The title of this article is ‘The Great ERP Promise’. It is in single quotes, ok. That must mean something, right?
As per various surveys done on ERP customers, 70% say that their implementation was a ‘success’ and only 30% say it is a failure.
Gives a neat quaint picture, doesn’t it?
Only 30% failure, thinks a prospective customer. May be all those stories about ‘ERP Failures’ that I read about are wrong. Name one application that can be implemented without any glitches? Enterprise applications have their gestation period, right? Also they say ERP has become a commodity. How hard it is to implement a commodity?
I implement ERP for a living. One of my job as a consultant is to do reviews. It could be implementation review, post implementation review, ERP Usage Review, User Satisfaction Review….
You name it, I have done it.
The kind of feedback that I get from the reviews is very disturbing.
A large company could not close their Financial Year in ERP for two years after going live. Things were a mess, Accounting, Costing, Compliances….
Another company lost almost 50% market cap after implementing ERP.
Companies with wherewithal are suing their implementation partner for huge amounts.
Disturbing stories.
The sales of a small scale company stopped after implementing ERP. ‘We had material in our stores, but not in our ERP application. Due to this we had to lose sales of one full month while consultants tried to resolve the issue. On top of that we had to write off the entire inventory since we were dealing in highly perishable goods’, one manager told me.
“We don’t understand how ERP costs our finished products, due to that we have given up on a proper profitability analysis in our low margin industry’, says another
“We are maintaining a parallel system in Excel, since my users do not have a clue how ERP works’, tells another
Complex processes, unreconciled clearing accounts, untrained (minimally trained) users, wrong data conversion, pressure from auditors (and even ‘observations’), high amount of data entry (‘My user spends 7 hours a day just running bank reconciliation process, how can he get time to do Cash Position analysis’), unsuitable costing methods, nerve-racking notifications and alerts, unexpected process holds, unexplained errors, unposted accounting entries, uncleared interface tables, performance issues (between 5 and 7 in the evening, our system becomes unbelievably slow), user errors, delayed period closing, agitated middle managers, flustered employees ….
Problems abound.
Data conversion for the previous period is going on even after go live. Cutover is a never ending activity.
You ask the CIO of these companies how they rate their ERP Implementation and they will say ‘Mild to moderately successful’. ‘We are doing most of our processes in ERP’ they will fill the review comments.
‘We are entering the transactions, but we are not getting any good reports from the system. We depend on Excel for management reporting’, says the CIO who says that his ERP implementation is moderately successful. He doesn’t even know if his ERP is performing as expected.
“We were promised a very good compliance reporting system, but we are doing all our compliance reporting in Excel’, says another
From my experienced eye, these are all failed implementations. What use is an ERP if it can’t give you the information that you require.
There is this ‘Great ERP Promise’, isn’t it? That it will act as a backbone to your ‘DigitalTransformation’ initiative? That is what sales guys told you.
Tell that to that CFO of an SME sitting yonder with his hands on his chin, wondering how is going to prepare the Balance Sheet and Profit statements.
His trial balance has huge amount in ‘Suspense Account’ and ERP shows his profits have fallen 40% month on month after implementing ERP. His product costs have gone skyhigh, his inventory turns have fallen to the ground. Prior to ERP implementation, he was proud of his performance.
Not anymore. Now his boss is doubting the earlier numbers.
You could say that companies call for my services only when they are in trouble. So I end up seeing many more troubled ERP Cases. Like a Cardiologist who sees health problems everywhere.
Maybe I am seeing only one side of the ERP story.
That side doesn’t look great.
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