I can’t tell you how many times we’ve gone into organisations with multiple issues only to have an executive tell us, ‘It’s okay, we’ll be all right when the new software arrives.’ Then I learn they’re putting in an ERP (Enterprise Resource Planning) system such as SAP or similar. This automation can bring a false sense of security and belief in it to solve the issues that are being experienced daily.
What is often not clear is that automating poor processes can bring a company to its knees. Ideally, a system that automates and links details from all end areas of the enterprise assists in tying sales, operations, and supply chain with financial systems so the business managers can make decisions in real time.
Implementing such automated software systems assumes that your business processes are already under control and you have best practices in place. Automated systems are designed to not let you change transactions. This means that once a transaction is entered, you can’t undo it.
This is why thinking you’ll be all right when the software gets here couldn’t be more wrong. In actual fact, you will be far worse off when the software gets there if the basic processes you’re trying to automate are not fully under control.
As an example, many years ago I worked in a steel plant where I ran the manufacturing. One day I arrived at work only to see a strange white shape that extended above the roof behind the steel plant—and this steel plant was quite a tall building, at least 100 feet high. It was a strange white shape and it was higher than the roof. I just couldn’t make out what was going on.
To my horror, as I walked around the side of the building to see what this mysterious white shape was, it turned out to be the tip of a massive pyramid of lime. Lime is one of the raw materials added to a furnace to make steel. I was horrified because if lime gets wet, it’s useless, and this was in a wet climate where it rains every other day! Yet there I was, staring at a pyramid of lime that was bigger than the steel plant itself.
At the time, we had just implemented a full ERP system. Typically, as the name suggests, the system automates elements of the enterprise such as procurement, operations, finances and other aspects. When they turned the new ERP system on, ordering had been automated and unchecked. When the system indicated how much lime we had in stock, it read 5 tons, but it had been scheduled to order if the minimum stock went below 50,000. So the system ordered more and more.
Eventually somebody noticed, turned the system off and stopped the ordering. There we were, with more lime than we could possibly use, due to reliance on software to automate a system that was inefficient. Whilst this was extreme, poor process and automated systemic multiple errors were occurring throughout the business and all the associated business units.
Before the system was installed, there had been a poor procurement process and checks that were not completed. In this particular case, so many issues arose across all aspects of the business the ERP system was eventually turned off until business processes where sharpened. This was a significant cost to the business and a significant overrun in the IT initiative.
Management systems are meant to drive your company and promote profit, growth and sustainability. An efficient management system will improve any company, any size, in any industry. A poorly structured management system, however, will simply lead to a culture of a frustrated team, lack of clarity, and diminished profit and growth. Relying on software to manage an already inefficient or complex management system will also not help and could be an even bigger hindrance across all business elements.