It is organizational hubris that makes people think their methodology or process of doing business is unique.

For almost every industry and every company there are basic functions that must be performed…
-create products
(or outsource them or buy them from vendors),
-identify and manage customers,
-take orders,
-process orders,
-ship products,
-invoice and
-receive payments.

All of those are essentially commodity functions. If they are standarized across an organization though a well designed ERP system (that leverages the same sets of master data) they’ll provide a high degree of efficiency. It’s when the organization tries to be “fancy” and breaks far outside the norm that complications and complexities arise both in the business and in the system itself.

ERP implementations often don’t provide the benefits, not because they are too complex, but because the business creates complex requirements that generally don’t make sense, and the business thinks that they way they’ve been doing business is the “ONLY WAY”.

i.e give a 3% discount to customers that start with “Z” but only on tuesdays when it’s raining… or create a process that delivers to strategic customers faster than to non-strategic even if the order came in 10 days later than the non-strategic customers order…and the product has a 10-day lead time….thus bumping the non-strategic order out to 20 days…forever losing them as a potential strategic customer.

Solution is to leverage as much standard process as possible – and focus competive advantage on things like strategic and analytical Business Intelligence, on Selling techniques or marketing techniques, cost saving and outsourcing techniques, drop ship processes and inventory control. The low cost provider (not low price) strategy is one of the hardest to to match.

This mean you are obviously loosing your competitive advantage which is defined by you process uniqueness.

Yes I agree BI can fix some stuff for these headless fat chicken organizations, but what you need is a more agile mechanism to manage your processes. BPM concepts bring some light to the grounds, but have to wait and see.

The initials ERP originated as an extension of MRP (material requirements planning then manufacturing resource planning).[2] ERP systems now attempt to cover all basic functions of an enterprise, regardless of the organization’s business or charter. Non-manufacturing businesses, non-profit organizations and governments now all utilize ERP systems.

To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package.

However, the term is typically reserved for larger, more broadly based applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance (one system instead of two or more) to easier and/or greater reporting capabilities (as all data is typically kept in one database).

Examples of modules in an ERP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System.

Keep up the great blogging!

Darren