SNw 022 Your ERP is a precision instrument - are you using it that way? Created by James on 6/12/2013 10:50:21 AM
One of the major issues that I encounter when reviewing sub-optimal system implementations is the lack of precision in the manner in which the system is implemented.
We live in a world in which we take precision for granted.
Our motor vehicles are precision engineered, our houses are built level and plumb and a gap between a door and frame of more than a few millimeters is cause to get the builders back in to fix the problem. We take precision for granted when it comes to nearly every aspect of our lives and get frustrated when precision is compromised.
Yet, when one looks at the implementation and application of business computer systems generally and ERP in particular, I am constantly struck by the extent to which business executives who otherwise run their businesses with high levels of precision tolerate outright sloppiness and then blame the software.
1. Computers are dumb adding machines
Computers really ARE dumb adding machines, they do exactly what we tell them to do.
The fact that a vast number of human beings have invested huge amounts of time creating sophisticated software that performs a huge diversity of specialized functions does not alter the fact that computers are extremely precise repetitive processing engines.
In fact, in order to work at all computer software has to be precise, if there are logic errors in the design or execution these will very rapidly become apparent.
Because computers are so dumb it is also so that when something goes wrong it is because some human being did something.
Computers are NOT human and they do not suddenly decide to have a bad day and make mistakes. They either work or they do not work, it is what human beings do that causes the problems.
All mainstream major brand business software products are precision machines, the end result of substantial time and intellectual investment by human beings somewhere, the question is, are you using your precision machine as a precision machine, or are you putting water in the fuel tank of your R1 million Rand motor vehicle and then blaming the manufacturer because it will not start?
2. A database is just a filing cabinet
A database really is just a filing cabinet.
A database comprises a large number of storage locations and classifications in terms of which data is stored.
Database application software is simply an automated filing clerk -- if you cannot get the information you need when you need it it is because some human being gave the filing clerk the wrong instructions and the item is incorrectly filed or it is filed in a bin with thousands of other items and no basis to locate it quickly.
If you just inserted every document into a single set of lever arch files in the order in which it was received you would struggle to find it in the absence of an index, computer databases are just the same with the added complexity that you cannot see what is where.
3. A computer keyboard is simply a fancy typewriter
So much emphasis is placed on computers as "productivity tools", we must get the latest software for maximum productivity.
Yet, have you taken the time to watch most computer users at the keyboard?
If a person who spends much of their time in front of a computer interacting using the keyboard as the principal means of input cannot type at at least sixty (60) words per minute with 99.99% accuracy then you are kidding yourself that the computer is a productivity tool.
When they make typing errors that result in the software operating incorrectly then productivity has become a total fallacy.
In fact, in terms of some of the things that I see it is debateable whether productivity has in fact DECLINED in recent years relative to the manual systems, the hidden costs of expensive professionals labouring to overcome apparent "technology" problems which are the consequence of imprecise and SLOPPY usage of computers are very substantial in many organizations.
4. A general ledger is just a large book to write numbers in
Because the general ledger is simply the expression of a large book one can put just about any sort of data in just about any form, structured or unstructured into it.
If you want to keep track of people or machines in detail, the GL is quite capable of being used for this but in the same way that if you write inappropriate things in the paper based general ledger you will cause problems, the situation is orders of magnitude MORE SEVERE in computerized general ledgers because the errors are much more difficult to spot. A good place to look is your audit fees, if an army of audit clerks spend months on your audit the chances are that there is something wrong.
A badly configured general ledger can cripple your business, recent reports indicate that a major corporation implemented a major new system with inaccurate configuration and thought they were making a profit when in fact they were making a loss and the CEO was forced to RESIGN -- badly configured ERP systems CAN cripple your business.
5. Precision strategic configuration determines value
Content NOT technology determines value.
There is not much to distinguish between the ERP products in the market today.
All are powerful, flexible and highly configurable.
Yes if you shop around you may find one which has certain modules that fit your business better but the quality of the implementation consultants will have a much bigger impact than the product you choose.
Consultants who do not exhibit a strategic (i.e. fundamental) grasp of your business and how to fit the software to your business can do huge damage and those that DO can add huge value.
Rather choose an implementer who can evidence robust understanding of the fundamentals of your business and then find out what product they implement than spend large amounts of effort selecting a product and then take the first implementer that comes your way.
Structured hierarchical taxonomies (classification schemes) that accurately reflect the REAL world in your business will make the difference between an exceptional high value implementation of a mediocre product and a mediocre implementation of an exceptional product. Such taxonomies are truly "THE MISSING LINK" in successful ERP implementation.
I will be running a course on "Strategic Taxonomies -- the ERP Missing Link" on Thursday 10 June 2010" please email me for more information and forward this to anyone you think will be interested.
The taxonomies define the layer of logical modelling of the business that sits BETWEEN the business and the ERP although the data itself resides in the ERP -- a truly strategically sound chart of accounts is fundamentally the same irrespective of which ERP you implement on top of it, ditto the materials master, item master, product master, etc, etc.
This same logical layer must exist between the business and the so called "business intelligence" tool.
Fact is, a BI tool is only as intelligent as the intelligence in the data and if there is no intelligence in the data you will spend a fortune on expensive consultants and not make better decisions -- Gartner reported a few years ago that in a survey of 1,300 major corporations in Europe which had spent large sums on BI they were not making better decisions that five years earlier.
6. Executive decision support information out requires executive thinking in
One of the major complaints I hear from executives is "we have spent millions on this system but every time I ask for information I am told it is not available even though I know the transactions are being processed".
Something else I hear frequently from executives is "Dr Robertson, I do not understand IT" -- this sort of abdication is a fundamental contributor to the first problem.
Executives do NOT need to understand IT in detail BUT they DO need to have enough insight to manage IT just like every other area of their business and to ensure that there is executive direction given to the implementation and operation of the system.
If you are an executive or manager and not sure you know how to manage IT then my upcoming briefing on Thursday 27 May "Why your ERP is not delivering and how to fix it" is a MUST.
This briefing will equip you to manage IT at an executive level and know when to call in specialists to advise you. Email me for more information and please forward to anyone you think might benefit.
7. Lack of precision in configuration and operation is the number one cause of sloppy ERP outcomes
If the configuration of your ERP is sloppy and imprecise, which it almost certainly is, and the typing of the operators is sloppy and imprecise why are people surprised when the outputs are unreliable and people resort to spreadsheets and other manual resources because they do not trust "the system".
I recently advised a client to trash a very substantial investment in a big brand ERP that had been shockingly implemented and it turned out that they were actually running the business on data in spreadsheets and not relying on the ERP at all!
Precision configuration and operation are necessary prerequisites for effective ERP operation. They are NOT a luxury and they do NOT cost more than the conventional approach, as with all things in life, quality is NOT free, it is just cheaper than the alternative.
If you have an ERP implementation that lacks precision and you truly analyse the FULL cost of that lack of precision you will see that you cannot afford to continue that way.
If you are debating whether to trash your current ERP and buy a new one, look first at the possibility of reimplementing what you have with precision configuration.
I can assist you to assess the merits of alternative scenarios, express a robust opinion on the health of your current system and advise you on how to approach the implementation or reimplementation of your existing system or a new system. Please email me for more information and pass on to anyone who you think would benefit.
Conclusion
The ERP industry is at a watershed.
A radical change in approach is called for.
Precision strategic (the essence of the business and how it thrives) configuration is THE way of the future.
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