Page 47 - MetalForming September 2012

example, customer-relationship man- agement (CRM) was not yet popular- ized (Siebel was founded in 1993). In most companies, business intelligence was limited to report-writing or cus- tom-built data warehouses. Mobility apps and collaboration systems were a long way off in the future. Even e-mail was not well-established in busi-
ness communications. So, ERP was where most of the action was, especially in the manufacturing sector, where it has its roots.
Although ERP was a hot topic
in the early 1990s, today we understand that ERP really does
not do all things equally well. Even the term “Enterprise Resource Planning” (an evolu-
tion of the “Material Require- ments Planning” and “Manufac- turing Resource Planning” systems of the 70s and 80s) is a misnomer. ERP systems are not primarily planning systems; they
are transaction-processing sys- tems. Benefits primarily are in standardizing and automating business processes. To perform what-if planning, understand trends hidden in the data, or gain a 360-deg. view of customers,youneedtogobeyondERP.
ERP plays a unique role in a com- pany’s applications portfolio, and forms the foundation for so many other things that organizations want to do. Sure, you can go out and implement CRM as a standalone system, but CRM works better when integrated with ERP for end-to-end business processes. Likewise, some organizations have implemented supply-chain manage- ment(SCM)softwarewithoutERP,but SCM is much more powerful when it builds upon ERP as the system of record. The same holds true for busi- ness-intelligence systems, collabora- tion systems and mobility apps—all deliver more value when they have ERP as their foundation.
Today, ERP is critical as the trans- action-processing hub of an organiza- tion. In many respects, we can think of ERP as the new IT infrastructure—a standard platform for building out the
rest of an organization’s enterprise- applications portfolio.
Recognizing the Risks
The second way in which the busi- ness-management landscape has changed is in how organizations per- ceive the risks of ERP. Everyone has
viewed as computer projects, not busi- ness projects.
Today I find that business leaders have a better understanding of best practices for successful ERP imple- mentations. They realize that ERP means changing how the organiza- tion does business. They recognize
(usually) that top management must be committed; that a suc- cessful implementation will require participation by all affected functions; and that it is best to select an ERP system that fits the business out of the box, minimizing as much as possible customizing the soft- ware code.
But Outcomes Have Not Improved
So, if ERP plays a critical role and executives understand the risks and best practices, then organizations must be more successful with ERP today then they were 20 years ago, right?
Sadly, I don’t think this is the case. According to our 2011 survey, 38 percent of ERP projects exceed their budgets for total cost of ownership. Furthermore, as I indicated in my keynote last August, the risks of ERP go beyond cost overruns: ERP is particu- larly subject to functionality risks (the project was within budget, but the sys- tem doesn’t satisfy key requirements), adoption risks (the project was within budget, but the organization is not fully using it), and benefit risks (the project was within budget, but the expected
benefits are not realized).
So, what is the answer? The answer
is that business leaders need to be reminded again and again about these lessons learned, and they need to exe- cute on these best practices. So, while I could have given (and did give) much of this presentation 20 years ago, the lessons are still relevant.
You can view my entire presenta- tion from the 2011 Manufacturing ERP Experience on YouTube. Search for “Trends in Manufacturing ERP and How to Ensure Success.” MF
www.metalformingmagazine.com
MetalForming/September 2012 45
read the horror stories of failed ERP implementations. Names like Hershey, Waste Management and Nike are well- known examples. Often the under- standing strikes closer to home: Most business leaders by now have either experienced for themselves, or heard from their peers, what can go wrong with an ERP implementation.
This was not the case 20 years ago. Executives often believed the hype of software vendors who claimed that implementation could be rapid or painless, or that business leaders could go about their jobs while the vendor or a systems-integration partner, did the heavy lifting. Very few executives believe these myths today.
Acceptance of
Key Success Factors
Also true 20 yr. ago: Executives were quick to believe that new software could solve their problems, or that sys- tems could be customized to match how the organization did business in the past. ERP projects often were