ERP Erosion: What is it, and Why is it Hurting Your Business?
Happiness or fulfillment come in many forms for most of us. Our personal lives bring us a great deal of happiness and fulfillment; however, if we can also feel fulfilled “at work” that can be magical. For myself, there is nothing more fulfilling than visiting a customer and having a conversation about how VISUAL ERP and/or Synergy have improved their business. I’m lucky to be working for a company where I get to have this experience often. Of course, there are some customers and prospects that I visit where ERP, or how it is being used, causes frustration… or in some cases seems to be working against them. In most cases, this is due to what I have come to call ERP Erosion.
What are the signs of ERP Erosion?
- Your Business has changed, but the use of your ERP hasn’t. Over the years, your company has likely gone through an array of changes. New people, new business goals, different product lines, new customers & suppliers, improved machinery & production methods, new communication methods (remember the fax machine!), and other changes are common in any business. With all these changes, the processes and how your users interact with ERP should have changed as well.
- Key power users (or champions) for the ERP left the company / lack of knowledge transfer. During the initial implementation, it is likely that a few key stakeholders championed the effort. Those folks likely understood the system holistically, not just how it affects one department or role or process, but how the use of the system by one department affects other departments. It’s also possible that new hires had to learn the system themselves or were not trained in a manner that would allow optimal benefits for that user or the company. Conceptual knowledge may not have been transferred (via training manuals and the like) into procedural knowledge. Furthermore, your new hires may have trained themselves using the generic training manuals from the software company that are meant as reference, not as optimal processes.
- Performing more and more tasks and data analysis outside the system, rather than inside the system. There is no doubt that Excel has many uses, but if you find that you are turning to Excel for key processes, or functions, then you may be creating silos of information. Moving away from silos is typically the exact reason people move to an ERP. If you find yourself making Access databases, Excel spreadsheets, or using other 3rd party tools for your key processes, then you can be sure that ERP Erosion has occurred.
- Tools and Features that you own are “collecting dust”. Your ERP may have features you originally planned to use, but perhaps becoming too busy or using the system in a way that doesn’t support your “new reality” didn’t allow you to take advantage of them. You probably own tools/modules that you are not even aware of (it’s likely you could find some buried treasure!)! It’s also possible that during the initial implementation there was an effort to implement “everything” instead of focusing on those items that were critical and could set the foundation for future continuous improvement.
How do you Prevent or Stop ERP Erosion?
First and foremost, it is important to realize proper use of an ERP has very positive impact and ROI for manufacturing companies. Many of the VISUAL ERP customers I visit experience benefits such as streamlined processes, reduced time and cost, improved customer relationships, enhanced data utilization, and more importantly they consistently reach their business goals (for example improved delivery performance).
To realize the benefits of ERP you need to:
- Think holistically and understand how processes and data flow from sales/quote to cash
- Breakdown walls and communicate openly throughout the organization
- Categorize and prioritize challenges/issues as well as view these as “business issues” instead of “system issues”
- Get to the root cause, instead of the symptom
- Implement the new processes in a methodical manner that allows you to achieve wins quickly and build momentum.
- Develop a way to measure and review key metrics to ensure progress towards your goals are being made
However, these steps may be difficult to perform if you haven’t been implementing them all along. You also may want the experience of someone who has seen companies like yours improve their processes and achieve success. Sometimes you have been following a process for years and it’s hard to see that it is causing upstream or downstream issues, and you need that outside opinion (fresh set of eyes). Synergy has helped many customers (and prospects) by conducting a Business Operations Assessment.
This 2-day Assessment will start with a quick pre-assessment interview/questionnaire, so we can understand what your current state is, how you are performing on key metrics, and what your goals are. Then we will review your current processes for each area of your company (Sales, Planning, Shop Floor, Purchasing, Shipping, Quality, Engineering, Finance, etc.). It is eye-opening what is learned when people hear what other people do upstream or downstream during these Assessments (and realize they could quickly improve or stop doing things that don’t provide value). Then there is a report out that provides a list of changes (prioritized) that:
- You could easily do yourself and implement immediately
- You could do in your current system with some work or help
- You may want to wait for until you upgrade to a later version that has features to support improved processes
After these Assessments, we achieve quick wins and immediate business improvements. Trust is built within your company (and with your partner!) in addition to improved communication. Some customers find benefits in implementing a “war room” for 15 minute daily/weekly standup meetings; others get rid of all their Excel spreadsheets and Access databases and have one database to perform all their strategic and tactical reporting from. Most importantly we can help implement best practices and procedures and turn these into the “New Normal”.
If you are experiencing ERP Erosion we can help. One of our new customers recently sent this message to me:
“TruXedo had not had an ERP Assessment done for a number of years. Due to our growth and changes to our business processes we requested Synergy to do a full ERP Assessment. They came on site and did a thorough job of evaluating all our business processes from start to finish. They demonstrated new functionality, provided us with training, quick fixes, and some great recommendations and direction on the next steps we should take to fully utilize our ERP. I would highly recommend this type of Assessment.”
The business benefits I see daily and the satisfaction from all levels in our customers’ organizations is what fulfills me in my career. Don’t let erosion take hold and wash away the benefits and fulfillment your ERP can provide.
Authored by: Paul Tedford
Synergy Resources, Executive Director of Sales & Marketing