Today, there are a wide variety of automation tools and techniques designed and devised to help SMEs and their employees produce their products better and more efficiently. There are excellent tools like Six Sigma Quality, Factory Automation, Design for Manufacturability etc with enormous potential. But, none of them will ever yield their full potential unless they are coupled with effective forecasting, planning, and scheduling processes. Enterprise Resource Planning (ERP) is the answer, which is a direct outgrowth and extension of Manufacturing Resource Planning.
Towards the end of last century, it was out of compulsion and not by simple choice that big industrial houses went ahead on the unchartered and expansive path of ERP adoption. Their non-standard, non-synchronized data, misaligned and broken information flow coupled with non-refined business processes were becoming a big hurdle in their growth story.
The need of the hour was to have some robust centralized solution which could handle their multiple businesses, functions, geographies, systems into one solution. This possibility became a reality only with the coming up of ERP Solutions from giants like SAP, Oracle, Microsoft and many more, duly supported by launching of robust servers and reliable networks.
SMEs, however, have a common perception that ERP is best suited for large scale industries due to high cost of ownership, complexity of implementation and subsequent maintenance cost (commonly known as Big White Elephant). But over the last decade, with technology becoming simpler and easily available, with the coming up of ready-to-use off-the-shelf ERP packages with shortened implementation phase, emergence of cloud computing (with pay as you use option), requiring minimum in-house skill set, the possibility to become leaner and efficient organization, now looks close to reality for SMEs.
But despite life getting simpler, ERPs have inherent challenges. A plethora of studies and research have been done on the subject and conclusions arrived at, but still for SMEs, it has its own set of limitations in terms of permissible workload, available resources and time liberties at disposal to cope with ERP implementation. If I have to pick the top five, they would be:
Top management interest, leadership and participation
If the goal is to run the business better, then the top echelon must be deeply involved because they alone have the real leverage over how the business is to be managed. Any business project, forget about ERP, the close involvement of seniors is very much mandatory.
So positive energy with persuasion or diktat (if required ) has to flow from top to bottom to meet the set of challenges whole heartedly. Any roadblocks coming in the way needs to be decided there and then only by business experts or consultants within a short time before it hits the schedule or cost. In this context, a famous quote by late Steve Jobs is very apt: “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.”
Awareness & change in management
Implementing ERP, as a new way of doing the same business, is a major undertaking involving many people throughout the organization, starting from top hierarchy. The changed practices and speed of information flow within or outside of the enterprise via adoption of best practices of ERP, represents a major shift in company thinking.
It means a lot of work for which awareness needs to be created on war footing, preferably much before the start of the project. I always liked to bring all the stakeholders on-board starting from CEO/Board Directors of the company to going upto the person at the lowest rung. Each and every person involved directly or indirectly in the chain needs to be made aware, motivated about benefits, persuaded and educated about the conclusive intent.
Scope of project implementation and strategy
The most critical aspect of any project remains its scope, cost and timelines. I had seen many projects going down the drain, which were not properly scoped and expectations were not set right, at initial stages. Any idea of ERP implementation going out of scope or unplanned change, however, important it may be, should be brought to the books and should only be dealt with (in rarest of circumstances), after due deliberation and approval on consequences by the highest authority/steering committee. Re-alignment of any scope, methodology, project requirements is not an advisable strategy mid-way for the ERP project (although it may be taken up in another phase, if found utmost necessary). In my view, big bang with vanilla strategy (as it is – rolling of ERP solution with built-in best practices, at one go) is most suitable for SMEs, predominantly giving desired results at low costs and with scarce resources.
Communication
Project communication is one of the topmost components for success of any enterprise wide application implementation, especially if we talk about SMEs, where mode and medium of communication are not always well structured. Communication plan for the ERP Project should ideally be defined at a very initial stage, as how information will flow into and out of the project, clearly outlining on the responsibilities and channels.
Customization
This is the most controversial aspect surrounding ERP Implementation. Considering the present context of SMEs implementation, the customization (that is, tampering with standard ERP package and practices), becomes very critical considering the endeavor to bring out best results, with all the meager means at disposal. I personally call it as an ultimate sin, to peruse customization, which is empirically proven of its long terms pangs and repercussions.
The bottom line
The factors impacting the success or failure of an ERP Project are practically endless. Results show, SMEs who have implemented via adopting the Industry best practices (a proven path), have virtually achieved many a level of success and have realized enormous benefits as a result.
Source: The Economic Times
