Common ERP Myths

Common Myths of ERP (Enterprise Resource Planning):

There are a lot of ERP myths that surround the concept, infrastructure, implementation and practice of Enterprise Resource Planning. Very often people are not willing to adopt ERP because of these wrong notions. In this section we will see some of the most common myths about ERP and will try to demystify them.

ERP MEANS MORE WORK AND PROCEDURES

• Properly implementing and managing an ERP system is not an easy task. The transition period from the traditional system or manual processing to ERP is difficult as new skills have to be learned; new procedures and processes have to be followed, and so on. Many employees think that ERP will add more work, make the work more difficult and will force unnecessary procedures. Transformation from the old system to the ERP system is a difficult process. However, if the management and the implementation team do their job properly, ensuring that the employees are told what to expect and given proper training, then the transition can be smooth. Once the employees get used to the new system, they will understand the potential benefits and the effort saved through automation of talks and jobs. Today’s ERP tools automate many of the repetitive, monotonous and tedious procedures, tasks and processes thus making the life of the employees a lot easier.

ERP WILL MAKE MANY EMPLOYEES REDUNDANT AND JOBLESS

• Another popular misconception about ERP system is that its implementation will make many jobs redundant (because of the automation) and hence, many employees will lose their jobs. A properly implemented ERP system will automate many tasks in the organization. This does not mean that the ERP system will make people redundant. Yes, there will be changes in job descriptions and in the activities people used to do. Many tasks will be automated and this will make the people who were doing those jobs unnecessary. But ERP system also create new job opportunities and they very same people whose jobs were automated could be used to fill the new positions after giving them proper training on the new tasks. Hence, the amount of planning that goes into re-location and re-training of the employees by the management and the implementation team can go a long way in reducing the anxieties of the employees. ERP is a people system made possible by computer software and hardware.

ERP IS THE SOLE RESPONSIBILITY OF THE MANAGEMENT

• Making an ERP system work is the responsibility of all the employees. It involves virtually every department and every person within the company. The company management is not responsible for the day-to-day operation of the ERP system. Their main job is to create an organizational environment in which ERP can thrive – give ERP the full backing of the management. They should also be involved in the development of ERP policies, usage guidelines, allocation of budget, package selection and appointment of competent professionals to implement and manage the ERP system. Only when the ERP team has the full backing and support of the management, they will be able to implement the system smoothly.
• The management should monitor the implementation and operation of the system, review the progress and status periodically and should take necessary corrective action, if required. The management should also ensure that the ERP implementation team gets the support and co-operation of all the departments, But, thinking that the ERP system will succeed just because the management is fully committed to its implementation and operation is one of the biggest mistakes that an organization can make. In fact, it is the employees – the day-to-day users of the system – who will decide the fate of the ERP system. If the employees are not fully appraised, trained, satisfied and are not happy with the system and are not using it properly, then the ERP system will be a failure.

ERP IS JUST FOR MANAGERS OR DECISION-MAKERS

•  The managers and decision-makers are the major users of the ERP system. They are the people who benefit the most from the properly implemented ERP system. They will have all the information they need at their fingertips for making informed decisions. The quality of the decisions and the speed with which the decisions are made are dramatically improved as the ERP systems provide high-quality, timely and relevant information. But every employee in an organization benefits from the ERP system. An ERP system gives the store clerk access to the inventory record and enables him to find out the exact quality of an item. It allows the production supervisor to plan his activities. It allows all employees to apply for leave, get loads approved, gets the travel expenses reimbursed and so on.
• But for making the best use of the information processing power of an ERP system the users should be trained on how to make the best use of the various features available. If people are ignorant about these, they will find it useless and if they are not properly trained, they will find the experience frustrating and tedious. These people will not use the ERP system or if forced will use it but not to its fullest potential. They will see ERP as a waste of time and do it just because they are forced to do it. This hostility towards ERP can be eliminated if the users are properly educated and make aware of the benefits of the ERP system.

ERP IS JUST FOR MANUFACTURING ORGANIZATIONS

• This assumption is basically due to the way in which ERP was historically developed from the methods of Material Requirement Planning (MRP) and Manufacturing Resource Planning (MRP II), which are relevant to manufacturing organizations. In the manufacturing industry, MRP became the fundamental concept of production management and control in mid 1970s. At this stage BoM (Bill of Materials), which is purchase order management that utilizes parts list management and parts development, was the prevailing trend.
• And this concept unfolded from order inventory management of materials to plant and personnel planning and distribution planning, which in turn became MRP II. This incorporated financial account, human resource management functions, distribution management functions and management accounting functions and came to globally cover all areas of enterprise mainstay business and eventually came to be called ERP. But in reality the concept of enterprise-wide planning of resource is not limited to any particular segment of industry.

ERP IS JUST FOR ERP IMPLEMENTATION TEAM

• The ERP implementation team usually consists of outside consultants, vendor representatives and select group of employees. But once the implementation and under training is over, the consultants and vendor representatives will leave. Then it is the responsibility of each and every employee of the company to use the ERP system properly and to make the best use of the new features and facilities.

ERP IS JUST TO IMPRESS CUSTOMERS

•  It is true that a properly implemented ERP system can help in serving the customers better as it helps the organizations to react faster, respond better and deliver high-quality products and services at astonishing speeds. This improved efficiency and quality will go a long way in improving customer goodwill and customer relations. So with an ERP system you get more satisfied customers, but that is only one of the advantages of an ERP system.

ERP PACKAGE WILL TAKE CARE OF EVERYTHING

•  ERP is not a silver bullet or a cure-all. Yes, a properly implemented, operated and maintained ERP system can dramatically improve productivity, automate tasks, reduce wastage and improve profits. But an ERP system needs people to operate, use and maintain it. If the employees are not interested in using the ERP system or are using it improperly, if managers are not making use of the decision-making capabilities of the system or if the system is not maintained properly, then the ERP will not deliver it promises.
•  It is a fact that the ERP tools have evolved over-time and have now become very sophisticated. Today’s ERP tools automate most business function and processes thus making the lives of the users a lot easier. But thinking that the ERP tools will take care of everything can be a recipe for disaster. There are many business activities that need human intervention and judgment. While the ERP tools make these jobs easier, there is no substitute for human intelligence and decision-making.

Also Read – Construction Management ERP

ONE ERP PACKAGE WILL SUIT EVERYBODY

•  There are hundreds of ERP tools available in the marketplace. These tools differ in features, capabilities, size, functionality, price, technical support, customizability, scalability etc. The organizations are also different from one another. Each has its own characteristics and identity. Assuming that one tool will be suitable for all organization is wrong. Selecting and purchasing an ERP tool without analyzing whether it is suited for the organization will have disastrous consequences.
•  For an ERP implementation to be successful, the tool that is implemented should be compatible with organizational culture, practices and procedures. So when purchasing an ERP package proper attention should be given to the selection of a tool that is best suited for the organization.

ERP IS VERY EXPENSIVE

• ERP packages come in all shapes and sizes. The sophisticated and high-end ERP tools are very expensive. ERP system needs people to manage it. Thus implementing and managing an ERP system is an expensive affair. But these expenses should be weighed against the benefits of the ERP system.
•  An efficient ERP system will increase the productivity of the human resources, shorten development and change cycles, streamline the production process, reduce errors by automating the monotonous and repetitive tasks, enable the better management of projects by providing quality information, improve customer satisfaction by resolving problems quickly and so on. When the benefits of the ERP system are considered, it becomes evident that the money spend on ERP is well spent and the ERP system will pay for itself.

ORGANIZATION CAN SUCCEED WITHOUT ERP

•  Before the advent of ERP, organizations were run manually. So, do we need ERP in order to succeed? If an organization is very small in size, caters to the niche market and has very limited scope, then it can sometimes succeed without ERP. But today’s organizations are becoming large and the products are becoming more and more complex in size, sophistication and technologies used. Also, a single group does not necessarily build the different components of a product.
• This is the era of multi-site, distributed production, where different groups situated in different parts of the world develop the components of a system. In such a scenario, managing the activities of an organization is a very complex task. If proper control mechanisms and procedures are not in place, very soon the operations can get out of control and products and organizations can fail.

Also Read – ERP for packaging industry