ERP (Enterprise Resource Planning) has become a four letter word in the apparel industry. Ask a CXO of a company whether the ERP they installed met their objectives, more often than not the answer you get is a "NO". Why is that? And why is that the same ERP works quite well in one company while is a complete disaster in another? In this multi-part series of articles, I will look at why ERPs fail to deliver and what factors should CXOs keep in mind when implementing an ERP. But first lets talk about some myths. Because that's where the problem really starts. Software companies promise the moon and say yes to pretty much every outrageous demand/wish that the customer puts forth. But when it comes time to implement, reality sets in and things turn bad.
Over many years of meeting apparel industry experts and in talking to companies that have implemented systems, I have realized that failed implementations are essentially a result of a lack of understanding of what an ERP can and cannot do. So let me just lay down the top 5 myths people have of an ERP. Being aware of these myths, would help you in improving your chances of success:
Myth#1 - ERP will simplify work - no it does not. The objective of an ERP is not simplification (at least not initially), rather it puts in controls - which actually can be quite restrictive when it comes to operations. The simplification starts happening once people realize the value of the controls and how it reduces the fire fighting.
Myth#2 - ERP will improve operational efficiency. Ask anyone who has implemented an ERP and they can tell you that releasing POs has become a longer process, somethings that just took one phone call now require 4 documents and 5 approvals! operations people hate it as it reduces flexibility, finance people love it as it gives them more control! But to grow you need to put in these controls.
Myth#3 - I can get by without my top people getting their hands dirty- the whole point of an ERP is to provide greater control to top management. But top management gets bored too quickly - they get so used to other people doing actual work - that they forget what it means to do boring, painstaking work that is needed to implement a robust system. If your top team is not willing to commit a significant time in the system then its a big red flag!
Myth#4 - Software is more important than training - a basic ERP system where users are well trained is far more effective than a top of the line system with weak user training. So invest in training and then invest some more.
Myth#5 - and this is a big one - ERP will fix ALL my problems. If you can't clearly define the top 3 things that an ERP will solve for you, then forget about it. No system can solve 20 problems at one time. So do your homework. Get the top team involved, prepare this "objectives" list and focus on achieving it. Once you get the win, then you can move to more areas.
I will write more on this in subsequent articles - but I hope this one gets you thinking!