Home  Articles and Publications  Proven Results  Associate Partners 

About Cris Hagen 

Realizing a Return on Investment from Your ERP System:  Chasing the Holy Grail or Chasing Your Tail?

Cris Hagen, MS

Have you left money “on the table” from your ERP implementation?

It has been 4-5 years since the Y2K threat drove hundreds of companies across the world to implement a new ERP system to address the threat of downed systems and an inability to conduct business.  Even those companies that waited and took a more conservative approach to replacing legacy systems have now reached a point where they are looking for the promised return on their ERP investment. 

Has your company left money on the table from your ERP implementation?  Whether you’re using Oracle, SAP, PeopleSoft, JD Edwards, Bahn, or some other system, a fully integrated, enterprise-wide system was supposed to enable better decision support as well as more efficient and globally standardized operations across your company.  Are your Marketing, Sales, Manufacturing, Service, Finance, and Procurement functions still working in silos?  Have they been unable to achieve cross-functional synergy and form into the kind of customer-focused teams that lead to improved customer satisfaction, cross-selling opportunities, reduced cycle times, and decreased labor costs?    Have you re-engineered your processes but still feel that employees are working twice as hard to make them work more efficiently than before?

If your answer is “yes” to these questions, then the reasons may include the following:

• You’ve re-engineered your processes, but focused only the process and the technology, not the people and organizational side of the equation.
• You’ve retrofitted (or worse, force-fit) your new system into existing operational practices and procedures, but haven’t had the time to optimize the system using best practices. 
• Your organization is stymied by turf battles, “not invented here” attitudes, and other political and cultural struggles.
• You don’t have a structured and systematic approach for achieving the full potential of your new system.

Re-Engineering is more than just automating and eliminating work

Business process re-engineering is the commonly accepted method for optimizing the advantages of the new ERP system.  However, most re-engineering efforts start and end with identifying which tasks can now be automated or eliminated.  And while this can lead to some consolidation or centralization of certain jobs, resulting in some degree of cost savings, there is much more that can be done to achieve not only cost savings but improvements in other business metrics as well.   What is required is a shift in thinking from a two-dimensional focus on technology and process, to a three dimensional focus that examines the “people” and organizational dynamics which can serve as “force multipliers” to improved business performance.  By using an appropriate set of tools and methods, it is possible to identify new ways of leveraging the power of this third dimension in the following areas:

• Unconventional cross-functional teaming arrangements to catch problems at their source
• Job design to foster increased motivation, commitment, and “big picture” performance
• Improved communication to maximize service and sales opportunities through better information sharing
• Better decision support to empower faster, more responsive, and more customer-focused decisions

Using a three-dimensional approach to analyzing current work processes enables employees using the new system to achieve “out of the box” creativity in structuring a more flexible, adaptable, and responsive approach to performance.  The result can be a significant improvement not only in cost savings, but in increased sales, improved quality, increased customer satisfaction, faster service response times, and standardized processes across global operations.

Our Approach

Since starting a re-engineering effort from a blank slate is not an option, our approach begins with an inventory and assessment of the current situation, including:

• Existing system architecture and functionality
• Existing business processes, particularly those processes where improvements can be linked to company strategic objectives
• Existing organization structure and design of jobs supporting core work processes
• Baseline financial and operational measures from which to gauge improvements over time
• The design of “people processes” that reinforce and motivate performance at all levels in the business

Based on our comprehensive analysis, and working with executives, subject matter experts, and a design team of selected employees, we derive a prescription for change and an implementation plan for whole systems improvement.  At each step, we work with your staff ensure that appropriate communication with, and involvement of, all key stakeholders is achieved to support the change plan.  During the project, we transfer our knowledge and experience to key change agents so that they can provide continued support and apply their knowledge to new projects over time.

Summary:

Realizing promised benefits from an ERP system is achievable.  But to do so requires a systematic approach to change that goes beyond automating and eliminating work processes, but explores ways of optimizing the people and organizational facets of change that can significantly boost overall organizational performance.