CIOs and their IT departments are often disconnected from executive teams and the business needs of their organizations. Despite the best intentions of CIOs and IT directors entrusted with aligning technology with the overall needs of the business, most are failing to do so. We often see a similar phenomenon with our clients. In many cases, the CIO becomes so wrapped up in the technological aspects of their ERP implementations that they lose sight of the bigger picture.
Adding further fuel to the fire, ERP vendors and systems integrators often oversell their technological capabilities, regardless of how well-aligned these capabilities may be with the operational needs of their clients. The reason for this trend has less to do with the CIOs and more to do with the changing nature of business. IT systems haven’t kept up with our economic shift from an industrial market focused on productivity to a knowledge-based economy focused on collaboration. The ERP industry faces a similar disconnect between the way software has traditionally been built versus the needs of today’s businesses and government entities.
So what does this mean to the average CIO or executive team about to implement a new ERP system? Here are a few ways that CIOs and other executives can better leverage their ERP software initiatives to ensure alignment between the business and technological aspects of their organizations:
1. Business Process Re-engineering Should be More Comprehensive and Less Focused on System Transactions
Most systems integrators, consultants and vendors tend to focus on system transactions when designing ERP software. However, this approach is more suited for ERP systems of the 1990s than for the 2010s. It is also a key reason why ERP failure rates have not improved in recent years. Instead of focusing on how to streamline keystrokes and deciding where specific fields should appear on certain screens, business process reengineering should identify ways that different departments can better collaborate, share knowledge and create a better product more efficiently. A top-down business process reengineering approach is best suited to accomplish this and will feed the technical team’s configuration requirements downstream in the project.
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2. Organizational Change Management Needs to Not Only Help Employees Better Understand how the ERP System Works but Also How Their Jobs are Changing
Organizations continue to evolve from industrial entities into knowledge-based centers of collaboration, employees need to be coached and managed through this change. In the midst of this change, employees will resist efforts to go back in time and force-fit an ERP system configured for the needs of an industrial manufacturer in the 1990s. While point #1 above will ensure that the software is configured to meet the needs of modern times, an effective organizational change management plan is still required to transition employees, customers and suppliers to this new way of doing business. The software won’t do it for you, no matter how well it is technically designed or implemented.
3. ERP Project Management Needs to Focus on the Needs of the Business as Well
Part of the reason most ERP implementations take longer than expected and cost more than expected is because the project team has set unrealistic expectations to begin with. Traditional ERP consultants and systems integrators aren’t business-minded so they find it difficult to manage ERP implementations as a business initiative rather than a technology project. Sure, an ERP system can theoretically be implemented and configured in a weekend if you really try, but not if you want it to meet the needs of your business. The latter is what takes time and needs to be budgeted and planned for. The disconnect between CIOs and business is just as prevalent between ERP systems and business. An effective project management team and methodology focused on the business and technological components of a successful ERP implementation is the only way to navigate this common pitfall.
We’ve seen the symptoms, researched the causes and applied solutions to our client situations. Hopefully this creates incentive for companies to do what it takes to avoid repeating mistakes of the past.