ERP Infrastructure Support
Most ERP implementations fail. Failure to realize the operational benefits is the norm unless change management (changes in business processes, resultant training required to facilitate those changes, etc.) is mapped and accounted.
Did you know that?
- 85 percent of the ERP business cases prepared today do not include an objective cost-benefit and risk analysis.
- Companies use less than 60 percent of the features available in their ERP systems.
- With ERP, inventory levels can be reduced up to 24%, sales increased 15% and more.
How important is IT infrastructure when implementing a Enterprise Resources Planning (ERP) system?
- Less than half of executives are pleased with the outcome of their ERP projects.
- Only a third of manufacturing and distribution firms that implement ERP projects are able to identify measurable benefits from their new system.
- The majority of ERP projects went over budget, ranging from 15% to 225% actual spend compared to their original budgets.
- Approximately half of respondents indicate that their organizations suffered from operational outages and work stoppages during rollout and implementation.
The majority of companies underutilize their ERP systems. Why aren't companies getting more business value from them? While ERP initiatives present the opportunity to generate massive operational and financial results; it is imperative that companies weigh the bottom-line costs and benefits and also identify which risk factors may potentially lead to failure.
An ERP risk analysis by Serenity Systems is an objective assessment of the costs and benefits of ERP. Serenity has helped many manufacturing and distribution companies make more objective decisions.
Contributing factors limiting realization of ERP benefits include:
- Functions don’t take full advantage of their ERP systems’ capabilities because they don’t know what they can do.
- Business people do not understand IT and most IT people do not understand business.
- Once implemented, there is a tendency to say "if it ain’t broke, don’t fix it." Owners view implementing ERP as a project when it is really an instrument for continuous process improvement.
- Poor reporting: If your CFO knew an ERP-driven process improvement could generate $10 million by cutting their company’s DSOs [days sales outstanding], would you put that at the top of the list of things to do?
How does Serenity ensure ERP success:
Know how you will measure success
We create a roadmap including drawing a diagram of a company’s entire application system, making sure to include data repositories and stand-alone applications, such as Microsoft Excel spreadsheets, as well as any electronic and manual integration links. You need to know exactly where things are now, that way, you can identify where specific gaps occur and develop a plan to address them.
Set up specific metrics based on your industry
Before you can adequately measure how well your inventory management applications are performing, you’ll need to identify an industry benchmark for turns.
Perform regular post-implementation audits
You’ve spent the money. Now comes the hard question: How does your application measure up? Only a systematic, disciplined approach to measuring ROI can provide the answer. To be effective, there must be a strong, across-the-board commitment to technology audits, including upper management. Of course, there will be risks—nobody wants to face the possibility that the application doesn’t measure up. But if your ERP audit focuses only on productivity gains, such as how many steps it takes to complete a shipping label, you’re not gaining a true picture of ROI. The audit also should take into account how well employees interact with the software. Does it help them feel more empowered to accomplish key tasks? How quickly do they feel they’ve mastered the software? Have you made it easier to communicate with peers, share information, or solve challenges? Those characteristics are far trickier to measure. Many experts advise implementing user surveys immediately following training and again six months later.
Analyze your performance numbers
Some areas of your software can be audited more easily than others. In general, the areas that are designed to automate processes, such as printing shipping labels and notifying customers, should be relatively easy to measure, as long as you’ve established benchmarks. More difficult to measure are areas that reveal an employee’s lack of familiarity with the software. For example, if your audit reveals little improvement in overall shipping errors despite the software’s automation capabilities, you may need to go back again to key employees. Ask them to show you precisely how they use the software.
Whether evaluating ERP or focused on maximizing the investment in your technology; contact Mark Leary at Serenity Systems.