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Lending Edge Technology – IT, eBusiness, lean

The ERP Devils Triangle and the Impact of the Supply

Chain

Ray Atkinson CEO

Atko Global P/L

ERP Devils Triangle Impact on Supply Chain & Corporate Risk

An Insight into ERP Failures

Atko Global P/L

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Atko Global P/L ERP and the Supply Chain


Atko Global P/L

ERP Philosophy Manufacturing/Distribution

Business Plan

Production Plan

Sales & Operations Plan

Master Production Schedule

Material Requirements Plan (MRP)

Resource Plan

Rough Cut Capacity Plan

Demand Management Forecasting Distribution RP Customer Orders Contracts

Planned WO Trial Kit Order Release Kanban Cards OP Scheduling Kitting Dispatching Order Closeout Production Reporting Picking Despatch Invoicing

Capacity Requirements Plan

Parts Master Bills of Material Routings On Hand Inventory On Order Inventory

Planned Purchases Release Orders Vendor Scheduling Kanban Schedules Order Receipt Inventory Control

MEASUREMENT

Understand how to use the tool


Atko Global P/L

History of Disasters: 1970-1990 MRPII 70% underperforming to expectations Some outright failures In-house implementation team with ad-hoc consulting

Name change to ERP 1990-Current ERP 70% underperforming to expectations Some outright failures Companies bankrupted Major negative impact on company performance Software House/implementation partners managing project Huge cost for implementation services + 25% overuns on budgeted cost Major Corporate Risk Legal action increasing


Atko Global P/L

Success & Failure Companies reporting successful ERP implementations claiming 50-55% of Benefits against expectation Few happy with results Failed ERP is difficult to specifically define. Usually elements of the system working but little benefit Negative impact on company performance Huge internal disruption and internal blame game Executive career risk Money black hole


Atko Global P/L

Typical Issues: From a company’s perspective • Project overrunning budget, costs blow-outs • Project late, poor progress • Taking shortcuts to bring project back on time • Resource issues, lack of expertise • Internal confusion and conflicts • Management frustration • Little benefit • Wishful thinking ignoring reality

Typical Complaints: From a company’s perspective • The ERP Software vendor and their partners misrepresented

the extent of their expertise and experience. • The vendor assigned inexperienced people to the project. • The software house concealed or mislead on the limitations of

the ERP software functionality. • Too many hidden costs


Atko Global P/L

Typical Response: From Supplier’s & Implementer’s Perspective • Lack of Top Management Commitment • Poor Initial Requirements Definition and ERP knowledge • Budgeted cost underestimated for data clean-up, training,

education, additional hardware etc., and business disruption

• Project implementation resources inadequate • Scope creep • Corporate behavioural and poor change management

processes • Project implementation schedule unrealistic • Software expectation versus reality gap • Unrealistic expectation of benefits and ROI • Inadequate training and education • Unrealistic “Go Live” date


Atko Global P/L

Companies with ERP implementation problems:

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The Company

All share responsibility For success or failure!

The Devils Triangle

But! Who was/is being paid for the ERP expertise?

Sold the expectation Try to implement what was sold

The reality: 55-70% disappointed

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1. ERP Acquisition Rationale

2. In House Expertise in ERP

3. Risk Assessment

4. ERP Cost Justification &Budget

5. Request for Proposal (RFP)

6. Software Selection Criteria

7. The ERP Contract

8. Project Plan

9. Go Live Date/s

10. ERP Education

11. ERP Training

12. Implementation Responsibility

13. Project Management

14. Executive Involvement

15. Software House Expertise

16. Software Imp Team Expertise

17. Process Change

18. Data Clean-up

19. Data Conversion

20. Issues Identification

21. Scope Change

22. Software Changes

23. Management Action to Issues

24. Go-Live Readiness Reviews

25. Live Running Cut-over

26. Post ERP Cut-over

Atko Global P/L1 2 3 4

Results of Project Analysis

That represents a common theme

Amongst companies implementing ERP systems

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Atko Global P/L

Effects on

Supply Chain


Atko Global P/L

In this situation the ERP System will not support The supply chain!


Atko Global P/L

The “Proven Path” is there any such thing?

This company was sold on the Basis of a “Proven Path” implementation Methodology.

70% of ERP systems Do not provide the outcomes cost justified for despite claims of risk free “Proven Path” Implementation methodology.

You decide!


Detailed analysis of ERP approaches highlight shortcomings across a large spectrum of activities summarised here:

Atko Global P/L

1. ERP Acquisition Rationale 2. In House Expertise in ERP 3. ERP Cost Justification & Budget 4. Risk Assessment 5. Request For Proposal (RFP) 6. Software Selection Criteria 7. The ERP Contract 8. Project Plan 9. Go Live Date/s 10. ERP Education 11. ERP Training 12. Implementation Responsibility 13. Project Management

14. Executive Involvement 15. Software House Expertise 16. Software Imp Team Expertise 17. Process Change 18. Data Clean-up 19. Data Conversion 20. Issues Identification 21. Scope Change 22. Software Changes 23. Management Action to Issues 24. Go-Live Readiness Reviews 25. Live Running Cut-over 26. Post ERP Cut-over

All of these areas need to be managed but who is given the power and mandate across all of these areas?

The company Software house/implementers Joint responsibility


A practitioners experience with ERP

Harry Houston


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