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When ERP is botched, CFOs must act

Fred O'Connor | Feb. 1, 2012
Companies long have grappled with glitches in their ERP (enterprise resource planning) system implementations -- a situation that the recent botched-rollout record suggests won't get better any time soon. While ERP projects go awry for many reasons, each incident reveals its own set of troublesome repercussions, financial and otherwise.

Gandy joins the list of executives who recently faced challenges setting up ERP software. His client purchased ERP software, and then brought on Gandy, who, after working with the company, discovered that a specific ERP system was needed. The company hired their second choice systems integrator to rollout that system after their main candidate passed on the job because it was too busy. After having an "awful" experience with the systems integrator, that firm was fired and Gandy turned to a company to complete the job.

Had Gandy been involved from the beginning, he would have made sure that the company first considered its long-term business needs and selected an ERP product that met these objectives.

"Typically you're moving from a system you've outgrown, to a system that can scale and provide more immediate feedback," he said. "There need to be very clear cut goals, because you need to think of this as being the last system you'll ever need."

Nailing this long-term business perspective is especially important to CFOs, given that the ERP system should grow to meet the company's future fiscal goals, said Martens. A shortsighted approach might force a company to prematurely retire an ERP system, she said and could lead to the CFO questioning why another multi-million software dollar investment is needed. Gandy concurs, saying that businesses should not have to replace a five-year-old ERP system.

The software a company needs to remain productive should be the driving force behind any ERP suites that it looks into, said Gandy. Considering a vendor because business executives heard chatter about its offerings, or assuming that a software's tie-ins to Microsoft products must make it a good, he said, "are all the wrong reasons."

Knowing the details of how your business functions is required when weighing ERP suites since every software package needs tailoring to fit each business' operations.

"There is going to be a gap between what ERP software can offer and what a company needs," said Martens. Companies want "to minimize that gap as much as possible" but also need to "be realistic about what has to happen to fill that gap," which may require spending additional money to customize the product, she advised. Conversely, businesses also want to avoid too much customization. That leads to buying software that goes unused and angry CFOs who want companies to use purchased technology, Martens said.

Beyond examining their internal workings, businesses shopping for ERP software should review some of a vendor's completed projects. Visiting a few companies --- rather than just one -- can expose possible problems with the software and eliminate vendors from the running, said Gandy.

"Will it keep a problem from happening? No," he said. But such shopping around "can certainly minimize problems and might even keep you from picking that ERP solution."

 

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