ERP Lessons Learned

Frank Scavo posts an excellent review of the history of and lessons learned from ERP systems over the past 20 years. Both Frank’s post, and his keynote video are well worth your time. Some key points from the post:

ERP is not primarily a planning system, it’s a transaction processing system. Its benefits are primarily in standardizing and automating business processes.

In particular ERP automates the reconciliation of money, products, people, and time to provide a clear record of what is and has happened in your business, with the full audit capabilities required by regulations such as Sarbanes-Oxley. Without this foundation added systems like CRM, SCM, and BI are only marginally effective.

Today, I find that business leaders have a better understanding of best practices for successful ERP implementation. They realize that ERP means changing how the organization does business. They usually recognize that top management needs to be committed and that it will require participation by all affected functions. They often realize that it is best to pick a system that fits the business, and as much as possible to avoid customizing software code.

That ERP is about the business, and not about the technology is a point that cannot be emphasized enough. Too often ERP decisions are driven by technology based factors (cloud vs on-premises, .Net vs PHP) while the core business requirements remain unexplored.

According to our 2011 survey, 38% of ERP projects exceed their budgets for total cost of ownership. Furthermore, as I indicated in my keynote, the risks of ERP go beyond cost overruns: ERP is particularly subject to functionality risks (the project was within budget, but the system doesn’t satisfy key requirements), adoption risks (the project was within budget, but the organization is not fully using it), and benefit risks (the project was within budget, but the expected benefits are not realized).

That is when technology is placed before business need, the ERP disasters we all fear come to pass. Learn the lessons Frank shared, focus on your business needs, and benefit from your ERP.

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