ERP Processes: Hard Choices and Forgotten Requirements
One misconception about ERP is that, because it is an integrated business system, and because it is used by thousands of customers, then it must be able to handle all of your business processes exactly the way you do them today. There is more than wishful thinking to support this idea; after all, you’ve covered your detailed list of ERP requirements with your vendor. The blueprinting sessions should just be a formality, to document the correct configuration for ERP processes, right? Probably not, unfortunately. The devil is in the details, and most of those details are not known until the ERP software is chosen and the blueprint sessions have begun.
Imagine, if you will, that circumstances, history, past financial success, and evolutionary influences have created a business process by which you fill and ship orders every day of the week, but you invoice everything each Friday. This started, in the early days of the company, when there wasn’t enough business for a full time accounts receivable credit staff, so one admin did all of the week’s billing at the end of the week. Sixty years later, you’re a Fortune 1000 company, but you still send out all of your invoices on Friday.
Opposition, Customization, Realization
During blueprinting, it emerges that your ERP package is not going to allow this; a product shipment generates a financial invoice in a rigid, logical connection. It is not a configurable choice; it is hard coded into the ERP software. There is a pregnant pause in the discussion as the group digests this fact. The first conference call is to the sales vice president, and the group leaders asks “Will there be any problem if we begin invoicing daily?” The sales vice president not only has a definite opinion, he is violently opposed to any change in process. It turns out that customers value those extra few days between shipment and invoicing as the same as longer credit terms, and sales sees it as a competitive advantage.
“Okay,” says the group leader, with some amount of confidence, “this is time for customization.” According to protocol, the group leader contacts the CFO and explains the ERP customization request. “Of course we’re not going to customize that!” the CFO thunders. “That was a bad business practice to begin with, and we’re not about to spend additional money to institutionalize a fundamentally flawed ERP process. We can take an average of two days out of the order-to-cash cycle.”
You get angry at your vendor for getting you in this mess, but they pull out the ERP requirements list. There was nothing on the list about only billing on Friday. Nobody thought it was a big deal.
In every ERP implementation, you will find ten to twenty of these hard choices. The worst thing is, they leave a terrible taste in everyone’s mouth. People don’t talk about the 99 processes that ERP does much better; they talk about the one that it won’t handle.
Be prepared to find things that ERP doesn’t handle.
Featured white papers
ERP Implementation: 9 steps to success
The 9 proven steps you should follow when implementing ERPDownload
ERP Implementation Checklist
Over 120 actionable steps to implementing a new ERP successfullyDownload
Manufacturing ERP Implementation Checklist
Over 70 actionable steps to rolling out new manufacturing ERP softwareDownload
What are the main benefits of implementing an ERP system?
Three big benefits you can achieve by implementing ERP
Implementing new ERP? Important considerations to keep in mind
This guest post from Avaap discusses the most important considerations when implementing ERP
Considering specialty ERP requirements during selection
What industries require specialist ERP features and why they're useful during selection