The futility of ERP's

Midnight Sun!Time for another story from the Comerford archives.

Several years ago I was involved in a global project to implement an ERP system in a multinational pharmaceutical company.

This project was huge. It was the biggest thing the company had ever done internally (and this is a company that had developed some of the most well known drugs ever made). At one point we had so many external contractors working on it we were spending over $100,000 per week just on them. It was unsustainable (this was ten or fifteen years ago, too).

All we were doing was replacing financial systems worldwide along with HR systems.

But here's the kicker : Nobody outside the project really cared.

The people who were working in the labs discovering drugs didn't care. The salesmen out on the beat trying to persuade doctors and pharmacists to prescribe the drugs didn't care. The manufacturing folks physically making the end product didn't care.

More importantly, the customer didn't care.

The IT component of the business cared, as did the CFO who was convinced he would be able to get more accurate data about the state of the company quicker than before. HR cared because they would be able to see more accurate information about the number of people employed worldwide, and in what capacity. But in reality this was never going to happen. The financial people were always going to keep their own sets of books locally and only report the figures they had approved to the CFO, rather than the actual day-to-day figures. Excel was the main way of manipulating this data and the system allowed Excel to be used in just this way.

So this hugely expensive project (which had dodgy cost-benefit justification in the first place) was being run purely to give the CFO and head of HR more accurate data - and it wasn't even doing that appropriately. None of the key departments were affected by this project (and the associated process change that came from it), and the customers were blissfully unaware that they were paying a huge amount of money for their pharmaceuticals so that a lot of it could be hived off to pay for this extremely expensive internal project.

So why do it?

Somebody obviously thought there was a cost benefit to doing this project. 'Better information flow' was bandied about as one justification, as was 'Single Worldwide System'. In my capacity as an auditor I got to see some of the documents that were not widely available to others on the project and can tell you that some of the justification and cost-benefit was tenuous to say the least.

But it does bring up the whole question of why do we implement ERP systems in the first place? Sure, there are companies with disparate and widespread systems that would benefit from having some sort of unification across their enterprise. But, in my opinion, the benefit comes not necessarily from the software itself, but from the unification of underlying process and settings. Merging a couple of companies together always benefits from implementing a common chart of accounts and common processes to underly them, but the implementation of a common (usually expensive) system is not always required.

Or am I wrong?
Photo Credit: kaniths via Compfight cc

Reminder: 'The Perfect Process Project Second Edition' is now available. Don't miss the chance to get this valuable insight into how to make business processes work for you. Click this link and follow the instructions to get this book.

All information is Copyright (C) G Comerford See related info below

Related Posts by Categories

Widget by Hoctro | Jack Book
For blog comments policy see this post
blog comments powered by Disqus