Manufacturing - ERP failures
The ERP world is littered with disasters that seem to be ignored when prospective buyers are looking for a new ERP system. They are akin to road accidents: "They happen to other people, not us!" The reality is: the majority of ERP projects do not deliver what is expected; budgets over-run by 25% and create chaos in the implementing phase.
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ERP (Enterprise Resource Planning) systems and their MRP/MRPII (Manufacturing Resource Planning) predecessors have been around for nearly 30 years. Questions and debate still abound as to the effectiveness of these systems and where to go from here. Raymond D. Atkinson discusses the issues.
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Over the last five years the success rates of ERP implementations have run at somewhere around 30% to 40% and with project costs that can spiral into millions of dollars it is not surprising there is considerable conflict between enterprises (clients) and their ERP suppliers/implementers. These conflicts generally become evident during the implementation stages of the ERP project when events occur that affect the progress of the project or when cost blow-outs become obvious.
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Thirty years ago it was widely recognised that implementing MRPII was not just a software system, Thirty years ago the success rate for MRPII was around 30%. Companies that claimed success in their ERP project reported a shortfall in results achieved against expectations. In those days the MRPII failures were mostly put down to the newness of computers and our learning to adopt change methodologies driven by senior management to effect that change. Thirty years later it is as if we have learnt nothing in 30 years.
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ERP, yesterday's great vision! Today we don't discuss it in public! The amount of corporate effort, not to mention cost, that goes into an ERP acquisition and implementation can run into many millions of dollars. Its implementation can severely damage a company and it is not unknown for a company to end up bankrupt as a result.
There are many claims from ERP vendors when pushing for project start-up about assistance that will be provided in the project management stage. While there are ERP project management practices that do work, it is clear from our analysis, there is too much emphasis put on software, whilst other critical areas are ignored or simply not considered at all.
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follow up /atko-global
ERP and Management Commitment! What does it really mean? One of the ten main reasons ERP systems implementations fail to match expectations or fail is “The Lack of Top Management Commitment”. Beyond signing off on the project and committing the company’s resources to the project, what more is expected of the senior management? This article, by Ray Atkinson, talks directly to senior management about their role.
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In the quest to become more competitive in the global economy many companies overlook or badly utilise some of the most simple problem solving tools available to us today. In this article, by Raymond D. Atkinson, examines some of them and what we need to do to change the culture to embed them into our thinking.
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Raymond D. Atkinson, says: There is a real cost and significant damages done to organisations because of ERP failures and companies have simply had enough. They want to hold someone to account for ERP failures and this will inevitably lead to the courts deciding who is in the wrong and what degree of responsibility all parties bear. There is a new era coming to Australia in ERP and this will result in a more open transparent honest relationship between sellers of software and services and the company buying those services.
Basic problem solving tools must be provided to employees by way of training and practical projects so they understand at a problem solving reality and not just theory then ensure they are utilised and displayed at their work stations. Make it part of their job and link results with pay reviews. Management must fully understand the tools available and apply them to a real problem to see the outcomes for themselves.
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