When senior management has Enterprise Resource Planning (ERP) on the table, it’s a pressing issue—a moment of truth for the company. To some of your top execs, it’s a catchphrase, to others, a tremendous resource-sapping expense. And they’ll ask you for a recommendation. As a member of management in a company that hasn’t yet implemented ERP, you may never have actually been part of such an implementation. You have two choices: You can bite the bullet and lay out ERP in all its glory and excesses, or you can appease the skeptics. If you choose the latter, be sure to add “skilled at appeasing skeptics” to your resume—the one you’ll be shopping vigorously six months from now. To allay your fears about ERP, I’ll discuss why it should have a place in your company’s future.
What ERP encompasses
You’ve read articles, studied the subject on the Internet, and spoken with vendors and colleagues in other companies. You have a fair idea of what ERP is all about: opening up internal information resources across departmental and business unit boundaries and increasing the ease with which information is passed to partner companies. It involves the restructuring of business processes to exploit this increased access and modifying database designs to create composite information sources to enable new applications.
And there’s more. In the past 24 months, since the Internet has opened up more for business information traffic, ERP is about opening your data doors to outsiders. This open philosophy means creating applications and database resources that you share with partner companies, which is a giant step beyond previous improvements in your data transport for the trading of business documents. At this point, ERP is about creating applications and processes that are:
- Highly integrated with other applications, across functional boundaries.
- No longer limited to internal use but shared across companies.
The business case for ERP
Why would your senior staff want to go through such an expensive, risky conversion? It’s easy for you, a technologist, to see the long-term benefits in terms of information access and user facility. But the senior executives don’t really lose sleep over how hard other people have to work to get data printed out or how user-friendly their apps are. An ERP conversion is going to cost an amount roughly equal to 30 salaries across two years. Are they ever going to see that money again?
Bottom line: Increased turns
Whatever your senior people have read about ERP and its promised miracles, the ultimate truth is that it is about the hard work of building the company they’ve always wished it could be. Most companies are in the business of providing products or services or accommodating companies that do. While we talk endlessly about the Information Age and our information economy, the reality is that money flows because people buy things. The point of ERP is fully optimizing the information at your company’s disposal to leverage its market position with respect to whatever it is you buy or sell or provide for others.
The way to make more money (and recover your ERP investment) is to increase your company’s ability to get goods and services to market and to increase the efficiency with which they’re created. An increase in efficiency generally manifests as a decrease in turnaround time, enabling more product cycling. This means more money.
Consider that it has probably always been possible to manufacture products faster or offer more services than you presently do. The catch has always been having the necessary information to synchronize your company’s activities with your partners (distributors, vendors) to increase your output without locking up operating capital. That information (and your ability to provide it to others) is the whole point of ERP.
A firmer handshake
Increased access to interdepartmental data not only makes your business better, it makes your partners better. In the same sense that you serve others better when your operational picture is sharper, your partner companies can serve you better when you share that picture.
ERP makes you a more desirable partner, too, but it’s more than just the sharing of data: It’s about the easy access and facility you’ll offer your partners after you’ve gotten this job done. It’s just a business reality today that an ERP-capable company is more often than not a better choice than a company that isn’t doing ERP. An ERP partner is a promise of a relationship based on growth, expansion, and a progressive attitude.
The technological case for ERP
Below is a list of what you get for your money when you lead your company through an ERP conversion. Some of your senior execs will appreciate these benefits, and some will be indifferent. But at the very least, this list will help you be satisfied in your own mind that you’re making the best recommendation.
- Improved functionality: Your redesigned apps will provide better information to a greater user base—and do so faster and more accurately. That’s the result of integration and increased database portability.
- Improved connectivity: Opening up data portals to the outside, and tying your internal databases together, causes you to greatly enhance your data transport infrastructure. This gives you increased options in setting up trading relationships with potential partners and reduces the cost-per-implementation of undertaking new partnerships.
- Improved recoverability: The database modifications required for application integration and the enhanced interfaces that your users will help you create will require greater recoverability of data at the transaction level. Whether you have that capability now and aren’t using it, or whether you must take measures to enable it, improved recoverability will greatly increase the security of your data as traffic increases.
- Improved user interface: Users are central to the ERP process reengineering. Again, the point of ERP is to enable processes that your company always wished it could have supported in the past. Creating wish lists with users is how process reengineering begins. With the quality of input you’ll receive from your users as interfaces are redesigned, you can’t help but end up with greatly enhanced user interfaces.
- An improved development team: Take five minutes to ponder just how much more skilled, strengthened, and seasoned your team will be on the other side of this conversion. Your people will be exhausted and pizza-fat, but they’ll be far better designers and programmers and, odds are, you’ll function better as a team than you do today.
Making the case
ERP is one of those rare opportunities you’ll have when making weighty recommendations to let the facts speak for themselves. Bolster your presentation with examples of successes other companies have had (including your competitors) and details about the ERP status of your company’s prominent partner companies. If you have consultants who can be called in to comment intelligently, by all means, bring them in.