Posted by: kenwbudd | May 8, 2010

Are ERP systems still relevant solution in a global market?

When ERP systems started to emerge, 20+ years ago, it was to address a market that had little understanding of a truly global marketplace. It was never intended to address a rapidly expanding dynamic environment. It was built for expansion in a local market not universal growth, as we understand it today.

As far as these early ERP systems were concerned the world was ‘flat’, or at least it was smaller and easily accessable over the local phone system provider’s infrastructure.

Today’s global marketplace is just that, a global market where you have to meet greater expectations, be more flexible in your systems and still manage to work within the localised environment applicable to each country. This is no easy task for an organisation and it needs effective tools to support it.

Far too often we come across ERP systems that are creeking and groaning, trying to stretch it’s business model to somehow reach out into a real global market when it was developed for a more simpler local environment. One size does not fit all.

Given the major investments made in developing an ERP system you would not expect organisations to throw it out and start from scratch, even if that is what is required. The shareholders and marketplace would not tolerate it. So, instead, most providers either plugged in a ‘global module’ to the existing system or tried to patch in quasi-global architecture and thus added additional overhead to an already top-heavy system.

At the risk of stating the obvious, neither of these approaches embraces a true global data model, and thus blocks and frustrates any attempt at an accurate worldwide view of business transactions, reporting, forecasting, and all business-as-usual operations. It would appear that you and your organisation are living in a parallel universe, whereby your vision is not being matched by your ERP system.

Shoehorn approach
I am always surprised to discover the number of CEO’s and stakeholders who still believe that you can impose an ERP system on an organisation and it will somehow circumnavigate all the internal problems that it faces; the local managers, the cultural difficulties, the silo mentality, the low morale, the lack of profit margins, etc.

The dream being sold to weary executives in the form of ERP systems, is that it will provide the organisation with good business practices overnight and will not only give you back executive control but it will pour calming oil on the somewhat chaotic and troubled waters of an undefined and struggling environment.

The scenario that you can control an un-manageable situation by turbo-charging it and making it operate faster, is more than a little flawed and is the stuff of nightmares. The obvious outcome of this is that you will either shake the operation so violently that it falls apart or you will crash headlong into a metaphorical wall.

The Gambler’s Dilemma
The gambler’s dilemma is whether to invest more into a loss making situation in the hope of recovering your losses or the more difficult option of cutting your losses and walk away. Unfortunately, too many organisations have experienced this dilemma at first hand and many are still trying hard to either a) dis-engage themselves from their ERP system provider and walk away with some of their honour in tact or c) to continue to justify the unjustifiable, the $Mns spent on a system that hangs like an albatross around your neck.

Conclusion
ERP systems are now seen as a legacy system for a less than global marketplace and should be retired gracefully. We are looking for the next new thing, based on where we are and where we want to go. We do not need parasitic systems that simply draw energ from the organisation simply to maintain the status quo, in the way that ERP systems do.

We are in a truly world-wide marketplace and have been for the last 10+ years. We need systems that will drive and support us in this boundless and boundary-less environment. System that can embrace the global and cultural differences that we encounter as an organisation. These may be multifaceted and will certainly need to be flexible and dynamic, but at the same time they need to be an informed aid to establishing tight control and strong management.

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