SNw 029 CEO – is your ERP hijacking your business? Created by James on 6/12/2013 4:04:51 PM
"Dr Robertson, I have spent Rxx million, I KNOW the transactions are being processed but I.T. tell me they cannot give me the answers I need unless I spend another Ryy million and take another zz years!"
"Dr Robertson, I may be wasting your time, I do NOT understand ERP!"
"I have one production unit and they cannot tell me what it costs to operate it, in a years time I will have eighty of those units, what do I do?"
"I do not think that FRED is suitable for our business, we should have bought something else" (FRED, which stands for "frightfully ridiculous electronic device" is a brand independent name of any ERP system that is perceived not to be working effectively – substitute the name of YOUR ERP for FRED...
These are a few of the most common statements that I encounter from Chief Executives and other C level executives when I conduct my short duration, high impact "Pulse Measurement" investigations.
A Pulse Measurement ranges typically from a day to a week in duration depending on the size of corporation, complexity of the problem and level of detail required for the diagnosis. It delivers by close of business on the last day of the investigation a written report listing no more than nine critical findings on a weighted and prioritized basis and no more than nine critical recommended actions also weighted and prioritized. The report is designed to enable management to act immediately.
In conducting the investigation I start with one hour one on one interviews with the Chief Executive and other C level Exec's, then managers responsible for the operation of the system and finally operators of the system and technologists.
Over the years I have built up a catalogue of the factors that cause problems and the factors required for success, classified them, written a book on the them and regularly run courses around them. The factors causing sub-optimal ERP performance (relative importance on average on causing failures and sub-optimal performance) are:
1. Mythology – "computers are magic", "we can do anything we can think of", etc – 30%
2. Lack of executive custody and poor governance – 19%
3. Lack of strategic definition and alignment – the essence of the business – 16%
4. Lack of precision taxonomies and configuration – 14%
5. Lack of change facilitation, poor training, etc – 12%
6. Lack of precision, lack of discipline – 6%
7. Technology issues – 3%
In a matter of a few hours, asking some key diagnostic questions, listening carefully, engaging with the people interviewed, gaining strategic insight into the business and the problem I am able to hold up a list of key words and key phrases against the above catalogue and accurately diagnose the cause or causes (usually more than one) of the problem and with a few more hours of engagement at the operational level I can accurately diagnose the measures required to remediate the problem.
Sometimes the diagnosis is simple, the simplest ever was identifying a clerk who was "correcting" what she perceived to be errors in allocation by an executive with the result that the numbers in the system bore no relation to the numbers he was authorizing and he blamed the system – saving? – conservatively in today's terms R15 million – the client had asked me to help them figure out how to quickly replace the system with more "reliable software" J
Sometimes the diagnosis is terminal as in "take it out and slit its throat as quickly as possible" as in the case of a big brand ERP that was so badly implemented that after five months of struggling the client was unable to meet its service promise and was haemorrhaging customers at an ever increasing rate – in that case no one could explain why the system was doing really obstructive things and no one knew how to fix it because the consultants who had done the configuration had left. In that case the client was still able to roll back to their old system – saving? They were able to stem the loss of customers and stay in business in reasonably good shape.
The interesting thing about this approach is that generally, when the results of the Pulse Measurement are presented the findings are so obvious that executives discover that they know a lot more about ERP's than they thought they did.
When an executive tells me they do not understand IT or ERP it generally means that the ERP is implemented in such a clumsy manner that it in no meaningful way models the business and therefore the executive assumes that because they cannot understand how this works they are stupid and they are too embarrassed to say something in case someone realizes they are stupid.
Once I have shown them how clumsy and inaccurately their system has been implemented they suddenly discover they DO understand a lot more than they thought they did and the problem is that the implementers did not understand their business and have therefore configured the software in highly inappropriate ways.
A simple rule of thumb – if the way your ERP is being operated does not make sense do NOT agree to further investment until you find someone who CAN cause it to make sense or can tell you what is wrong and how to fix it – do NOT allow your fear of being thought ignorant prevent you from taking a stand to be allowed to know what is going on with your investment.
And if some technologist is arrogant enough or ignorant enough to suggest you do not understand then apply the same tough corrective measures you would apply to any other insubordinate staff member or arrogant consultant – it is YOUR business and you have a right to know what is going on.
The way your ERP is configured should accurately model the real world – you should be able to look at the configuration and say "yes, that IS MY business".
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