Applications

An Interesting Perspective on ERP Systems

ERP or Enterprise Resource Planning System/Software is an important enterprise application that integrates all the individual department functions into a single software application. But an ERP System is not a magic wand that will solve all the problems faced by companies, and increase profits/reduce errors, overnight. It requires good technical skills with implementation expertise, and may not be suitable for all companies.

This post contains an interesting/alternate (critical) perspective on ERP Systems, written by Ciro, a reader of this blog. These points were originally mentioned in the comments section of the post on ERP Systems – Advantages & Limitations, written earlier, in this blog. Since the comments/arguments were thought-provoking enough, I decided to make it into a separate guest post.

Some Questions for Companies looking to Implement ERP systems:

How do you think it will benefit your enterprise compared to your current operations? Do you have a thorough understanding of your own enterprise work-flow, decision-making process, and employee skill and experience levels, to assess an ERP software fit? Does your enterprise have the wherewithal to support ERP software, and do you know what that means?

Do you have some sense of how ERP software would be integrated into your operations; its impact on existing work-load, and employee disruption and disorientation?

Do you have a sense of how compatible ERP “best practices” fit with your existing practices and to what degree, adjustments, both to the ERP software and your operations that would have to be made to achieve a satisfactory fit, AND the cost of doing so? Are you acquainted with ERP “best practices”?

ERP software systems are Web-based, meaning that your applications and data files are processed via the “World Wide Web” referred to as the internet. Do you know, or care, where the ERP software and data files would reside? How secure from intrusion, how the system is maintained and who does it, and who’s responsible for systems breakdown or disaster recovery?

Do you have a sense of how your existing data files would be converted to ERP software, their format compatibility, how that would be accomplished, and under who’s control? What  would happen to those data files in the event you decide to discontinue the use of the ERP software or shift to an alternate vendor?

A suggestion:

A Business Systems Department can be a department staffed by professionals and facilities with the mix of backgrounds that are necessary to design, implement, and support and manage computer applications on a large-scale, OR ONE PERSON who has all that experience, or most of it, tasked on a smaller scale!

That is where small businesses should begin their journey toward more complex integrated computer applications – taking it one step at a time and within their wherewithal. In that way experience is gained in workflow improvement and may suggest other feasible computer application efficiencies.

So where does it leave Financial and Human Resource Heads who recognize the potential for computer applications, but have nether the technical background nor access to consultants.

How does one research and decide on buying a home, car or investment? How does a business research and structure its operations to make a profit?

Take a page from Research & Development industry practices – by first developing a prototype before going into production. It’s a small inexpensive step to assess its utility, and a mechanism to inexpensively optimize before embarking on a major expensive project effort.

An Alternative:

ERP systems are not for beginners — beginners don’t know what they don’t know. Computer applications designer/analysts can easily assess the end-users capacity to utilize such complex software, but vendors side step that assessment and sell the software anyway. While the end-user has to deal with the debris of a failed implementation, the vendor walks away with the money!

Every advantage advocated by ERP systems can be done better and cheaper. In-house programming provides all the “pro” benefits of ERPs, and none of the “cons”.

Conclusion:

ERP software systems are exceptionally sophisticated integrated processes that can provide just what it says it can; BUT ERP software also requires the end-user to be equally sophisticated – which is rarely the case, and that is where ERP implementations fall apart.

ERP implementation failures clearly demonstrate that it is not possible for end-users to make the gigantic technical leap to ERPs from a starting point of an undeveloped technical background, and that client users must be equal to the so-called higher skill levels of ERP software usage.

I thank Ciro for agreeing to publish his thoughts on this topic as a separate guest post. Ciro is Retired Univ of Arizona Systems Analyst, Former Aerospace Engineer, College Computer Science Instructor (among others). Please leave a comment below if you want to add to this discussion. Readers may publish guest posts on this blog, according to the T&C mentioned here.

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2 Comments

  • BatchMaster ERP Software

    Really, the blog post is quite interesting and this is true that ERP is not suitable for all businesses but there are many ERP vendors providing such services to handle everything for those businesses who doesn’t have technical knowledge. These vendors will provide technical training and complete support. The enterprises just need to select the right ERP provider, whose customer services are satisfactory.

  • Ciro Verdi

    Hi Mr. Anonymous BatchMaster ERP Software, welcome to this discussion. While there was much said in my post, a lot was not said, nor did your post add to it. Would you add to our knowledge by answering the following questions that go beyond the usual ERP sales pitch:

    BM: “there are many ERP vendors providing such services to handle everything for those businesses who doesn’t have technical knowledge.”

    Ciro: That is very good, but in my opinion if enterprises had the smarts to select the right “vendors” they would not be looking for vendors in the first place. It’s a catch-22.

    BM: “These vendors will provide technical training and complete support.”

    Ciro: Excellent, would that mean:

    1. The enterprise would not need any in-house technical wherewithal, including hardware?
    2. The ERP vendor would perform the detail enterprise’s workflow & decision making process analysis to determine a compatible user/ERP/interface fit?
    3. The ERP vendor would perform the enterprise’s data & file conversions process apart from the user training process?
    4. The ERP vendor would be the implementation Project Manager?
    5. Where would the enterprise’s applications reside, in-house or remotely?
    6. Where would the enterprise data files reside, in-house, or remotely?
    7. Who would be responsible for the physical maintenance of software, data files, and disaster recovery?
    8. Would the ERP vendor be responsible for hacking intrusions resulting in personal information theft?
    9. What state would the enterprise be in if it wished to discontinue ERP outsourcing?
    10. Would the ERP vendor assist the enterprise return to operations?
    11. What would the enterprise own?

    ERP’s as an outsourced shadow technical resource — off-the-shelf, plug-and play, one size-fits-all system(s), including training, technical support and hardware as a buy/lease/own system — is perceived as a very attractive immediate leveraging option alternative. An out to having to deal with the complexities of staffing, administration, and budgeting an in-house IT resource.

    However, that rationale, in the face of widespread ERP failures, reflects a serious disconnect from the realities of implementing ERP’s, OR ANY major software system. At the end of the day, whether software is outsourced, purchased, or developed in-house, a considerable in-house wherewithal will inevitably be required. The difference is whether the software is a custom fit, or one that is not.

    Wherewithal is the total professional skill-mix, experience, and supporting facilities to implement “computer based information systems” – not just ERP’s but ANY information system!

    Notwithstanding outsourcing diminishes the enterprises operational control, and loss of technology knowledge, it begs the question what state the enterprise would be in IF the ERP vendor goes belly-up, or a DELETE button is pressed?

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