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Extracting returns on ERP adoption

D. Murali | Updated on April 02, 2011 Published on March 31, 2011

Mr Subu D. Subramanian, CEO, Defiance Technologies.   -  THE HINDU

While technology is an important part, the visible commitment of the company's top management to a project is extremely critical.



Despite spending significant amount on ERP (enterprise resource planning) deployments, many organisations feel they did not get the best ROI (return on investment) in terms of business enablement.

Ask Mr Subu D. Subramanian, Chief Executive Officer of Chennai-based Defiance Technologies (http://bit.ly/F4TSubuD), what his views are about the malaise, he frets that most organisations view that their businesses are unique and their organisational culture is unique. Consequently, they tend to customise the ERP to suit their requirements rather than adoptthe best solutions provided in the ERP application, he adds, during the course of a recent e-mail interaction with Business Line.

“As a result many organisations lose the benefit of the real performance and power of ERP. By accepting the ERP without much customisation, organisations stand to benefit by the best of breed business practices offered by the ERP,” advises Mr Subu. Excerpts from the interview:

On deriving the best benefits out of ERP

Organisations need to ensure a thorough process modelling and clear definition of key performance indicators (KPIs) before implementing the ERP. This will help derive the best benefits out of the ERP implementation.

Most organisations tend to look at ROI primarily in terms of direct financial gain. However, ROI could be derived in many other ways, i.e., in terms of the growth in productivity, efficiency, or in terms of overall improvement in the performance of the company or even to the extent of better transparency in the operations being carried out by the firm to the satisfaction of stakeholders. Besides, organisations need to manage the expectations of their people who use the ERP systems.

The user community generally expects a reduction in their workload immediately after the implementation of ERP. However, in reality, this happens only over a period of time, as the flow of information throughout the organisation improves and the company starts performing better. Organisations should, therefore, ensure that they set the right expectations with their user community in this regard. This will be critical for the users to be motivated and thereby leading to better ROI out of the system. Organisations need to be aware to these perspectives and look at ROI appropriately.

On how CIOs should roll out or upgrade their existing ERP systems

An ERP rollout or upgrade is often times not a technology project but a business project. Many times such projects are even business transformation projects. Such projects usually require heavy budgets and carry significant business and organisational change management risks. As a critical prerequisite, such projects will require a careful assessment of the business needs and a compelling business case.

While technology is an important part, the success of such projects often depends on the commitment of the people of the organisation and the skilful management of their expectations and aspirations. Towards this, the visible commitment of the company's top management to the project is extremely critical. The core users from the company need to be carefully identified, provided awareness and orientation and shall be fully involved in the project.

The company needs to choose the right implementation partner who would bring in their expertise and skilled consultants for the project. Such consultants should be “business technology” consultants who not only have the ERP product knowledge but also significant knowledge of the client's business processes. There should be continuity of the consultant team till “go-live”. During a roll-out, at most care should be taken to consider local requirements without compromising process and data harmonisation.

Above all, there should be a rigorous programme management office (PMO) to efficiently manage the project and a carefully-designed change management programme to manage the stakeholder expectations.

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Published on March 31, 2011
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