An ERP is a management system that integrates all parts of the business, such as planning, manufacturing, sales, and finance. The ERP system has the goal of integrating information from the entire company and eliminating processes that are not necessary and that are also costly.
The company can obtain favorable results as long as an adequate implementation of the system is carried out, otherwise everything will happen in failure and very costly money losses.
Most of the time an ERP fails it is because its implementation time is too long or because it has an excessive cost and companies do not see a benefit in the ERP investment.
75% of the information systems constitute operational failures since their implementation required a lot of time and money. In other cases the systems do not work as they should or simply are not used because it is too complicated and the data is also thought to be unreliable.
To understand why information systems fail, 4 factors must be analyzed, which are the main areas in which problems arise:
- Design. The system design is not adequate to the needs of the business. It may be that the information does not flow quickly, or the information is presented in a confusing and difficult to understand format, so users are discouraged from working with it. In this aspect of design, it must be taken into account that the system must be compatible with the structure, culture and goals of the business. Data: The system presents erroneous data. It may happen that information is missing or not properly broken down, which makes decision-making difficult. cost. The cost of implementation is very high. Even if the system works properly, there are usually extra costs that were not included in the contract and it can be an investment that is not profitable at all. Operations. The system does not operate well. The information is neither timely nor efficient since the system has a very slow response time.
One of the most mentioned cases of failure in the implementation of an ERP is the case of Hershey's. The chocolate maker reported a 19% decrease in profits for three consecutive quarters in 1999. The CEO of Hershey's attributed this loss in sales to a failure to implement “a new business process” based on R / 3, which is a SAP system.
The factors mentioned above are specific to the system, but there are also other factors inherent to it, which determine their success or failure by far, such as:
- Implementation: Refers to the organization, to the plan of how things will be done to adopt the new system. For the implementation of the information system to be successful, the following must be taken into account: The users of the system: The people who will work with the system must be taken into account, since many times they are the ones who are not willing to face changes in business processes and will feel overwhelmed by it. Administrators: You must also have the support of administrators, so that users and all staff feel committed to achieving the proper functioning of the system. Level of complexity and risk: Here you must consider the size of the project, its structure and technology. Greater risks are incurred when the company has not had experience in large projects, has many requirements in its business processes or has hardly worked in technology. The more risks there are, the greater the possibility of failure. Follow-up: Here you have to evaluate how the implementation of the system is performing, the cost-benefit and the times.
A success case in the implementation of an ERP is Cementos Apasco, that before implementing the SAP R / 3 System, Apasco operated numerous software systems that worked independently, which increased the workload by having to develop interfaces and having to reconcile the information that arises in the different areas of the company.
Now with the SAP solution, you have flexibility to adapt to market conditions, quick response to information requests to improve decision-making, optimize business processes and manage a new business culture, are some of the achievements by Grupo Apasco, when successfully carrying out a technological transformation project with R / 3.
In conclusion
It can be said that a system such as an ERP, CRM, or any other is successful if it is put to good use, if the users feel satisfied and have a favorable attitude, the business objectives have been achieved and, of course, they have been achieved. obtained an economic benefit from the investment in the system.
And they fail if in the implementation of the system the users are not willing to change, and the administrators do not support them, in addition if the level of complexity is very high and risky for the company.
Bibliography:
Management information systems. Kenneth C, Laudon, Jane P. Laudon. Prentice Hall 6th Ed.
Master, Cheaper ERP. Lee Pender.
Apasco Group. Success story.
