Can real people work with ERP?


J

Jim Hudspeth

Since ERP Is Only Software, It Takes Real Integration, Not Just Implementation, to Work
back to archives
By James M. Noblitt

Enterprise resource planning systems have received a lot of bad press over the last decade. Companies complain of high
implementation costs and low return, if any, on investment in ERP. While touted as a panacea by the software vendors and
consultants, ERP has often failed to produce the promised results. In some cases, ERP has been identified as the culprit for poor
and even failed operations. However, ERP is usually not the guilty party. Usually, the problem is fundamental and resides within
the company itself and its operations.

Many companies struggling through the ERP experience have unknowingly self-induced the ERP troubles. That is to say, they
typically create barriers to success and to achieving a positive ROI. Most failed ERP initiatives were doomed to failure at the
outset due to several key factors.

• Ineffective Integration of ERP. A typical “failed” ERP implementation is just that, an implementation. Anyone can install ERP
software but for ERP to be successful it must be “integrated” into the enterprise. After all, it is an enterprise-wide information
system. For a chance of success it must become integrated into all facets of the enterprise. Becoming integrated into the
enterprise means that ERP is the system that is used to run the operations. There must be no other “shadow systems” that duplicate
and/or supplement, and are not integrated with functions that are performed by the ERP system. In order for ERP to produce an
improvement in operations, it must be integrated into the operations. It is the effective integration of ERP that produces the
primary benefits.

<snip>

http://www.glscs.com/archives/04.03.opinion2.htm?adcode=30

No "shadow systems"?

Does anyone here have enough confidence in ANY system to do THAT?

Seems to me that this amounts to forcing an entire business organization to conform to the dictates of a single piece of software.
That requires more faith in computer software than I've got.

Jim Hudspeth
 
W

Wm.\(Bill\) Warning

I recently completed a graduate level course in M.I.S. We did a lot of work
with ERP. There is no simple answer to the question Can Real People Work
With ERP? Our class found that some people can and other can't.
********************************************************************
Jim Hudspeth said:
Since ERP Is Only Software, It Takes Real Integration, Not Just Implementation, to Work
back to archives
By James M. Noblitt

Enterprise resource planning systems have received a lot of bad press over
the last decade. Companies complain of high
implementation costs and low return, if any, on investment in ERP. While
touted as a panacea by the software vendors and
consultants, ERP has often failed to produce the promised results. In some
cases, ERP has been identified as the culprit for poor
and even failed operations. However, ERP is usually not the guilty party.
Usually, the problem is fundamental and resides within
the company itself and its operations.

Many companies struggling through the ERP experience have unknowingly
self-induced the ERP troubles. That is to say, they
typically create barriers to success and to achieving a positive ROI. Most
failed ERP initiatives were doomed to failure at the
outset due to several key factors.

• Ineffective Integration of ERP. A typical “failed” ERP implementation is
just that, an implementation. Anyone can install ERP
software but for ERP to be successful it must be “integrated” into the
enterprise. After all, it is an enterprise-wide information
system. For a chance of success it must become integrated into all facets
of the enterprise. Becoming integrated into the
enterprise means that ERP is the system that is used to run the
operations. There must be no other “shadow systems” that duplicate
and/or supplement, and are not integrated with functions that are
performed by the ERP system. In order for ERP to produce an
improvement in operations, it must be integrated into the operations. It
is the effective integration of ERP that produces the
primary benefits.

<snip>

http://www.glscs.com/archives/04.03.opinion2.htm?adcode=30

No "shadow systems"?

Does anyone here have enough confidence in ANY system to do THAT?

Seems to me that this amounts to forcing an entire business organization
to conform to the dictates of a single piece of software.
 
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D

DGG

No "shadow systems"?

Does anyone here have enough confidence in ANY system to do THAT?

Seems to me that this amounts to forcing an entire business organization to conform to the dictates of a single piece of software.
That requires more faith in computer software than I've got.

Jim Hudspeth
Absolutely I have enough faith in systems to operate on a single
software platform. Unfortunately there are very few software systems
available that have true ERP funcitionality. This is usually due to 2
critical issues IMHO:

1. The software is designed with sales, marketing, and opeations in
mind with accounting/financial reporting/financial analysis as an
afterthought (if thought of at all). So, while the software works
great for tracking customers, handling transactions, etc., the costs
of using the package for accounting/administrative purposes skyrockets
either in cost of additional staff or lack of reliable information
flowing from an overburdened staff.

2. The pieces of the ERP system are so finely intertwined that all it
takes is one person who doesn't understand the system to bring the
whole thing crashing down. In a more simplified scenario I recall the
case of a purchasing system that was an anchor around our necks
because several operational managers refused to use the PO module.
With PO as the foundation of the system the whole thing was rendered
useless and the automated processes became amazingly labor intensive
again resulting increased costs and poor financial information.

On the plus side, I worked for a very small company that grew from
$2mm to $120mm in revnue over a 16 month period without increasing
overhead costs due to systems/additional staffing. We had real time
information on a daily basis, closed the books within 3 business days
each month/quarter/annual period end, and worked only 40-45 hours a
week! How did we do this with an accounting staff of 2 people? We
had a company president who understood the critical nature of accurate
timely information and who also understood that everyone in the
company was responsible for their part in ensuring such information.
EACH employee understood their jobs, how to use the information
system, and the importance of accurately entering data. EACH employee
understood that the policies & procedures I instituted were to be
followed by everyone every time. EACH employee understood that they
were responsible for their areas and the financial information
pertaining to that area and that accounting would NOT be the whipping
boy for their errors.

Fortunately my policies and procedures (created with control and
information flow in mind) were also developed with the idea of not
placing an undue "paper" burden on the operational, marketing, and
finance perosonnel.

This concept worked in our 14 person company. Of course, as the
number of employees increases so does the probablility that there will
be one "contrarian" who bellows about "I'm here to sell widgets,
accounting is supposed to deal with numbers. I make the money for
this company, they don't" and thus kills the entire system.

DGG

"Debits by the door, credits by the window"
"First the lawyers, then the public accountants"
 
J

Jim Hudspeth

Fortunately my policies and procedures (created with control and
information flow in mind) were also developed with the idea of not
placing an undue "paper" burden on the operational, marketing, and
finance perosonnel.

This concept worked in our 14 person company. Of course, as the
number of employees increases so does the probablility that there will
be one "contrarian" who bellows about "I'm here to sell widgets,
accounting is supposed to deal with numbers. I make the money for
this company, they don't" and thus kills the entire system.
This concept is relatively easy when you are starting small and able to hire only "compatible" people.

How do you make it work when you already have a few hundred people, many of them untrainable contrarians, some of which you may not
easily do without?

Jim
 
S

Sr. Ricardo Sanchez

And this has been the experience of my company.

Crappy ERP software which we were suppose to change our entier
business around for. **** that!
 
A

A. L. Meyers

Have personally experienced and observed many entities who have
implemented one of the most widespread ERPs: SAP. Until now, not one of
them has ever expressed entire satisfaction and fulfillment of any of
the originally envisaged targets except one: cost.

Group think: "If so many have it, it must be good;" and prestige: "If
Competitor X has is, we must have it too;" play preponderant, irrational
roles in the choices for and the selection of ERPs.

A. Lucien Meyers, CIA, CMA
 
D

DGG

How do you make it work when you already have a few hundred people, many of them untrainable contrarians, some of which you may not
easily do without?

Jim

Another sad fact is that most companies are doomed from the very get
go to underperforming in efficiency and profitability.

Why? Because the executives at the start are generally focused on the
top line- revenue, revenue, and more revenue. Anything that doesn't
directly increase revenue is a waste of money/effort. Unfortunately,
they often throw accounting and information systems into this realm of
wasted effort.

As an investor I expect to see a long-term vision that includes
developing the proper infrastructure at the very begninning of
operations. Accounting systems that are capable of providing accurate
information as the company grows, plans for stair-stepping into other
systems at various levels of business, and conversion plans that don't
interfere with the flow of information to both internal executives and
external investors.

The reverse is usually the norm. Companies grow, grow, grow and then
spend WAY too much trying to get their people and their systems to
catch up with the company.

Another red flag is executives who don't understand technology or how
it can benefit the company. For example, a CFO at a company I worked
for purchased a web-based project accounting/operations system. This
company spent 3 years and $297,000 trying to get a $30,000 package
operational. The president of the company was convinced that it was a
dud.

Within 3 months of joining the company I had the system fully
operational and functioning well.

Am I a genius? A guru? Did I have an angel on my shoulder? None of
the above.

It was simply a case of the CFO having limited experience and trying
to make this new system function EXACTLY like the old system. (As an
aside, what the heck is the point of THAT?) She couldn't make the new
system fit into her realm of knowledge regarding how systems operate.

By applying some thought and alternative procedures/controls we got
the thing humming like a two-bit hooker on a $50 date.


DGG
"It usually ain't the software, it's the nut loose at the keyboard"
 
J

Jim Hudspeth

By applying some thought and alternative procedures/controls we got
the thing humming like a two-bit hooker on a $50 date.
An interesting metaphor. Also an experience I have not had.

In the mid 70's I took on a large retail client with the understanding that we would overhaul the accounting system. Our
understanding was reached without consulting "Old Joe", the bookkeeper.

When I informed "Old Joe" about our plans, he informed me that he was keeping books before I was born, and that he was not about to
start taking directions from a "snot nosed kid".

I suggested to the owners that we hold off on our overhaul until after "Old Joe" retired. We did, and with the help of "Old Joe's"
successor we had a very successful overhaul.

Jim
 
J

Jim Hudspeth

Wm.(Bill) Warning wrote:

Hi Bill:

Any reference that requires privileges is not a lot helpful in a newsgroup
discussion. I seldom quote from THE WALL STREET JOURNAL for that reason,
even though it has one of the best single sources of information on the web
(in my opinion).

While I believe your statements are true, they are way too broad to be
useful.

In YOUR OPINION:

1) What are the characteristics of people who can work with ERP,
2) what are the characteristics of those who cannot,
3) and how likely are we to find each in most real medium to small
organizations?

Jim
Jim:

I was working on a study of General Foods implementation of S.A.P. I was
surfing through the proxy server at Metro State Univ (Minnesota). I got a
real good hit by a study of British accountants in Management Accounting
(not the USA's IMA MA magazine). It is an extremely good explaination of
ERP. I don't think I still have researching privileges at Metro any more.
I'll check.

Bill
********************
 
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S

Sr. Ricardo Sanchez

Have personally experienced and observed many entities who have
implemented one of the most widespread ERPs: SAP. Until now, not one of
them has ever expressed entire satisfaction and fulfillment of any of
the originally envisaged targets except one: cost.
You have clearly summed up what I feel about our new ERP system.
Syspro sucks and so does Adapt CRM. I definitely won't be paying for
the maintenance plan when that comes around.
 
A

A. L. Meyers

Sr. Ricardo Sanchez said:
You have clearly summed up what I feel about our new ERP system.
Syspro sucks and so does Adapt CRM. I definitely won't be paying for
the maintenance plan when that comes around.
Maybe your organization is already "hooked" on ERP.

To get out, you as an adult need the courage of the boy in the story
of "The Emporor's New Clothes". Human nature, as many known tests
have shown, is very irrational when it comes to sunk costs.

Who is willing to admit that his new Rolly Royce is full of defects?

Most people feel that, in paying more for something, they actually
get more.

A. Lucien Meyers, CIA, CMA
 
S

Sr. Ricardo Sanchez

Actually, what I thougt I would do is not pay the maintenance fee,
approximately $5,000, and use our new software for the next fives
years and move to semothing else and use the money that would have
been paid for maintenance fee for new software.
 
J

Jim Hudspeth

Sr. Ricardo Sanchez said:
Actually, what I thougt I would do is not pay the maintenance fee,
approximately $5,000, and use our new software for the next fives
years and move to semothing else and use the money that would have
been paid for maintenance fee for new software.
One of my latest ex-clients tried that.

When we parted company their records were in such bad shape that they
couldn't even produce a general ledger.

What would it cost, two to three years out, if you couldn't produce a
credible financial statement?

Jim Hudspeth
 
C

Christopher Browne

After takin a swig o' Arrakan spice grog said:
One of my latest ex-clients tried that.

When we parted company their records were in such bad shape that they
couldn't even produce a general ledger.

What would it cost, two to three years out, if you couldn't produce a
credible financial statement?
The problems typically don't come in the areas of G/L, A/R, or A/P;
they tend to come in the fancier modules.

If you don't pay the maintenance fee, you won't get the latest updates
to payroll handling, which is a _much_ more severe problem.
--
output = reverse("gro.gultn" "@" "enworbbc")
http://www3.sympatico.ca/cbbrowne/linux.html
"It seems that perfection is attained not when nothing is left to add,
but when nothing is left to be taken away."
-- Antoine de Saint-Exupery.
 
J

Jim Hudspeth

Sr. Ricardo Sanchez wrote:

What was the cause of the company having their records in bad shape?
Were they sloppy with record keeping or did they not care? Or were
they just unknowledgeableWhile of how to do things.
To some extent, all of the above.

Their records had been horrid for a long time. Up until a few of years ago
I had been tying it all together for them prior to reviewing their
statement. That became impossible under the current independence
standards, and I told them they had to get it cleaned up or I would not be
able to review their statement. They bought new software and tried to
implement it without paid vendor support, which resulted in an even worse
mess. When I refused to proceed they went elsewhere. I was very glad to
see them go.

I think they truly expected me to compile a statement from extraneous
scattered information and then review it. I wasn't willing to do that.

Jim
 
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J

Jim Hudspeth

Brent said:
Hi All,

my 2cents

I work doing a mix of implementaion and support of an ERP type package.

We get it right. Now to qualify that statement!

The essential key is setting realistic goals, and timeframes, and not
trying to get everything working from day one. Pick the important bits,
get them going, then bit by bit add everything else. This can take
anything from a month or so through to a full year, with an ongoing review
period for an additional year or so to make sure it's all bolted together
right.

Oversimplifying the answer - maybe, but I get cynical when ever a
salesperson tells me a package or product is easy to integrate or
whatever. Tell the client it' sgoing to be a pain, it's going to hit
problems, the client always works through it with you, and often we advise
of the errors in the accounts, because we are certain they are there, and
often not our fault - good systems highlight bad procedures.

thats my experience anyway...

Brent
Excellent commentary.

Jim
 

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