Ever have one of those days when nothing goes right? When you get dressed in the morning and realize all the socks are in the dirty laundry basket? When you attempt to run a quick load of laundry but realize your teenager has just started a load consisting of one pair of jeans? In a rush and out of options, you find your son's skateboard socks with the very professional Incredible Hulk pattern.
Note to self: don't sit cross-legged today.
Later, in the middle of a meeting, a call comes in from the wife checking if we made the quarterly donation to the local children's home.
Great question... I have no idea.
After a tedious day in the office, grilling some steaks sounds great. After fighting traffic all the way home from the grocery store, it's time to fire up the grill but somehow there's no charcoal.
Fantastic.
It would be great to have some miraculous visibility into planning laundry better. Or a way to check home inventory at any time. Or to quickly see all our expenses by category for the year.
Now imagine a large corporation dealing with similar issues. How do they handle planning their resources? Back in the seventies, someone came up with the idea to create a resource planning system for companies. Later, someone added the word "enterprise" to make it sound official, and voila! "Enterprise Resource Planning" or ERP was born. Since there's already so much confusion around what an ERP system is, it might be most effective to clarify what an ERP system is not.
An ERP system is not a cure-all for a company's woes, as many expect. Unfortunately, the acronym ERP conjures bad memories due to previously unmet expectations. One of the keys to making a system successful is setting the right expectations while prioritizing between necessary functions and "magic button" requests.
Example of a "magic button" request: "Wouldn't it be great if after partially completing a purchase order, the system automatically completes the order and knows exactly what we need to order? And then when they complete it, the shipment arrives on time with the right amount?"
Companies often bog down their systems and implementation efforts with these "magic button" requests in an attempt to cure all, which leeches time, resources, and budget from the critical requirements that should be the main focus. Just because something can be automated, doesn't mean it should be.
One of the most common misconceptions is that an ERP system will make bad data an issue of the past. No system—no matter how smart or laden with data-validation—will prevent human error 100% of the time.
Furthermore, an ERP system will not cleanse existing bad data from an old system or Excel spreadsheets. Bad data refers to data that is outdated, contains duplicate values, and includes data entry errors or typos or incomplete data sets. If a company has bad data in its old system, that data will remain bad when migrated to the new system unless a human being with human logic takes on the task of cleansing the bad data first. If a company's customer list has the incorrect contact details for 20% of the customers and that list is loaded into the new system, the new system will reflect the incorrect data unless someone takes time to manually correct the bad data.
No ERP system can spin straw into gold.
While an ERP is set up to streamline standard business processes (i.e. purchasing, accounts receivable and accounts payable, inventory management, and accounting) and to generate basic financial statements, there are some things an ERP system simply will not do:
In its most basic definition, an ERP is a tool that supports a business. It provides a company with the tools to purchase supplies, fulfill orders, bill customers, pay vendors, manage inventory, and maintain accounting records from a single system.
A well-implemented ERP system allows a company to streamline and standardize business processes, provides the opportunity to store company data in a centralized location, and empowers companies to capture an almost endless list of metrics, which can be compiled into sophisticated reports. If implemented properly and used for its intended purposes, an ERP is a powerful tool that positions a company for growth by allowing it to standardize processes, streamline operations, and capture data that can be leveraged into well-informed, strategic decisions.
Now if you could only implement an ERP for your house, dads might not be subject to wearing their son's skateboard socks to work.
This article has been adapted from a chapter from the author's book, Jar(gone).
Trenegy helps companies select and implement ERP systems to make reporting and analysis easier. Our non-traditional consulting method cuts through the ERP confusion, providing our clients with efficiency and confidence. Contact us at info@trenegy.com.
