By Xavier Perrin (xperrin@xp-consulting.fr)
I had recently read a very interesting survey conducted by Software Advice, a firm that analyzes ERP Software. The survey results from an analysis of a sample of interactions between Software Advice and prospective buyers in search of guidance to find the best Enterprise Resource Planning (ERP) software to fit their needs. Here is the survey: Enterprise Resource Planning BuyerView 2015.
I would just like to add my two cents to that study. Some of the companies I’m working with are about to switch to a new ERP and they eventually ask me for advice regarding the best solution. My first answer is always: “I’m not an ERP expert, so I have no opinion. Consult an expert!”. Nevertheless, I always continue with this question: “Why? Why do you want to switch to another system?” Software Advice’s survey shows that 90% of the buyers cite the need to improve the integration of data between different business processes as a top reason for seeking an ERP system. I have the same experience, and a similar reason I’m facing is: “We need to improve visibility” or “we want to reduce the costs of managing duplicate systems” or similar answers. Well, let’s continue with another “why”: “Why do you need to improve that integration? Which value do you expect from that integration?”. Most of them are a little bit disappointed by my question, as it seems so obvious that integration is worthwhile. Actually, I’m not so sure. A system like ERP allows to support business processes, even poorly engineered processes! The only result in this case is getting an efficient ineffective organization!
Similarly, I meet managers who ask me what is the best ERP system because they aren’t satisfied with their “old fashioned ineffective system” and want to invest in a new one. Generally, when I have had the opportunity to study their organization and planning processes, my answer is: “if you implement the best ERP on your current processes, your guys will appreciate friendly interfaces and faster systems… but they will get the same (bad) results than today”. So, start by learning how to create effective business processes, learn the best practices and train your people on that best practices of supply chain management, improve your current processes with your current software. And when you will reach the point where your constraint is actually your IT, the time has come to consider buying a new one”.
This article addresses a similar topic: How Poor Understanding of MRP2 Can Lead to the Degeneration of Your ERP?
Thank you Xavier for this excellent paper!
We are working on that subject with SPACE, and you provide us with very good material for our task!
No doubt I will use it!
René
My two additional cents:
“So, start by learning how to create effective business processes, learn the best practices and train your people on that best practices of supply chain management, improve your current processes with your current software. And when you will reach the point where your constraint is actually your IT, the time has come to consider buying a new one ».
It sounds to me very much like the mindset of the 5 focusing steps of the ToC:”exploit the constraint” and “subordinate everything to the constraint” BEFORE “increase the capacity of the constraint”.
You’re right Jean-Michel.
Just for reminder about the five focusing steps of the Theory Of Constraint:
1) Identify the CONSTRAINT
2/ EXPLOIT the constraint
3) SUBORDINATE all the system to the constraint
4) ELEVATE the constraint
5) Do not let inertia becoming the constraint: GO TO 1!
Actually a powerful approach that is perfectly appropriate for that kind of decision. Thanks for having reminded it!