ERP with desirable effects

2019-04-08 10:39:18

Why don’t ERPs bring desirable effects?

Why don’t small businesses get the results they want with ERPs?

I´m going to write about one particular experience, but I´m convinced that such a description (or case?) could fit others’ experiences in various small and mid-sized businesses.

Among small- and medium-sized enterprises (SMEs), there has been a strong trend in the past few decades to implement ERPs. On the one hand, PCs were more available everywhere and, on the other hand, companies became more and more complex. I don´t want to go deeper into detail (there are plenty of articles and posts on the internet), but I want to stress the frame for decisions firms made to buy an ERP. Many providers, sellers and consultants wanted to sell ERPs and ERP was “cool” two or three decades ago. ERPs were implemented at a huge rate. ERPs have grown, new modules have been developed, and ERPs became monsters.

However, the price for such a purchase and implementation often consumed a huge share of an SME’s budget. They therefore often tried to save money in that stage of implementation. For the most part, they saved money by omitting training programs for ERP users. That was only the beginning of problems. Nobody had in mind the main reason of the investment. That was: making more money, increasing profit.

I learned this through my own experiences. The top management published a list with arguments for buying an ERP (in our case, SAP). One of the goals was to cut costs. Yet this goal has been never pursued, measured or proved. It was same with the others items from the list.

Due to lack of training, SAP has become huge monster and great mystery to users.

On the one hand, for ERP consultants (inclusive SAP consultants) ERP has become a great business opportunity. On the other hand, no consultant or developer is familiar with the entire ERP. Even worse: no one knows the bigger picture of the role which ERP plays in a company.

From my point of view, both sides are responsible for bad results in so many (maybe most) cases of bad ERP (SAP) implementation.

How can we avoid this situation in the future?

Well, the solution can be found in theory of constraint (TOC). We shall ask what the goal is. Is the goal to implement ERP? Or is the goal to make more money?

I´m convinced, the second answer is the right answer. We shall buy solution for making more money. As example: We can use a contract between a company implementing ERP and ERP consultant. That contract says, after implementation of ERP, if the company will make more money, the ERP consultant will get X % from the increasing profit. It will cause, that each side will have interest on their mutual goal.

A man could say: Nowadays the ERP market is saturated. In this case the logic mentioned above could be used for particular projects in ERP too. The goal remains the same. Make more money. And only than should be the consultant be paid.

I suppose that most firms try it in such a way, but I am not sure whether sufficiently. In my opinion both sides (companies and consultants) are stuck in their worlds and points of views without knowing the other side and I think this is the reason for many failures.

This is the point, where I want to help and to find a better future for both sides. I have been SAP user as a plant manager for 17 years. I also have been an ABAP OO developer for 10 years. The purpose of this website is to share my coding and my insights.