why your erp is not delivering and how to fix it - by dr james a robertson -- the erp doctor
DESCRIPTION
One hour conference presentation regarding the major factors that give rise to ERP investment failure and how to achieve success Defines some fundamental principles that are of vital importance to any organization that is implementing or operating any Business Information System See http://www.James-A-Robertson-and-Associates.com/ for more informationTRANSCRIPT
Why your ERP is not deliveringand how to fix it
ICTM ConferenceFebruary 2010
Dr James A Robertson PrEng
I.T. versus bridges
Engineers do NOT design bridges to stand up
Engineers design bridges NOT to fall down
Angus Struan Robertson
Vision
Experiencing failure
Experiencing failure
Experiencing failure
What is strategy?
Strategy – Doing the right things
Tact
ics –
Doin
g th
ings
righ
t
What is strategy?
Thrive
Strategy – Doing the right things
Tact
ics –
Doin
g th
ings
righ
t
What is strategy?
Thrive
Strategy – Doing the right things
Tact
ics –
Doin
g th
ings
righ
t
Survive
What is strategy?
Thrive
Strategy – Doing the right things
Tact
ics –
Doin
g th
ings
righ
t
SurviveDie slowly
Die fast
What is strategy?
The right things done right
The essence of why an organization exists and how it thrives
Information technology
“19 out of 20 ERP (integrated business information system) implementations do NOT deliver what was promised”
An industry in crisis
Extreme failures
1. Seven years and half a billion dollars -- international chemicals company
2. $400 million -- multinational shoe corporation
3. Multinational entertainment giant -- $878 million
4. Major supermarket chain -- $195 million
Professor Rossouw von Solms
Deleting a building
Deleting a building
Deleting a building
Deleting a building
Deleting a building
"Attendees of Gartner's Business Intelligence Summit in London last month were not surprised to hear that most enterprises are still failing to use business intelligence (BI) strategically. Gartner's survey of over 1300 CIOs returned some unimpressive findings about the state of BI implementations: Gartner's vice: president of research summed up the situation nicely by saying:
“Most organisations are not making better decisions than they did five years ago”
An industry characterized by failure
BUSINESS INTELLIGENCEArticle published in Computer Business Review Africa.
There is a need for a new approach
What is NOT an engineering approach?
What is NOT an engineering approach?
What is NOT an engineering approach?
There IS great opportunityERP can and should add value
Different view of ERP / IBIS(Integrated business information systems)
Common view of best practice
10
0
Different view of ERP / IBIS(Integrated business information systems)
10
0
Real potential of ERP software
– with high quality
taxonomies
Common view of best practice
10
0
Different view of ERP / IBIS(Integrated business information systems)
10
0
Real potential of ERP software
– with high quality
taxonomies
Common view of best practice
10
0
10
0
The REAL opportunity–strategic configuration
Different view of ERP / IBIS(Integrated business information systems)
10
0
Real potential of ERP software
– with high quality
taxonomies
Common view of best practice
10
0
10
0
The REAL opportunity–strategic configuration
X 3
X 7
• Logical word (semantic) structure
• Conveys understanding of a particular subject area
• From one human being to another
• In a structured hierarchical form
• Essential to conveying information through computer systems
• Human beings experience as valuable, meaningful and informative
• Essential element of effective decision making supported by I.T.
What is a taxonomy?
WorldAsiaAfricaEurope
Germany...
...
Data engineering defined
The definition of information content
in a way that is structurally (taxonomically) fundamentally meaningful to human beings who understand the business
and the translation of this content into structured codes which faithfully and accurately reflect human understanding in a way that the computer can manipulate
with minimal human intervention
so that the computer system appears to be intelligent
drives configuration and integration
Strategically focussed, top down, fundamental first principles, precise, models the business and the real world
What is ERP?
What is IT?REALLY?
What is IT?REALLY?
What is IT?REALLY?
What is IT?REALLY?
What is IT?REALLY?
$
What is IT?REALLY?
$
What is IT?REALLY?
$
What is an ERP?Data tables
Entry screens
Executable software programs
Reports
Integration
Example of faulty integration“The system lost my data”
So…. What is an ERP?REALLY?
Delete (scrap) or refurbish?
Is IT moving so fast you cannot keep up?
Is IT moving so fast you cannot keep up?
Is IT moving so fast you cannot keep up?
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
30%
19%16%
14%
12%6% 3%
1. Mythology, hype & tradition -- 30%
2. Lack of executive custody, inap-propriate governance and policies -- 19%
3. Lack of strategic architecture, alignment, etc -- 16%
4. Lack of data engineering and poor configuration -- 14%
5. Soft issues and change impacts -- 12%
6. Lack of an engineering approach, lack of precisioin, etc -- 6%
7. Technology issues -- 3%
Factors causing ERP failure
The value of technology is determined by the person using the technology
Technology is only 5% of what causes failure
Technology is only 5% of what causes failure
Technology is only 5% of what causes failure
Technology is only 5% of what causes failure
Software defects CAN be prevented Take a stand
IT people who lie
Badly designed coding in Chart of Accounts
500528 Waste Material Consumed500530 Loss from valuation of external materials500540 Loss from valuation of own materials500550 Losses - inventory variance -consignment
sale500560 Safety Clothing500565 Safety Equipment500570 Sand & Stone500575 Scraper Rope500580 Scrapers500585 Services500590 Signs500595 Skips & Cages500600 Finished Goods Inventory Offset500605 Smelting & Refining500610 Production Order Settlement - Variance500615 Steel Other500620 Steel Sections500625 Steel Sheets & Plates
Badly designed coding in Chart of Accounts
500528 Waste Material Consumed500530 Loss from valuation of external materials500540 Loss from valuation of own materials500550 Losses - inventory variance -consignment
sale500560 Safety Clothing500565 Safety Equipment500570 Sand & Stone500575 Scraper Rope500580 Scrapers500585 Services500590 Signs500595 Skips & Cages500600 Finished Goods Inventory Offset500605 Smelting & Refining500610 Production Order Settlement - Variance500615 Steel Other500620 Steel Sections500625 Steel Sheets & Plates
Huge impact on integration, reporting, etc
Badly designed coding in Chart of Accounts
500528 Waste Material Consumed500530 Loss from valuation of external materials500540 Loss from valuation of own materials500550 Losses - inventory variance -consignment
sale500560 Safety Clothing500565 Safety Equipment500570 Sand & Stone500575 Scraper Rope500580 Scrapers500585 Services500590 Signs500595 Skips & Cages500600 Finished Goods Inventory Offset500605 Smelting & Refining500610 Production Order Settlement - Variance500615 Steel Other500620 Steel Sections500625 Steel Sheets & Plates
Huge impact on integration, reporting, etc
Jumbled data
Jumbled data
Example of simple hierarchically
structured data table
From chaos to order
From chaos to order
Structure of strategically aligned Chart of Accounts
Investment
E...
D..
... operation
Processing
Marketing and sales
Operational support
Administration
Dividends, taxes, etc
MOBILE PLANT
LHD’s
Dump trucks
Drill rigs
Other off road
LDV’s
etc
Assets Assets owned Assets leased ... Dep’n assets owned Dep’n assets leased ...
LiabilitiesIncomeExpenses R&M assets Finance and insurance assets ...
Plant Maintenance
Materials Management
Provide for foreseeable growth
500528 Waste Material Consumed500530 Loss from valuation of external materials500540 Loss from valuation of own materials500550 Losses - inventory variance -consignment
sale500560 Safety Clothing500565 Safety Equipment500570 Sand & Stone500575 Scraper Rope500580 Scrapers500585 Services500590 Signs500595 Skips & Cages500600 Finished Goods Inventory Offset500605 Smelting & Refining500610 Production Order Settlement - Variance500615 Steel Other500620 Steel Sections500625 Steel Sheets & Plates
MOBILE PLANT
Loader’s
Dump trucks
Drill rigs
Other off road
LDV’s
etc
Mapping between modulesBadly structured
Lack of consistency in detail in Chart of Accounts, random mapping, difficult and costly to maintain, VERY DIFFICULT to report on strategically
Mapping between modulesWell structured
MOBILE PLANT
Loaders
Dump trucks
Drill rigs
Other off road
LDV’s
etc
MOBILE PLANT
Loaders
Dump trucks
Drill rigs
Other off road
LDV’s
etc
General LedgerRepair and Maintenance
Materials MasterPlant spares
Examples of failed ERP implementations
1. Medical insurance company
2. Contract secretarial employment company
3. Mining company
4. Wholesale chemical distribution company
When problems with your ERP cause you to lose customers your ERP has just become more expensive than you can afford
Factors for ERP implementation success
Factors for ERP implementation success
Factors for ERP implementation success
22%
20%
19%
17%
14%
6% 2%
1.Executive custody, strategic solution architect,accountability -- 22%
2. Effective change facilitation -- 20%
3. Strategic architecture, alignment, etc -- 19%
4. Data engineering and configuration -- 17%
5. Engineering approach, design against failure,precision, etc -- 14%
6. Business integration, training, processes, CBT --6%
7. Technology -- 2%
Factors for ERP implementation success
Factors for ERP implementation success
Factors for ERP implementation success
Factors for ERP implementation success
Technology
People
Performanceimprovement
People and technology alignment
After Dr Fritz Hölscher
TechnologyMethodsStrategic objectivesSystemsStructures and processes
People
Performanceimprovement
People and technology alignment
After Dr Fritz Hölscher
High risk
TechnologyMethodsStrategic objectivesSystemsStructures and processes
People
High risk
High frustrationPerformanceimprovement
People and technology alignment
After Dr Fritz Hölscher
• Empowerment• Commitment• Ownership• Experience• Knowledge• Participation• Consultation• Information
TechnologyMethodsStrategic objectivesSystemsStructures and processes
People
High risk
High frustrationPerformanceimprovement
People and technology alignment
After Dr Fritz Hölscher
• Empowerment• Commitment• Ownership• Experience• Knowledge• Participation• Consultation• Information
Laboratory
A location where the real world is simulated on a statistically valid representative basis
ALL possible scenarios thoroughly tested
Leadership
Leadership
1. Executive custody is critical
-- 50% leadership
2. “Business systems department” instead of “IT department”
Data engineering principlesCase study
1. Presented with the client at a public conference – most powerful form of testimonial
2. Dramatic increase in management information
3. Reduction in head count
4. Dramatic reduction in audit time and cost
5. Unqualified balance sheet first time in 15 years
Remediating failed and sub-optimal ERP projects
1. Critical examination – investigate all factors causing failure
2. Plan a project which takes account of all factors for success
3. Precision strategic data engineering / taxonomies, configuration, integration are critical – plan accordingly
4. Design new taxonomies
5. Create mappings from old to new data
6. Either map new taxonomies outside the existing installation in a business intelligence tool
Or
7. Clean slate re-implementation
Characteristics of a successful team
1. Design against failure -- constantly top of mind – 22%
2. Know and apply the critical factors for success, manage against the factors causing failure, manage principles for success, stages, critical human foundation, etc -- 20%
3. Strategy is the foundation on which the solution is built – strategic leadership, right things well, coupled to CEO leadership – custodian of the integrated vision -- 18%
4. Change facilitation and other soft issue services, competence modeling, psychometrics, etc -- 14%
Characteristics of a successful team
5. Precision data engineering, cubic business model as basis for integration, associated software and code maintenance services -- 12%
6. People -- critical issues methods, disciplines, engineering rigour, multi-disciplinary, hard and soft components, high focus, high energy, motivated, loyal, quick attack approach -- 10%
7. Standards, documented methods, tools, standard operating procedures, reference documents, standard practices, policies, etc -- 4%
Strategic alignment
Strategic alignment
1. Essence of why the business exists and how it thrives
2. Model the business in the configuration from a precise, real world, strategic perspective
Summing up
1. Precision
Summing up
1. Precision
2. Real world, practical modelling of the organization
Summing up
1. Precision
2. Real world, practical modelling of the organization
3. ERP is NOT magic do NOT abdicate your intellect
Summing up
1. Precision
2. Real world, practical modelling of the organization
3. ERP is NOT magic do NOT abdicate your intellect
4. Design AGAINST failure
Summing up
1. Precision
2. Real world, practical modelling of the organization
3. ERP is NOT magic do NOT abdicate your intellect
4. Design AGAINST failure
5. You DO understand ERP slow ERP down to your speed!
Summing up
1. Precision
2. Real world, practical modelling of the organization
3. ERP is NOT magic do NOT abdicate your intellect
4. Design AGAINST failure
5. You DO understand ERP slow ERP down to your speed!
6. Align ERP with the essence of your business (strategy)
Summing up
1. Precision
2. Real world, practical modelling of the organization
3. ERP is NOT magic do NOT abdicate your intellect
4. Design AGAINST failure
5. You DO understand ERP slow ERP down to your speed!
6. Align ERP with the essence of your business (strategy)
7. There is a great opportunity to make a difference
If you do not act within 48 hours you probably never will – act TODAY!
What is your single most important insight from this presentation?
What is the single most practical action that you can take tomorrow to apply ERP more effectively?
If you do not act within 48 hours you probably never will – act TODAY!
What is your single most important insight from this presentation?
What is the single most practical action that you can take tomorrow to apply ERP more effectively?
Design ERP solutions like bridges ...To last and not fall down
Finding the missing pieces of your I.T. and strategy puzzles
Thrive through strategic use of ERP
Questions?
Dr James Robertson PrEng
Email: [email protected]