Business pain can be good for ERP
August 3, 2011 2 Comments
Instinctively, we all try to avoid or minimize pain. This is true for individuals as well as business organizations. However, in our attempts to reduce pain, we too often focus on eliminating the symptoms without addressing the underlying root cause. We may feel temporary relieve but our short-term decisions only lead us to a point were the pain resurfaces and the available options to address the pain become more limited and costly. In the next sections, we will discuss how to address business pain by effectively utilizing your existing ERP investment.
Step #1 – Take an appropriate problem solving approach
Following is a standard problem-solving approach as defined in the Project Management Institute’s Body of Knowledge (PMBOK).
Seems easy enough! The challenge I’ve observed is that many organizations do not execute the problem-solving process effectively. To compound this challenge many customers believe that having an ERP system somehow accelerates or simplifies the problem-solving process. Following are some of the common misconceptions that cause ERP customers to miss the mark in solving problems.
The misperceptions and inappropriate expectations surrounding ERP can cloud your view of the real problem. However, the greater hindrances to effective problem solving are the views that (a) pain is bad, and (b) quick-fixes are more desirable (demanded) than permanent solutions to business problems. For an ERP perspective, the typical end-result to quick fixes will be more customizations. Greater customizations result in less flexibility and more costs. If unchecked, your organization can build band aid fixes on top of one another,which may ultimately result in a catastrophic event. The key to eliminating this quick-fix mentality is to change the perspective of how pain is viewed.
Step #2 – See business pain as an opportunity
My daughter loves to play volleyball. Recently, she has experienced some pain with her ankles as well as experienced some falls that caused my wife and me to have concerns. I suspect that I’m a little over-sensitive given that our daughter has Type-1 diabetes. We took our daughter to see a sports physician specialist to identify the problem. “Your daughter has a good problem to have.,” said the specialist, “she is still growing! Your daughter is still figuring out how to coordinate her changing limbs.” Whew! What at relief yet what a good life lesson. Too often, organizations can’t see past the present pain. We focus only on the symptoms (negatives) without looking for the opportunities (positives).
Many times, IT organizations are motivated by addressing problems by taking a “triage” or ‘fire-fighting” mentality. IT performance metrics can support this mentality if the focus is only on cycle-time and response-time metrics. Don’t get me wrong, if a production system goes offline unexpectedly, you can bet that a quick response is warranted. A red flag to look for is when ERP support problems are seen as an inconvenience rather than an opportunity. This can be especially frustrating to IT when the problem is a recurring issue. When viewed as a hindrance there is the natural human tendency to deal with the issue as quickly as possible to move on to the next problem. To get out of the above support rut first we need to eliminate or minimize reoccurring problems through effective problem solving. Once performed the IT organization can spend the time to evaluate viable options for greater ERP value generation.
Step #3 – Use business pain as a driver to increase ERP value generation
During my career as an ERP consultant, one of the key challenges I faced with every one of my customers was how to drive additional value from their ERP investment. As I did additional analysis, a common theme across my customers was that they did not realize the rapid deployment of new ERP functionality. Based upon my experience, I have identified the top three strategies that support long-term, rapid delivery from ERP.
As seen from the illustration above the single largest driver for long-term, rapid delivery of addition value from a customer’s ERP investment is frequent upgrades. However, in the effort to address tactical business pain quickly IT organizations built customizations as quick fixes instead of allowing these opportunities to drive the value proposition for an ERP upgrade. It is important that the internal IT organization resist the temptation for a quick win and illuminate the IT roadmap that will provide the opportunity for greater value from their ERP investment. In the next section, we will briefly discuss the price to be paid if one uses ERP as a means to a quick fix.
The price of ERP quick fixes
There is a price associated with every decision made. In the case of ERP, the short-term gains will eventually result in limiting your ERP strategy. ERP quick fixes are typically implemented as customizations. Customizations require a greater level of support from the customer’s IT organization (because ERP vendors do not support customizations). IT spends more time performing support activities (indirect business value) versus building new enhancements (direct business value).
Second, customizations add to the upgrade effort. Third – and most important – performing quick fixes send a signal to customers that counters the basic value proposition of ERP (packaged) software. The price of ERP quick fixes may be small at first but they will have a compounding effect on the Total Cost of Ownership (TCO).
Pain is the way our bodies (and organizations) communicate that something is wrong. It defines the gap between where we are and where we want to be. Effective root-cause analysis is the first step to correctly diagnoses the pain and identify viable solutions. ERP can play a positive or sometimes negative role in addressing business pains. The key to understand how to correctly apply ERP technology to transform business pains into opportunities for greater business value.