We all know that implementing a new ERP system is one of the most challenging things we can do in our manufacturing businesses. ERP systems touch every aspect of how we do business, including finding customers, configuring orders, manufacturing and shipping products, billing customers, collecting money and posting financials.
ERP implementations are particularly challenging in environments where legacy systems and business processes have been deeply ingrained over many years of usage. Even though modern ERP suites are extremely configurable and flexible and have evolved to support every conceivable business scenario, the urge on the part of customers to customize around a deeply ingrained legacy process can be very strong. We’ve often all heard users say, “Well, the thing you don’t understand…” during design and configuration and sometimes well into deployment. Or the words, “The new system is too complicated. It’s easier for me to do it the old way.”
Customizations to accommodate an existing business process can run counter to the business objectives and process simplification goals of an ERP implementation. And they can complicate and add cost to future system upgrades. How does one address the argument that an existing legacy process is more efficient than best practices built into a modern ERP suite? And how does one judge whether a (hopefully) rare customization might actually be necessary?
Addressing the “My legacy system is more efficient” argument
Successful ERP implementations integrate multiple business processes in a way in which the whole is much more efficient and effective than the sum of the parts. It’s a mistake to look at a discreet process or departmental function and conclude that the new ERP makes the process or function more difficult without understanding the relationship of that process or function to the whole. What are the inputs and outputs of that discreet process and how are other upstream and downstream functions dependent on those inputs and outputs? It’s very easy to lose sight of the forest for the trees.
Let me provide an example. I once lead the implementation of a ERP system to support an Engineer-to-Order (ETO) manufacturing fulfillment process. In the legacy process, Design Engineers maintained their own item masters and pricing on Excel spreadsheets which they used to build the equipment lists. The equipment lists were then sent to the Customer Service team who entered them as orders into the ERP system. Invariably there were errors. Spreadsheet items didn’t match the Item Master in the ERP system. Items in the Item Master didn’t exist on the spreadsheets and vice versa. Pricing was inconsistent. Model/Option combinations were invalid. In addition, extra effort was involved in trying (unsuccessfully) to keep the spreadsheets and the Item Master in sync.
The Design Engineers felt that their spreadsheet process was easy and didn’t want to change it. And they didn’t like being dependent on another department to maintain master data. They had little understanding or regard for the detrimental effects of their process on those upstream.
Breaking Down the Silos for Collaboration
We addressed this disconnect by inviting thought leaders among the Design Engineers to observe what the Customer Service reps did to address errors and clean up orders resulting from bad spreadsheet data. We also implemented process and organizational changes to give the Design Engineers confidence that Item Master data in the ERP system would be timely and accurate. Understanding the implications of their “easy” process on partners upstream gave them a better understanding of the bigger picture and greater sensitivity for collaboration and dependence among teams. The Design Engineers then adopted a configuration tool within the ERP system that was integrated with the order entry process that used a common Item Master.
The lesson here is that no discreet function can be an island within the overall Quote-to-Cash process. To get the most benefit from an ERP deployment, all participants must understand and have a holistic view of the entire business process the system is designed to support. And cross-functional dependencies need to be recognized. In rare cases, a customization may be necessary to accommodate a truly unique requirement. But let’s do our best to ensure those cases are truly rare.
Ready to let go of the legacy systems in favor for the more efficient cloud ERP for your manufacturing business? Please reach out to one of our experts at any time.