Author: Tronserve admin
Thursday 29th July 2021 11:47 PM
Dispelling ERP Implementation Myths
A recently released survey by Mint Jutras of more than 300 manufacturers and distributors about their ERP implementations unveiled that the majority were satisfied with the results. The respondents are in leadership roles at manufacturing and distribution companies with income that goes beyond $25 million every year and have deployed ERP systems. Contrary to the perception left by well publicized, expensive ERP implementation failures that many people are aware of—Vodaphone, Target Canada, Hershey’s and Waste Management, among others—the majority of companies implementing new ERP solutions are, by and large, reaping the advantages that the technology supplies and satisfied with the results.
It’s comprehensible that executives in the C-suite approach upgrading enterprise technology solutions with trepidation. They are complex to replace or modify and business continuity can be impacted, something no company wants to endure. In the end, an executive’s professional credibility is at risk with an embarrassing and expensive failing. It could even result in the loss of a job or reassignment to a much less important position within the company.
The results of the survey paint a vastly different picture. More than 67 percent of the manufacturers and distributors queried reported their implementations as successful or very successful. A little 2 percent described their implementations as “not very successful” and only one of the 315 companies viewed its ERP implementation a failure.
Why Tackle Challenging Technology Implementation?
While the factors many executives are reluctant to embrace change are clear, the reasons for developing a new or upgraded technology solution are considerable. A full 82 percent of the companies surveyed achieved ROI within the time estimate. Not only were the more aggressive companies more likely to achieve full ROI, they were most likely to do this within the time expected, although they set the bar higher than the less demanding companies. We encourage clients to try to achieve ROI within two and a half years, that we identified as the industry standard. The ROI comes from a variety of places with reduced IT costs being the maximum factor at 40 percent per the survey. It was followed by reduced inventory levels (38 percent), reduced cycle time (35 percent) and reduced headcount dedicated to manual data entry (32 percent).
Today’s more recent architectures and technologies, particularly those built on microservices, make solutions easier to develop and uphold. Extra savings may be derived by opting for a SaaS model as opposed to the traditional on-premise deployment model. No capital expenditure is required with no need to build and handle a data center. It also reduces the need for dedicated IT staff that can be redirected to other, more strategic positions. With less hardware expenses and no up-front license, fee you have lower start-up costs. Subscription-based rates gives the option of accounting for costs as operating expenses rather than capital expenses.
Key Success Factors
The survey uncovered what went right for the majority of the companies and what went wrong for the less than successful efforts. A consistent theme to the feedbacks had more to do with the organization’s people and processes than with the software itself. Well executed planning and planning, as well as visible support from top management, pays off.
While the study did not find a single, overriding factor when unsuccessful implementations were considered, the lack of proper business process re-engineering and a bad evaluation of the solution choice based upon those processes were determined to be primary reasons for lack of success.
It is imperative for companies to set goals before starting on an ERP deployment. Business cost savings and performance improvement are frequently cited as reasons why companies opt for new enterprise technology solutions but if they don’t establish specific, quantifiable goals, they are not likely to achieve as much improvement as is possible with the new solution.
It’s important to be critical during the goals-setting process and determine if you are reaching for the full potential that will provide your company with a competitive edge versus your competitors. If this is a difficult task for internal resources, then engage an independent third party that can identify realistic objectives and results.
My closing thought which was proven by the Mint Jutras survey is to be vibrant, embrace new technology and all the benefits it can bring but prepare for the deployment in a thoughtful, strategic fashion. The technology has never been better and in order to ensure continued success in a crowded, challenging marketplace, accept the challenge of leveraging new technology solutions to enhance operational efficiency and competitiveness.
This article is originally posted on manufacturing.net