ERP - The Organizational View

A new ERP system project is a major event for any organization. Unfortunately, many regard it as an IT project, leaving its management to the IT director (or equivalent) or, in some cases the CFO. This is a grave mistake for reasons I will elaborate below that too often cause these projects to exceed budget and schedule in the better cases, or totally fail in the worse ones.

It is true that an ERP system is a computer application. It has, however, a few implications that are far beyond the technical aspects:

1. The human side – organizations that choose to ignore the human element in an ERP system project do it at their peril.

  • Threat – especially in organizations that had not had a previous ERP system before, but also in organizations that had one for a while, users have accumulated a lot of power by being gate-keepers to information. You will always find those who have their own spreadsheets that no one else has access to, or the only ones to know how to generate a special report. Being is such a position gives power and having a new system that might deprive them of this power, while eventually beneficial to the organization, is a threat to them and might cause antagonism and, in extreme cases, sabotage.

  • Respect – in every group of people you will find those to whom respect is paramount. Ignore them (or their views) and they will get back at you. It is imperative to include potential trouble-makers in the planning and implementation processes to neutralize any respect-related threats.

  • Fear – of the unknown, of changes, of failure. All these fears are common to any new system and process and it is important to acknowledge and assuage them.

2. The process side – too many organizations fail to analyze their processes when implementing a new ERP system. It’s like installing a new and modern engine in an old car. It will probably drive quieter and perhaps consume less fuel, but it will not go significantly faster or be safer. A new ERP system is an opportunity to re-examine all the organization’s processes – operational, financial, human, commercial etc. – as well as the interfaces between them. It is a long and painful process but failing to do it will devalue a major investment and might end-up with people wondering what was all this money spent on?

3. The structure side – a thorough examination of the organization and how it works might reveal that some functions are not where they should be. Take debt-collection for example – should it be in Finance or in Sales? It is advisable to think about these things before launching the project because its architecture might be influenced by the decision.

So how should a successful ERP project should be run?

  • Hire the best consultants but don’t let them lead you. An ERP project is probably not something you can manage by yourself. Unfortunately, too many consultants are IT people with little or no regard to what’s been described in this article. Make sure that the consultants that you hire understand your views and preferences, and work with you to have a successful project.

  • Make sure to have a proper steering committee: have all the relevant participants included – HR, head of departments, key players from within the departments and trouble-makers. Make room for all to be heard and try to build a consensus as wide as possible.

  • Have sub-committees for Human, Process and Structure elements. Think ahead of other key-issues that need to be addressed and form steering sub-committees for them as well.

  • Be transparent. The project and the new system are to create a major disruption in the organization’s life. This is no time to keep things away from your staff.

  • Plan the launch event – build-up the excitement, invest in making a celebration of it and in general create a positive atmosphere.

  • Prepare for disappointments - things are not going to work on day 1. There will be failures, results won’t be what people expect and additional workload will be generated. It takes 1-3 years for a successful ERP project to mature. Prepare your staff for it, assure them it’s normal and in general find a way to lead the change. This is one of the occasions in organizational lives when leadership counts.

A new ERP system project can be a keystone in creating a new organization. Don’t make an IT project out of it.






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