Own Your ERP, Let It Not Own You
The Era of ERPs yelling loudly to own your business is over and here’s what we can look forward to now.
It was the dumbest sign to ever grace my professional life; in 36 point font, taped on the wall of the satellite fabrication office, capital letters proclaimed:
WE WILL CHANGE OUR BUSINESS PROCESSES TO MATCH OUR ERP. WE WILL NOT CHANGE OUR ERP TO MATCH OUR BUSINESS PROCESSES!
I almost thought it was a prank, but it was on official letterhead and signed by a Vice President. So it had to be real, right? How had a respected business gone so far down the rabbit hole to bestow their future decision making to a lumbering piece of software? The story starts much further back.
The Early Years
Many people grow nostalgic about the years prior to software and for good reason. Some elements of business truly were better. If a person sold parts, that person had to know how the parts worked and fit into an assembly. Contrast that with today’s undertrained staff member clicking around to provide an incorrect “solution” and one can quickly see how nostalgia for pre-computer times sets in.
Material requirements planning, a way to algorithmically manage the production process, was invented as a way to better manage the sprawling production needs of large companies. By 1980, material requirements planning saw widespread adoption. Inventory turns, requirements, and min-max points could be calculated by hand.
Computers Get Involved
With affordable computing power and increasingly complex material requirements calculations, a transition to computer-based calculations began in earnest. A natural next step for manufacturing planning was to teether manufacturing planning to financial resources, and potentially customer and employee management. Thus, ERPs (Enterprise Resource Planning Systems) were born.
Enterprise resource planning means the integrated management of main business processes. Each module of the ERP system was necessarily complex and more modules were added as time went on. The consultants charged with installing these solutions were typically selling the ERP system as a cure-all for businesses.
We can handle all of your human resources, CRM, manufacturing, and project needs. Trust us!
In certain instances, an ERP system’s ability to dictate operating protocol was a net benefit to the client. Well defined processes stabilized poor business practices and provided a strong framework for growth. Unfortunately, a single ERP package cannot define operating protocols for all people. For example, let’s investigate the simple process of receiving an inbound shipment. That shipment is received and pushed to a quality lot if it meets certain parameters, tests are conducted, and the asset is returned to standard inventory if the test passes.
Enterprise software can easily define the simple process of inbound receiving but struggles with nuanced and complex tasks such as a quality check. A typical result? Loads of supplemental Excel spreadsheets to track the required measurement data.
The one size fits everything ERP solution was a winner take all game in the 1990’s and 2000's. A company’s ERP either provided the 100%, take no prisoners solution or a competitor’s software company was lined up to be that savior. With such a framework in place, software companies were incentivized to sell everything and the kitchen sink to win a client’s heart. SAP has long argued:
“SAP R/3 overcomes the limitations of traditional hierarchical and function-oriented structures like no other software. [All the functions] are integrated into a workflow of business events and processes across departments and functional areas…”
To sell a single program as a one size fits all solution is a tough value proposition, seeing an ERP system is built to define hundreds and perhaps thousands of processes. A 98% fit for purpose success rate in doing so is admirable. But what happens to the dozen or so processes that aren’t appropriately defined? Is it time to advocate for manual spreadsheet intervention?
Blessed is the API
In 2005, APIs (application programming interfaces) made it out of the backrooms and into the common business vernacular. APIs allow critical data to be delivered to a client or application without the need for middleware. As of 2019, three-quarters of organizations are developing internal and publically facing APIs to allow systems to talk to each other in a seamless, efficient way.
What the Advent of APIs Mean for ERPs
An ERP software appropriately enabled with APIs can still claim to provide all of a client’s needs while easily engaging smaller, agile programs should the particular needs arise. Let’s take another look at the example of receiving an inbound shipment.
That shipment is received and pushed to a quality lot if it meets certain parameters, tests are conducted, and the asset is returned to standard inventory if the test passes.
In the prior example, a supplemental worksheet was used to collect data outside of the enterprise system. With API empowerment, a simple web or mobile application using specialized measurement data can collect the required data and then easily deliver mission-critical data to the ERP system. This allows for flexibility in system design by allowing a simple specialized tool to deliver the required information quickly and efficiently. No customization of the ERP or manual, out of the system spreadsheets are required.
Replace the Sign
We have entered an incredibly interesting period for manufacturing and distribution. Many decision-makers in these industries aren’t aware of the power and flexibility that APIs grant them in designing and executing a robust management system. A great ERP system with robust API integration will make sure you never have to pick between a person monitoring an unconnected Excel spreadsheet and or piece of lumbering software.
But if you ever have to?
Pick the person. Every time.
The Epilogue
What’s happened to the Fortune 500 company that allowed its ERP system to modify their business processes?
Project Managers buying parts on their own credit cards.
6 consecutive quarters of losses.
Mass layouts and the shuttering of plants.
An eventual divestiture to a competitor.
It’s a sad cautionary tale of what was once a great business. But take a careful, thoughtful approach to the implementation of technology and the future is yours to own.
Written by Travis Ziebro ,a Senior Consultant with Momenta Tech. We help mid market manufacturers and distributors improve their profitability in a crazy short amount of time.
