Monday, October 8, 2012

Enterprise Resource Planning or Eagerly Reject the Proposal?

This article has been published in SME WORLD Oct 2012 issue.

A Discussion on ERP between “The Enthusiast”, “The Cynic” and “The Pragmatist”

I totally agree with the catch-line of Café Coffee Day. Indeed, a lot can happen over coffee. And especially around the coffee machines that adorn many offices which happen to be the location of confluence of ideas convergent or divergent. This is the actual place where people try to hard sell their ideas or vehemently condemn or discredit them. Unlike the board room or conference hall meetings where people are guarded and suave, armed with presentation files and supporting spreadsheets, case studies and mindless heaps of paper (which people often do not read), the cup of coffee in hand (and an occasional cigarette which I personally do not support) breaks lot of shackles and allows for free flow of views. Like it or not, much of the success of an initiative owes its origin to a handful of such informal discussion.

Let us see what a typical discussion would resemble between “The Enthusiast” (E), “The Cynic” (C) and “The Pragmatist” (P) on the matter of implementing ERP in the organization. 

E: I have read that it reduces redundancy and the sales pitch affirms the same. People will have less work.  
C: Yeah! And it means many of us will be handed the pink slip! And redundancy is a must. Why then do companies spend on backup devices and servers? (Thinks inwardly – if we do not spend longer hours in the office, how are we going to prove we are working “hardly”!)
P: If implemented correctly, I agree that it will reduce redundancy, free up resources and give people a fair amount of free time. But it can also mean that these same people can become more productive and take up newer challenges within the company.
E: And the system can compile data from multiple sources across functions; crunch the numbers to help in strong decision making for middle and top management.
P: Yes, but we will need to understand the implication of data across functions and configure the system accordingly to generate the consolidated view. It will not happen at the click of a button automatically. Though once done accurately, it can improve efficiency of decision making. And one can always fine tune it further.
C: If the system does everything then what is our need? The company can easily hire less educated, lower skilled people! This is absurd. It is we who do the number crunching and analysis not some computer.
P: Hold your horses! It is not as simple as you are trying to make it sound. The system will be able to do a much more veritable and meticulous analysis at a much faster pace. But that does not mean it will be able to decide for us. The use and comprehension of implication of the analysis will finally depend on us.
E: ERP is very transparent. It will break all information silos by making functions talk to each other and exchange data as well as link them logically. The ERP application sales presentation stated that systems like procurement, planning and production, sales order processing, finance and accounts will be interconnected and present a seamless view of information flow.
C: My dear friend, in companies, information is power. You do not empower everyone with the same kind of information. It will simply make the office environment competitive and vicious. Not to mention, people will start meddling and asking questions about things they have no knowledge or idea. That’s why we have hierarchy and chain of command. This linking business! Do you think it will stop here? They will decide to link all customers and buyers.
E: Yes it is called supply chain management. Suppliers will get to know what we want when we want and how much we want without us telling them. Inventory levels will go down and our store space will be optimally used.
P: Maybe some of the space can be re-allocated for some other useful purpose. Resource optimization is the need of the day.
C: Like it or not we all need some leeway for mistakes and shift the blame. In this “connected” scenario there will be too much transparency which can be disadvantageous.
P: Furthermore, transparency is not loss of power. It is how you empower people to become alert and responsible. Questioning is not always negative. Flow of information will help reduce waste, optimize inventory by ordering and stocking just the right item in appropriate quantity and improve the bottom-line. Sales and Accounts will be able to monitor accounts receivables and control outstanding and overdues. Lending organizations all look out for these factors. It is in the long term interest of the company and us.   
C: (Internally trying to pick holes in the logic and counter it while sipping his coffee)
P: Try to view from the owner or management’s perspective. There purpose of adopting technology is not to make people redundant and to sack them but use the same resources for company’s growth and expansion through new projects and diversification. To increase per unit resource yield therefore reducing cost. There are two aspects to this growth plan. One is money. New projects cost money. Money comes from banks. Banks lend to companies that can establish and demonstrate their credibility. Prove their control, good governance and compliance. The other aspect is employees’ growth. New projects will be bringing new responsibilities, new challenges and a brand new learning curve to ascent.
C: We work for years to learn how to perform well and now you are advocating rocking our boat and to move out of our comfort zone. Start afresh. No Sir! Thank you. I am contented the way I am and where I am. Anyway with new projects etc., the management will be filling their coffer and not drastically improve my bank balance. And not to mention, will have to learn operating these new age applications. I left school twenty years ago. Who wants to learn again! It might add to my skills and sharpen my resume, make me more employable and open avenues but have I asked for it? No! It will simply change our lives (for better maybe but that is not the point!) There will be change. And change is never good. It is unsettling, scary and breaks the routine. It makes situations unpredictable. Business is about regimen and discipline. Quality comes from consistency.
E: There are some other benefits of ERP that cannot be negated. Paper work will reduce as most transactions become electronic. It will reduce overheads and we can become more cost competitive. Cheaper price can get us more orders, means more work. The filing cabinets can be easily replaced apart from the necessary ones as required for statutory compliance. All notebooks and registers get replaced by smart workstations and can also be operated using laptops, tablets and smartphones while on the move. It is said that much of the architecture of ERP applications is such that we can operate through lean desktops. The entire data is stored in centralized servers which have strong backup policies and systems aiming for near 100% uptime and availability.
P: Yes this is a good part of the application. Though I must add that management will get a complete view of the company’s operations sitting from anywhere. There will be swift dissemination of information and higher accountability. They will know who is actually performing and who is not. Wherever there is a bottleneck will be fixed with more resources or technology. The company will become agile and proactive which is always good for us.
C: (Becomes quiet and contemplates the repercussions. How will I shift the blame of inefficiency to a slow PC, virus infection or hard disk crashing! And it is all login based. Anyone can work from anywhere. And what happens to my beloved desk if we are expected to work from anywhere? Also if our offices do not adorn cabinets full of files will it not look like we are useless and not working at all? Clean office and tables with only a computer or laptop to complete all tasks means we are petty clerks and not big shot managers???? Whom will I complain to about hardship?)
P: Whatever said and done. The most important thing which we are not acknowledging is that everything will follow a system and procedure. There will be order instead of chaos and screaming. Company will know how much resources are truly required and when. There will be internal checks and set points to help check deviations and errors. It will become compliant with all regulatory and statutory requirements automatically provided the initial configuration of the application is done properly. Eventually, company will grow, there will be more people, opportunity for more personal growth, bigger teams to manage, newer ideas to implement and there will be vitality and enthusiasm.
E: It is going to be a game-changer. Mark my words!
P: As much as simplified it looks, ERP implementation will not be a cake walk. Decision to implement will be just the first step. The world of ERP has a long list of examples of failure and cost overruns. With all the positives and the negatives, only time will tell how well we have managed to map our business processes and identified the parameters and defined the performance scale
C: (Smiles a cynical smile) You people are getting too carried away with this ERP phenomenon. Trust me, finally the pen and paper, register and files are going to be around. It sounds very futuristic that we will work only on computers, paper-less office, work from anywhere etc. Changing people is not easy. Not many will be ready to embrace this new idea. Reality is different. There will be stock-out situation and chaos. There will be many rounds of long elaborate meetings required to solve the problems though people will be coming with consistent reports unlike earlier when different people had different data with no clue of the real situation. There will be goof-ups and squabbles. And yes, there will the quintessential blame game that is integral part of companies. That is the spice of life. (Thinks silently - I am pretty sure this ERP initiative will die a natural death. No one believes me when I say that this thing is evil. How will we spend longer hours in office proving I am working “hardly” to get a good appraisal!
E: Well I got to go. Have to finish a presentation. Let us grab some coffee after some time. (This ERP is coming for sure)
P: Yes see you around. (I hope the management knows what they are getting into with this whole ERP thing. But if it comes, it is going to be a good learning experience)
C: Okay! (I am sure this ERP thing is not coming. Or is it? Nah! What if? It will be a disaster. But what do the others think? Maybe I need to gauge the view of others. I am pretty sure most of the people feel the way I do.)

What do you think happened in the company? Did they go ahead with the implementation? Wait till the next coffee break. 

Author of “Going Soft is the New Normal” available on Amazon - (

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