How to Increase the ROI of your ERP System – Cut the Flab
Let’s face it. If you have an ERP system that’s more than 5 years old, then it’s getting overweight by now. You’ve struggled to get ROI out too. It’s OK – lots of folks suffer from the dreaded “ERP software bloat”. The good news is that it’s not too late to drop those pounds…and keep them off.
In our last installment of the Austin Powers series on enterprise software, we learned 3 ways to put your Fat Bastard of an ERP system on a diet. To recap, those steps were to:
- Redesign business processes in moderation without radical “re-engineering”. In other words, make simple modifications to the diet without resorting to drastic “yo yo” measures.
- Prioritize tasks and start with the easier, less expensive fixes first. Eat the “low hanging fruit” before trying to stomach the harder-to-digest changes.
- Start a reasonable, manageable exercise plan that includes measuring key performance indicators (KPI’s), testing thoroughly (pounding the keys), eliminating unnecessary functionality and fully documenting “work instructions” for the people who will use the system. Put an exercise plan in place and stick with it.
Unfortunately, anybody knows that keeping the weight off is the hardest part. How can companies break that “vicious cycle” of broken processes and complexity? Well, here are few good ways to cut the flab from your ERP software and keep it off. Fortunately, they’re a lot easier to stomach than you might think.
Empower the users to do analysis on their own
In the early days of ERP systems, any changes to “sessions” or screens were considered a “customization”. Today’s customizable web interfaces, data extraction tools and ability to personalize screens give regular users the ability to do their own analysis without waiting for IT to build custom tools.
In the ‘90s I was working with a Controller who said, and I quote, “ERP systems eat like an elephant and sh*t like a mouse”. He was referring to the fact that although they were entering massive amounts of data and generating millions of transactional “records”, he couldn’t extract useful information easily without waiting for IT to write him a bunch of custom reports.
If he was using the updated version of the system today, he could set up “conditional formatting” to filter the data, reorganize his screens, filter the records on the screen and extract data directly to MS-Excel. In other words, he could easily tap that Fat Bastard of ERP data using just the standard capability.
Some great ways to empower the users to be “fit” on their own:
- Use Microsoft Office Integration
- Take advantage of user interface personalization with a Web UI
- Use an inexpensive, easy to use business intelligence (BI) software package
- Use data visualization
The ROI boost will come from diverting IT staff to much more productive uses of their time, cutting down on customized reports, reduced training costs and many other benefits. Plus, it energizes the users to exercise on their own.”
Don’t go down the customization road
Almost all of the big companies I worked with back in the ‘90s added bulk and complexity by heavily customizing their ERP systems. Customizations are addicting. As Fat Bastard said, “I eat because I’m unhappy, and I’m unhappy because I eat. It’s a vicious cycle.”
In terms of manufacturing ERP software, it starts with adding functionality that wasn’t in standard. This makes you a slave to consulting firms, who are all too happy to indulge your appetites for more add-ons to the old system rather than implementing a new ERP that has much of the functionality you need already there.
The problem is that when you’ve worn out your old custom clothes, in other words you’ve outgrown an old version of heavily modified enterprise software, you typically can’t just upgrade or do minor alterations. Instead, you need a whole new suit. And if you’ve got a large “on premise” ERP system, my friend, that suit may have to be an Armani from the “Big and Tall” shop. You don’t want to know what the tailor costs either….forgetaboutit!
Fortunately the bulk of those customizations back in the day were reports. Now there are lots of options to replace customizations without writing reams of new code. For example, a $36 Billion electronics manufacturer that had Baan ERP is now upgrading to Infor LN. In Baan, they had doubled the amount of Baan standard “sessions”, approximately 6,000 to over 12,000, by adding custom sessions. Many of those were custom reports.
By using two standard “export” sessions in the latest version of LN, one for financial statement “trial balance” data and one for general ledger (GL) transactions, they were able to eliminate around 200 custom Baan ERP reports. I wish you could’ve seen the smile on the Finance Manager’s face when I showed her ERP data extracted right into an Excel pivot table. She looked like Austin Powers when he got his “mojo” back.
- Upgrade your ERP system to the latest version
- Take a bolt-on approach with 3rd party add-ons
- Buy, don’t re-invent the wheel
- Provide “self-service” options
- Streamline business processes
The ROI boost will come from decreased IT headcount devoted to customizations, reduced consulting cost for programming, a less expensive upgrade path for your ERP system, decreased complexity and better user adoption. Make your CFO happy!”
Always continue to improve
There’s always panic and excitement when you “go live” with new enterprise software. When things go right, there’s also a euphoria that accompanies a new way of doing business that promises efficiencies and (hopefully) user satisfaction. It’s like Fat Bastard making a New Year’s resolution to stop eating baby back ribs.
Unfortunately, New Year’s resolutions often don’t last because dieters lose resolve. Really staying fit and preparing for growth entails a commitment from the entire organization, particularly management, to not let inertia creep back in. That’s the only real way to make your weight reduction plan stick.
As authors Chip and Dan Heath say in their wonderful book “Switch”, a company needs to ingrain new ways of doing things through practice, change management and continuous improvement. They have to learn to resist that “emotional Oreo cookie”.
In other words, the software users have to commit the new processes to habit so that the “rider” (their conscious mind) can relax and avoid expending so much energy trying to control the “elephant” (their subconscious mind). As the Heath brothers say, we’re almost powerless to control an unruly elephant.
Some popular ways to do this that I’ve seen work well are:
- A continuous learning and ongoing training plan to keep users fit
- Key Performance Indicators (KPI’s) to measure progress in the business
- Total Quality Management (TQM) to reduce waste
- Lean initiatives for manufacturing to speed throughput
- Six Sigma “black belt” programs to root out problems
- “Pull” systems like Kanban or JIT to relieve bottlenecks
The ROI boost will come from less waste in operations processes, higher output, better productivity, more management control with fewer resources and decreased inventory. Not to mention, everyone feels better about their new bods!”
The good news is that I’ve seen many companies successfully put their ERP systems on strict diets and keep the weight off after they “go live”. In fact, that’s been a large part of the ROI benefits that the majority of my clients have enjoyed.
They keep getting better as they practice, clean up their data, reinforce their new “best practices” and kick their customization habits. In order to grow and compete with faster and smarter rivals, companies have to be lean fighting machines. Maybe not Mini Me, but closer!
Do you have more suggestions on how to keep ERP systems or other enterprise software on the path to health after “go-live”? I’d love to hear your thoughts in the comments below.
If you liked this blog and would like to check out some others, then here’s a sampling from our InforLN.com business blog:
- 7 Simple Ways to Avoid an ERP Project Disaster
- 3 Leadership Secrets From Richard Branson
- David and Goliath: How to Turn Small Into POWERful
- Enterprise Software: How to Turn Your ERP Project Into a Party
- Halloween: 4 Simple Ways to Take the HORROR Out of a Startup
- Halloween II: 4 More Simple Ways to Take the HORROR Out of a Startup
If you’re interested in the topics of enterprise software, ERP software, BI, consulting, manufacturing and others, then I invite you to check out our new website inforln.com. There is an enterprise software resource library with examples of work instructions, whitepapers, etc., an ERP software presentations library, videos and our new blog.
Posted by Dan Aldridge
Dan Aldridge is the CEO of Performa Apps, an ERP software consulting firm specializing in Infor LN and Baan. He has almost 20 years of ERP implementation experience. Dan has helped dozens of companies with their ERP software implementations and training including Carrier, Mercedes Benz, Snap-on Tools, Blue Bird, Flextronics and a host of other manufacturing companies. He is a serial entrepreneur and blogger on LinkedIn and his new site inforln.com.
You can reach him on e-mail, About.me, LinkedIn, Twitter, Google+, Scoop.it, WordPress,Slideshare, Pinterest, and Facebook . His company Performa Apps is on LinkedIn, Twitter, Facebook, Google+, YouTube, Scoop.it, and Slideshare.