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Managerial Issues In ERP

Enterprise Resource Planning (ERP) is software that can alter many business processes in a company. Executives must understand how the changes will impact the company and have a working knowledge of the business processes to be able to make good decisions. ERP can change how departments interact and cause more work in some areas. Once implemented, ERP can be a platform for continuous improvement of processes. Executives who make poor decisions without sufficient knowledge of the business processes and required interactions can slow down or derail the ERP implementations.

1.    Executive Involvement

Executive involvement often results in executives plying a high level role in implementations and making detailed decisions that are detrimental to the process. Executives should be involved only up to the level where they understand the business processes they are dealing with and know what decisions should be made at that level. An executive who knows his business processes in detail can make good decisions regarding those business processes. An executive who is less comfortable with the nuances should realize that decisions requiring detailed knowledge should be left to a project team or manager who is familiar with the impact of changing processes.

2.    Executive Power and Authority

Executives must realize that their decisions can have tremendous consequences in terms of the speed and resources devoted to making something happen. ERP implementations can be full of tasks and programs that waste a tremendous amount of time and resources. One consultant illustrated this by drawing a large gear on a whiteboard representing an executive making a decision. If the executive gear turns a quarter turn, a related manager’s gear may turn one complete turn, and then a related employee’s gear may turn 10 times. The point is that many employees waste lot of time performing work based on an executive or manger’s decisions. A realization of the impact of such decisions can reduce implementation time.

3.    Timely Training

Training related to a new ERP system, as well as ongoing improvements to that system, usually comes in three areas. The first is generic ERP education related to how any ERP system can change a business. Executives and managers must understand this because of the power and authority they wield but also because ERP can drastically change how a company operate. The second type of training is for the project team. They also need the generic ERP training but they are also the first employees to learn the new software. It is the project team’s responsibility to figure out how to use the software to control the company’s business processes. This is usually done though a testing phase called a conference room pilot. The last kind of training is an output of the conference room pilot. This is the training for employees on how to use the software that is specific to the business. Failure to implement any one of these training types can result in implementation failure or failure to successfully and continuously improve the use of the ERP system.

4.    Opportunity for Continuous Improvement

ERP systems are a great platform for continuous improvement. Continuous improvement simply means that a company is open to, and elicits, improvement suggestions by those actually performing the business processes. Management often requires training to learn how to elicit improvement suggestions. To do this, the company must make a commitment to continuous improvement, no matter how small the improvement or cost impact may seem. This usually requires a cultural change along with the training. However, a continuous improvement environment can make a company more competitive because its business process will always be improvement. This will result in more revenues and reduced costs.

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