Entrusting Your Company's Operations to a Piece of Software

Numerous films have dramatized the idea of a futuristic world where human beings, at some point in the past, entrusted too much of their World to machines. The machines, in true Hollywood style, take over the entire planet and either seek to kill or enslave all of humanity and, without the help of a few good men and women, they would succeed.

All in all, these films give technology a bad reputation.

Despite some of the valid criticisms from theorists about the modern state of living in a mechanized, online world, technology has done some miraculous things in medicine, media and business. In fact, in business, some companies have made the supposedly fatal error of entrusting the entirety of their operations to a piece of software, and have been working to do so for the last 30 years. The goal of an Enterprise Resource Planning (ERP) system is to integrate all of a company's data and operations into one cohesive system, the successful implementation of which will make a company more efficient and its employees reliant on the software and hardware necessary for the ERP system to function. Many organizations have implemented them and, despite the movies' grim warning, the world is still intact and these systems have been beneficial for many of the companies who've used them.

A Little Planning ...

There have been mistakes, however, in the implementation of these systems and because they're so broad and have so much to do with all of the organization's processes, a misstep in ERP implementation can mean total stoppage of a company's day-to-day operations. Perhaps the biggest name to be associated with poor ERP implementation is Hewlett-Packard, a company whose lax planning and mediocre execution led to a financial loss of $160 million back in August of 2004, approximately five times as much as the total cost of the proposed system implementation itself.

There have also been success stories, companies who diligently planned and executed the implementation process with the help of the system vendor and wound up better for having done it. "You have to have people who are developers and programmers," said Gene Perry, a division credit manager for manufacturer Cooper Crouse-Hinds. "There's a lot of attention to work flow and how the whole business works." Perry noted that one of the first steps in integrating all of the company's processes into one global ERP system is recognizing exactly what it is that each business division does and what they need. Staff members in each area of responsibility need to be brought together and it needs to be clear what exactly each of them needs for the system to work. Extensive planning goes a long way in implementation because there are certain portions of a company's operations that need to be corrected or finalized before another process can become functional. "It requires a tremendous amount of planning," said Perry. Various phases of the credit and sales process must be established prior to the successful integration of another process like, for example, invoicing. "You can't invoice unless certain things are set up," he said. "Your database needs to be as accurate as possible." Perry added that other things like price lists need to be up-to-date and uniformly organized before any invoicing can take place through the ERP system.