, “the only constant now is that things will change”. My partner, Paul Sita, reminds me of the axiom that accompanies this, “things will not only change, but they will change rapidly”. Therefore, I thought it would be appropriate to give some tips on a very important part of every ERP project, big or small, that I have been involved with, change management.

See it for what it is.   The first step to managing change is to recognize the change and how it affects the people involved. Don’t put your head in the sand and act like nothing is changing – it’s simply not true. When you work with a new ERP system many things change (hopefully for the better), business processes, roles, and relationships between co-workers to name a few.

Hear it for what it does. The second step in managing change is to listen to the people that fear it. For most people change can be a little scary, we would all like things to just go on as we know it. Change affects us in a very personal way because it is not human nature to want to change. Think about how hard it is for us to change bad habits, such as smoking or not eating properly. Take the time to understand why the person does not want to change.

Speak it for what it means. The third step to managing change is to talk about how it can make things better overall for the company. Address the issues of each person head on and tell them how they can contribute personally to making things better for the company. Then make a plan of action for the person to contribute. This may consist of activities within the project and/or some specific training. In essence, become an agent of change, not a hindrance to it.


What's new?

The Question of the month!! Every month we field a question from one of our fearless readers! Don't be shy. Submit your hardest question and see how we do.

Word Scramble time.
“Process of continually improving skills within an organization. (2 words)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

G E A N O G C U I I O N D T N O


Answer to last month's word scramble.

“ Business cases used to determine if your business application is working to spec. (2 words)(TEST SCENARIOS)

Question of the month. This month's question comes from Larry P. in NY City.

We have one of the well known ERP systems. But I'm finding that people are constantly "going around" the system or using their own spreadsheets and tools to make decisions. What can we do to change this? Larry, it sounds like your users were never fully educated in why the company invested in ERP, and how the organization expects to get value from it. So, those users are just using the system to enter transactions. If you dig deeper, it's possible that you might need to re-implement the system if it really is not capable of delivering the information that people need, but I suspect that this is not the case. Go to management and try to get some education going. Good luck and keep us posted!


A Look Ahead To Next Month

In March, we'll continue with the quest to get value out of ERP, by looking "OUTSIDE THE BOX".

We want your feedback. Contact us

Innovative IT Consulting, LLC
(631) 549-1685