To a large extent, software packages do work out of the box. Packages that do not perform perfectly or as users would expect is when dissatisfaction arises. This dissatisfaction can be dealt with in a rational manner through the employment of effective project and change management procedures.
However, an area that typically creates problems, whether expected or not, is the development of interfaces between proprietary software that cannot be replaced. Building these interfaces takes time in terms of defining requirements, designing conceptual and detail specifications, programming, and testing. One question surrounding this issue that may seem repetitive and tedious is, "Why would you want to be faced with the interface requirements for two enterprise-wide applications at the same time?" If the question is tedious, answering, "Of course, you would not." is equally repetitive. An advantage of taking on interfaces one package at a time is that after you resolve the issues for the enterprise resource planning (ERP) software, you may find that the interface issues for supply chain management (SCM) have either resolved themselves, are not required, or are much less complex than expected.
However, direct interfaces between the ERP and SCM software are a cause for greater concern. For a one, there are a lot of them. As we mentioned before, formulas, resources, routings, inventory availability, and customer demand and orders are just "the tip of the iceberg." For another, since you are dealing with unfamiliar and complex software, the learning curve can, and most likely will, be significant. The learning curve must get around the obstacles of not knowing the code and possibly not knowing the technology employed. This is definitely true if the packages are purchased from two different vendors. But, what if the packages are from the same vendor? Aren't they already integrated?
Don't be fooled by the marketing hype that just because you purchased both ERP and SCM software from the same vendor, there will be no interface issues or that the interfaces are seamless. Check "under the hood" and determine how the interfaces function.
While a standard interface may exist and work, it may be designed for simplistic supply chain models and may not be appropriate for your company. If this is the case, likewise the standard interfaces will not be applicable to the majority of companies, including yours. And, while you can change your product nomenclature, your vendor numbers, and even your general ledger chart of accounts with minor consequence and inconvenience, changing your manufacturing model to take advantage of the standard interfaces make little or no sense. Why? Because, it is your existing manufacturing model that provides your company with a competitive, and possibly proprietary, advantage in terms of how your finished goods are produced and the costs incurred.
Again, it would be better to have the ERP software running smoothly and under control before taking on the SCM software and attempting to model your business processes. You don't want to crank up the advanced planning and scheduling engines, only to see that you have not effectively emulated the production lines and, more significantly, have lost the business efficiencies that has taken years to achieve. "Live long and prosper," "May the force be with you," or any other incantation is not going to save the day or possibly your job.
This is Part Two of a two-part note.
Part One detailed the immediate problems to a joint ERP SCM implementation.
Which Enterprise Software Should Go In First?
Which enterprise software should go in first? The answer is fairly simple. Because you need to create a good foundation of data, reduce the cultural shock on the users, and obtain a real understanding of the interface issues between ERP and SCM software, the ERP software should be implemented first. No real surprise here. How long after the ERP implementation should you wait before implementing the SCM software? Six months is not unreasonable. So what is the big problem?
Typically, the real benefits and tangible savings come more from the SCM than ERP software. Being able to produce the "perfect" order, getting more yield out of your production lines, and knowing what you can commit to and when can achieve good results on your company's bottom line. As sponsor, user, or even project manager, you may be hard pressed to argue against this line of reasoning. Who wouldn't want to make a positive impact to the bottom line? However, you must be prepared to articulate the implementation rationale. It is analogous to the debate about who is needed first versus and who is more valuable: the financial accountant, who maintains the books and financial records, or the tax accountant, who saves you money by reducing your tax liability. Without the records, how would you calculate the taxes? Without a solid, stable ERP database, how would you setup, validate, and utilize the SCM model?
Hopefully, by establishing the positives for proceeding with the ERP software first and stating the serious pitfalls if you start with the SCM software, you can convince your management of the correct implementation sequence. If not, you may never achieve the benefits attributable to the SCM software and never get to the implementation the ERP software. Frustration levels may be so high that the company will revert back its older systems. It has and does happen.
The reasons for proceeding first with the implementation of the ERP software are relatively straightforward and include
- Establishing a solid and stable data foundation.
- Ensuring a realistic availability of implementation resources.
- Developing realistic expectations and tasks for implementation personnel.
- Reducing the cultural shock and trauma on the user community.
- Creating a sense of accomplishment and confidence sooner rather trying to restore these attributes later.
- Keeping software problems at manageable levels.
- Staggering interface requirements so they are consistent with the learning curve of the software.
- Understanding and appreciating the full impact the interface issues between enterprise-wide software.
Beware of and expect objections from executives who are myopic and focus only on the bottom line and short-term gains. Be prepared to answer their objections or, better yet, anticipate them before these objections rise to a crisis level. If so, you can achieve the efficiency and technological benefits gained from state-of-the-art ERP software as you later take the money to bank. These will be the results of the effective planning and scheduling offered by the SCM software.
On a final note, if you plan on implementing both ERP and SCM software and agree with the sequential approach, make sure that you capitalize on this fact when negotiating the contract with the vendor to achieve the most attractive pricing. This can be done by either obtaining a larger discount by agreeing to purchase both packages at the same time or, at least, locking in the future price for the SCM software.
About the Author
Joseph J. Strub has extensive experience as a manager and senior consultant in planning and executing ERP projects for manufacturing and distribution systems for large to medium-size companies in the retail, food and beverage, chemical, and CPG process industries. Additionally, Strub was a consultant and Information Systems Auditor with PricewaterhouseCoopers and an applications development and support manager for Fortune 100 companies.
He can be reached at JoeStrub@writecompanyplus.com.