Executive Summaries on Enterprise Apps© Number 8: Improving ERP Utilization

November 11, 2015

A client recently contacted us at the ACA Group because they were not getting the results they had hoped for when they implemented a new enterprise wide Enterprise Resource Planning system. How we helped them makes a good case study on how to improve ERP utilization that can be applied to any organization that is not getting the results they want from their systems or processes.

The client asked us to provide some basic ERP education to their planners and key members of their management team. This was an excellent start to improving their system utilization for two reasons. One, it ensured that everyone, managers and users, had the same understanding of how an ERP system is supposed to work. Two, it provided an opportunity to identify what was not working with their system and why.

We at the ACA Group have decades of experience helping executives make improvements to their ERP systems. Our experience has taught us that you start to improve system utilization by understanding the current state of affairs. Specifically we: identify the results you are currently getting, understand who is driving those results, and determine the root cause for the current results. With the current state understood we next help the client to: define in detail the results you want to get, decide who needs to be involved to achieve those results and, determine the changes required to systems, business processes, and people factors.

We followed that exact approach in this case. The training we delivered gave us the opportunity to talk to the people using the system on a daily basis and the managers who were setting policy and performance expectations. This combination of hands on users and managers gave us a good picture of the current state. The discussions during class revealed issues with how the system was set up, how the it was being used or not used, and issues with data quality. We were able to document root causes in the form of company policies, users’ understanding of ERP functionality, and that several processes were not working as desired while other required processes were not in place at all.

We reviewed these findings with the responsible executives and developed an action plan to improve the utilization. The plan started with defining specific metrics and targets that were key to the proper functioning of an ERP system. For example we set targets for master schedule performance, bill of material accuracy, and on-time supplier delivery. Having defined the results we wanted to get, we made changes to processes, people factors and technology. For example, we implemented a Sales and Operations Planning (S&OP) process to ensure that the master schedule was achievable and reflected current reality. The new S&OP process required that we revise roles and responsibilities, and incentives for the people who were expected to execute the process. Then we refined system configuration settings to better match the new process and we created reports that provided data to support the critical business decisions that an S&OP process requires. That set of  actions are an example of how changes to processes, lead to changes in people and technology.

And believe or not, understanding the current state and designing the desired state was the easy part. As is always true when making changes to the way people work, the hard part is the implementation. To implement change that sticks and makes a difference always requires four key steps: Align, Train, Enable, and Inspire.

  1. Align – Employees need to be aware of and aligned with the plans and goals of the program.

In this case employees needed to be informed about the new metrics and ways they are being measured. They needed to understand the changes made to the business processes and the corresponding changes to their roles and responsibilities.

  1. Train – Individuals need to have the capability to achieve the company’s goals.

We were expecting people to perform in new ways and to use different modules of the system, so we had to make sure they had the knowledge required. This meant training them or otherwise assuring they had the competency to execute the new processes and use new modules.

  1. Enable – For people to perform as required, adequate resources must be available and obstacles to performance must be removed.

Resources needed at this company included time to perform the new process, the authority to take action on the results of the process, and the information needed to make good decisions.

  1. Inspire – Consequences have to be put in place to create an environment that make people want to deliver a high level of results.

This takes us back to the beginning, we designed metrics and measures help people understand how they contributed to the results. People needed to be clear that they will be measured and the results of the measures will be used to judge their individual performance.

As this brief case study shows, executives who want to improve ERP utilization need to assess the current situation and results in some level of detail, define the results they want and design improvements to systems and processes,  and then implement those improvements. For implementations to be successful executives must Align, Train, Enable, and Inspire their people to new levels of performance.


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