Mzn 003 Decision support information – the key to unlocking ERP value Created by James on 6/14/2013 2:20:39 PM
The delivery of high value decision support information lies at the core of why decision makers implement ERP (Enterprise Resource Planning) systems.
In fact, precision configuration to support the delivery of decision support information is critical to successful ERP and related value. There are numerous reasons why.
Thrive decisions drive success
Highly effective and successful organizations exist as a consequence of outstanding strategic, tactical and operational decisions. These thrive decisions direct the organization towards the fulfillment of its essential goals, goals that are aligned with a body of customers who will pay or vote for the products or services delivered.
All too often businesses are forced to negotiate a maze of smoke and mirrors in the implementation of ERP systems and integrated computerised business information systems.
There are several, at times obscure, considerations that should be kept in mind with the implementation of these systems. Our objective is to shed some light and help map out a clear, solid route to ERP value.
Gut feel and experience are 85% of what drive thrive decisions
Thrive decisions require experienced, well trained managers and executives and are heavily (85%) based on gut feel/ instinct and experience to determine the strategic (right) things to do. This experiential wisdom is applied to the hard data to make quality decisions, if the hard data is unreliable then the resulting decision is suspect and we end up with executives "flying by the seat of the pants", effective implementation of ERP to support decision making is therefore vital.
It does not matter how well something is done - if it is the wrong thing to do it will simply weaken and ultimately destroy the organization in time if not corrected. There is no point in optimizing workflow if you are manufacturing the wrong product.
Thrive decisions also require quality hard information
Thrive decisions also require reliable, strategically aligned, intuitively-structured hard information in order to measure organizational performance.
You do not need a fuel gauge to chart your course to Cape Town, but it sure helps to know how much petrol you have in reserve. Thus, while gut feel and experience drive the bulk of decision making, that decision making needs hard data against which to operate.
Theoretically your ERP should deliver that hard information, in practice, however, it frequently does not.
Workflow (process) optimization is fundamentally tactical
Workflow or process-based business optimization, which is the lead characteristic of most ERP implementations, addresses tactical and operational (do things well) issues without focusing on strategic issues.
Executives in 19 out of 20 corporations are dissatisfied with their ERP in terms of decision support
A survey in the Financial Mail some years ago reported that "19 out of 20 ERP implementations do NOT deliver what was promised". The number one reason for this frustration at executive level is the lack of availability of strategically aligned hard information.
"I have spent millions and I cannot get answers to my questions" is a complaint I hear regularly from Chief Executives and other C-class executives.
The reason for the problem is simple; their ERP was NOT implemented with decision support in view.
Decision support is tacked on as an afterthought, and, as an afterthought, it has no hope of working because the software was NOT configured with this goal in mind.
Most organizations are not making better decisions than was the case five years ago
Some years ago the findings of a Gartner survey involving approximately 1,300 Chief Information Officers substantiated this statement. The survey covered individuals from companies that had made substantial investments in business intelligence and found that “most companies are not making better decisions than they did five years ago.”
Why? I hear you ask. The reason is simple, there is NO strategic insight in the way the ERP's are configured and accordingly there is NO strategic insight in the data contained in the ERP's.
Without strategic alignment and strategic insight an investment of millions in an ERP is massively short-changed.
Strategically aligned precision engineered configuration is the missing link
The lack of precision in the configuration of just about every ERP implementation I have assessed, and I have assessed many, is staggering.
Organizations buy a precision machine in the form of ERP software and implementers and business personnel then almost universally implement the ERP in a manner than can only be described as "sloppy", or if you choose to be more diplomatic, "lacking in engineering rigour".
Why? Well, that is how everybody does it! In fact, that is the ONLY WAY they know to do it!
It really has not occurred to most implementers that there is a better way.
They focus on process and decision support goes by the board because most implementers do not understand its importance as a design input, let alone how to support it.
Some years ago I found myself faced with the representative of an ERP company who argued with me about the standard of workmanship of one of the worst Charts of Accounts I had ever seen.
"FRED (insert the name of your ERP) is so powerful it can handle that" he assured me while looking at a Chart of Accounts that defied all rules of logic, structure - in fact anything that qualified it as a source of management information whatsoever!
The moral of the story? The software company that sold FRED did not know how to implement it to its full potential as a strategic decision support tool.
The implementer in this case was printing money with expensive consultants maintaining the most elementary reports imaginable which were constantly broken because of the shocking design of the Chart of Accounts.
In contrast, strategic precision engineered configuration focuses on the essence of the business and how it thrives (strategy), designs the high level structure of code schemes with decision support in mind and driven by the executive team uses highly hierarchical taxonomies.
All configuration is then driven off this precise design resulting in configurations which are MUCH easier to use and cost MUCH LESS to maintain and which consistently give performance improvements across the board.
Precision strategic taxonomies are the essence of the opportunity
Within the concept of precision configuration, precision strategic taxonomies are at the heart.
These taxonomies capture the strategic (essence of the business) focus of the executive team on a fundamental first principles basis.
This approach incorporates logic which recognizes and works with the psychology of information assimilation and interpretation. This process makes difficult data easier to engage with, interpret and analyse - and ensures robust, sustainable reports and analysis that can push the boundaries of corporate performance measurement.
As a result there is support for excellence and a thrive culture in which all involved benefit.
In conclusion the reasons stated above explain why there is only one way to unlock the true value of ERP and that is through precision strategic configuration executed with engineering rigor and attention to detail.
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