ERP Systems

According to a survey, although only 2% enterprises move their ERP system to the cloud, almost 50% enterprises plan to adopt cloud ERP system within 10 years. Because of the rapid development of cloud computing, it seems like it is a trend to move ERP system to the cloud.

What are the reasons drive this trend?

1. Achieving faster time-to-market: traditional ERP takes to reach the market; however, cloud ERP system saves the time of building server.
2. Legacy ERP systems lack scalability to support 21rst century compliance: traditional ERP system’s data model cannot support the current global entire operation.
3. Mobility: in today’s warehouse, mobile platforms are most often used for material handling, warehouse management, traceability, quality management, logistics and service tracking. Mobility offers real-time information.
4. Increasing number of small business: traditional ERP is costly for them.

The disadvantages of traditional ERP system and need of current business lead to the development of cloud ERP

What are the pros and cons of cloud-based ERP system?

Advantages: Access to more latest features, decrease the cost of server and hardware, faster implementation.

Disadvantage: Limited customization, security issue (data are in the vendor’s hand)

 

Walmart is building up its ability competing with Amazon in the online retailer field through acquisition of Jet.com and installation of new warehousing technologies such as automated product sorting and improved item tracking. It’s like two giants coming from different sides of the world, one rises from virtual online marketplace and the other has been dominated real thousands of real shops and stores, wrestling with each other. An interesting article from Forbes gives us the insight; whoever wants to win this battle must know the following three things: 1. knowing your own advantages and your customers, 2. establishing a robust and flexible supply chain, and 3. discovering new services in retails and dominating it.

To design a set of strategies that address the above three concerns, one thing cannot be ignored is all about information. How to obtain customer and market information, how to analyze and predict where are the demands, and how to storage goods to optimized delivery efficiency, each one of them are big problems waiting to be solved. We are so lucky to live in a world with computers hence tools and algorithms for solving problems are possible. Tools and strategies are not enough, without precise execution, it is very likely to repeat Canada Target’s story.

We all like to hear about success stories. Especially about business applications, where through careful planning, problem solving, and teamwork, Company EFG overcame the odds and achieved greatness. Or how Company LMN did this, this, and this, and became a textbook example of how to do something. How inspirational!

But I think the best stories are the failures: the bigger the disaster, the better the drama. So, I collected some of the best known ERP fails over the years below:

1. U.S. Navy. U.S. Navy began implementing a new ERP system back in 2000 when they tried to integrate their existing subsystems (all 44 of them) into one single system. They tried four different pilot projects (each of them failed), and ended up spending over $1 billion. Nuts. Ultimately, the failure was due to a lack of coordination between project, poor process standards, no transaction standards, and exclusion of enduser for requirements. (Source)

2. HP. HP in 2004, was migrating to a new order-processing and supply chain system in their North America division. Things were going smoothly until a series of small problems snowballed into a massive one that ended up costing the company $160 million in lost revenue. There were three main issues in play: first, the project team had some difficulty working with other parts of the company; second, there were lots of data-integrity issues (Orders fell out between the legacy front-end system and the new system on the back end, which needed significant manual intervention); third, increased demand of products, which put more pressure on the new system. (Source)

3. Nike. In 2000, Nike invested $400 million in updating their ERP and supply chain system… Only to see $100 million in lost revenue and a 20% dip in stock price (not to mention a bunch of class action lawsuits) when they produced too much of one shoe and not enough of another. The new system was suppose to match supply and demand and run a tighter manufacturing cycle. But due to poor software testing and too much faith on the demand forecasting features of their new software, their plans backfired rather spectacularly. (Source) 

What these cases show is that ERP implementation is very complex and things can go wrong very quickly with significant financial impact. But by keeping disaster stories in mind, you can watch out for common pitfalls.

This week was review about the different process in ERP systems, Accounting, Procurement, and Fulfillment from an ERP perspective. Particularly we analyzed and the business issues of Target Canada from an ERP perspective.

Finding the right ERP software solution is a difficult and resource-intensive task for any company, and with Target’s tight timeframe, successfully implementing a system within 2 years was next to impossible. Although using the existing system proved to be successful in US, and also familiar for the employees to work, it didn’t include features specific to Canadian market. Some of the issues were as follows:

1. Target had bad data management with lot of errors. This was one of the main reasons for critical failure of ERP systems in Target Canada.
2. The timeline that retailers and employees was set on was unrealistic. This led its supply chain to plunge in chaos.
3. Training is vital to a business’s success with a new software system. User errors are inevitable, but they can be easily managed when a business allows itself to roll out a new system gradually instead of implementing it drastically.

Takeaway in this case would be that companies must be ready to invest the time and resources necessary for making their implementation a successful one.

 

I attended a wedding this past weekend, which got me thinking about how the processes in organizing a wedding are similar to the business processes we’ve been learning in class. Wedding Planning and ERP planning both require detailed planning to the meet the needs of the stakeholders ( bride/groom, family and friends). The bride/groom procure the services of external vendors (wedding hall rental, food and bar, entertainment), and are impacted financially through the purchase of these services. The procurement of these services are then used to produce the wedding event.

Enterprises across the globe have moved towards greater adoption of mobile solutions and ERP is no exception to the trend.  Here are ways how mobile ERP will benefit enterprises

1) More time for better decision making.

If your key supplier has a huge shipment of raw materials stuck in transit, the operations managers finds out only when they access the ERP platform through a fixed workstation which sometimes maybe too late. With Mobile ERP, managers will be informed immediately giving them more to come up with an alternative solution.

2) Sales People have access to Information while on the go

With a mobile ERP app, salespeople who visit customers can carry important information about the products they are selling and the customers they are selling. They have the advantage of  checking  inventory on hand, order status while being with the customer.

3) Remote workforce:

Most of the companies have remote workers in distant areas, these workers can benefit from having mobile access to the central ERP platform.  Also with the Mobile ERP, upper management can stay connected to the business.

http://www.meritsolutions.com/enterprise-mobility/mobile-erp-benefits/

We have been learning the importance of an ERP system and the numerous benefits it offers to the companies specifically large businesses having number of departments and requiring cross-functional communication to perform various operations. Yet having such powerful system comes with an upfront cost that could not affordable by many SME’s, they need to have an IT department to manage the complex system also infrastructure costs for having up-to-date equipment and the physical storage space to house it all.

How can SME’s have the facilities of ERP system with reasonable costs? The answer is Cloud ERP, which is provided as a service where the data is managed in Cloud by the ERP vendor which is accessed by the customers via web browser. Cloud ERP has been able to be cost effective as it:

• Prevents upfront costs for equipment and the physical storage space.
• Lower need of IT support as IT is in the cloud
• Remove maintenance and support cost since update and upgrades are handled by the cloud vendor
• Fixed monthly plans gives flexibility to use cash on core business
• Immediate availability as no installation equipment’s and software required

And many other benefits. With technological and security advancement in future, maybe Cloud ERP could make the on premise ERP system outdated.

We saw how global companies are implementing ERP systems across their departments and across their international offices where thousands of employees within the company use the same ERP.

But what if the company needs to change ERP vendor or make a major change ?

For such cases, boards have to deal with the tedious phase of change management where the whole company go through a complex re-organization of the culture of work.

Therefore, global organizations implementing ERP software need to include the following five components to succeed the transition:

 

1. Project champion: While employees usually report to the headquarters,  their allegiance lies where their leadership resides. So the company need to have local project champions to push toward the acceptance of the new ERP in every big office around the world.
2. Cultural considerations: Language, education and demographic differences have a significant impact on how employees perceive and understand goals, objectives, risks and benefits of an ERP project.
3. Employee engagement: The adoption of the new ERP system needs to be a clear objective for the whole organization. Employees need to be involved by quantifying the impact of such important decisions.
4. Communications: Communication within a global ERP project is absolutely vital but incredibly difficult. Most employees would like to hear updates about the project from their manager during team meetings [1].
5. Training: Change management plans must be devised in order to address workforce transition to the new ERP system and who will be super-users and trainers.  A comprehensive training strategy is needed [1].

Target’s expansion into Canada failed very quickly. A lot of people think it is because Target wasn’t ready for its global expansion. But what is really wrong or what exactly “wasn’t ready”? Opening 124 stores within such a short period of time led to a big mass with inventory planning, disappointing shoppers expecting to see the same abundance they would see cross-border shopping in the United States. With bare shelves, Canadian shoppers couldn’t even shop if they wanted to.

 

Target Canada faced a choice: Adopt the US technology or implement something completely new. Adoption would have required customization for the Canadian dollar and French-language characters. Those changes would take time. Target was attempting something impossible: set up and run SAP in roughly two years – this doesn’t seem an impossibility – a challenge perhaps, but if you have the brightest resources on your project and you are deploying the best ERP application that money can buy.

When you have veteran employees on the payroll a greenfield implementation of SAP may be a great plan however when almost all your staff are fresh young graduates with little or minimal training and experience you need to have rock solid policies and procedures and need to have equally good consultants to help with the transition.

Target Canada hired the kinds of people that they felt that they wanted in terms of personalities, but junior staff received minimal training according to former employees who worked at Target in both countries.

Reference:http://www.essoft.com/2016/06/why-target-failed-in-canada-was-the-erp-system-rollout-part-of-the-problem/

Why Target Failed in Canada – Was the ERP System Rollout Part of the Problem?

It is hard for me to relate Education industry with an ERP system. In my opinion, in education industry ERP system does not play a lot of roles. However, I saw a news said that ERP education market is increasing.

The education ERP market is estimated to grow from USD 6.77 Billion in 2016 to USD 14.19 Billion by 2021, at a CAGR of 15.9% between 2016 and 2021.  Especially higher education segment is the lead in the ERP education because the learning and teaching processes are changing in that section. Therefore, ERP solution is one of the efficient and effective ways to address these alterations.

The primary audiences of education ERP system are schools and university bodies. ERP solutions in academic institutions have enabled administrators to manage various business processes, such as student billing, registration, and enrolments. ERP solutions enable schools to manage their resource more efficiently, break the silo, and collect and analyze data. For example, by enrollment rate, student’s performance and cost of certain program, schools can design a program fitting for themselves and students. Moreover, there are a lot of online publication, tutorial, and programs. ERP solution helps schools to manage those products.