Don’t expect to revolutionize your business with ERP. It is a navel gazing exercise that focuses on optimizing the way things are done internally rather than with customers, suppliers or partners. Yet the navel gazing has a pretty good payback if you’re willing to wait for it a Meta group study of 63 companies found that it took eight months after the new system was in (31 months total) to see any benefits. But the median annual savings from the new ERP system was $1.6 million per year.
Case Study - McCullough, the former CIO of Delta Air Lines, found himself reshaping his new company's IT infrastructure without the benefit of a large budget or staff. As CIO of eCompanyStore, an Alpharetta, Ga.-based company that builds online stores to fill promotional product needs for its clientele, he had to figure out how to deploy big-company technology—specifically, ERP applications—without spending big-company money. "We knew we were going to have to go [the ERP] route if we were going to become scalable," McCullough says. "We didn't want to come back in 18 months or two years and say we can't handle [transaction] volume."
McCullough decided to explore a relatively new option in enterprise applications: fast-track ERP. Fast-track ERP gives smaller businesses (with revenues between $200 million and $500 million) access to functionality similar to what their Fortune 500 counterparts have had for years. When all goes well, fast-track ERP implementations are measured in thousands of dollars instead of millions, and months instead of years. The vendors promise up-front, guaranteed agreements on schedule and price, fully functioning applications and a lot fewer headaches than traditional ERP.
The fast track isn't without its speed bumps, however. First, there is a greater need to stick to the plain vanilla version of the package, with as little customization as possible. There are also unexpected costs that pop up outside the scope of the fixed-price contract. Although they are simpler than their bigger brethren, the systems are still at the mercy of people—it's essential to manage expectations and resistance to change, and provide thorough training.
McCullough started down the fast-track ERP path with Walldorf, . He and his team of 20, composed of SAP consultants and eCompanyStore employees, installed the R/3 system with modules for materials management, function planning and finance, and an online store to replace the Pandesic application. They started in mid-December 2000 and applied the finishing touches in early January 2001. They did it without spending big-company money or time. "I'm sitting on an engine that's capable of taking our company into the stratosphere with the same suite of applications," McCullough says.
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