GOLDILOCKS AND ERP DECISIONS

ERP Decisions

Goldilocks, SMEs and the quest for ‘Just Right!’

“Goldilocks was wandering through the forest when she chanced upon a house. Famished and tired, she entered and was delighted to see three bowls of porridge to quell her hunger pangs. She tasted the first bowl and exclaimed that it was too hot. The second bowl’s porridge was far too cold. The third bowl however was just right for her and she soon gobbled it all up”

Small and medium sized enterprises are the proverbial Goldilocks of the business world. While Goldilocks strolled aimlessly through the woods in need of food and nourishment, these firms wander through the business world, in need of a solution to help them cope and compete in their industry.Goldilocks had to taste situs slot online terbaik all the bowls of porridge to find the one that was ‘just right’ for her. Much in the same way as Goldilocks, firms also have to go through all the available options to determine which solution is ‘just right’ for their needs.

Just as Goldilocks was famished and in need of nourishment, a firm in today’s hyper competitive environment requires enterprise resource planning solutions to address its needs and hunger for growth. The solutions offered may be ‘too hot’ with far too many components, complexities and costs that would burn the firm. A ‘too cold’ ERP system without the necessary modules to meet the requirements of the firm is not a desirable solution either. An SME can neither have a ‘too hot’ solution or a ‘too cold’ one as both would hurt them and their prospects for growth.

So what is the ‘Just Right!’ solution?

1) The porridge that is ‘just right’ is sufficient in quantity to alleviate Goldilocks’ hunger, nourishing enough to help her grow and at a temperature that renders the meal palatable.

2) Similarly the ERP that is ‘just right’ has all the modules and programs necessary to meet the firm’s current and more pressing business needs, while the system aids the company’s future growth plans – all at an affordable cost. The ‘just right’ ERP should meet the firm’s current pressing needs and the future more slot complex needs for growth.

3) Most SMEs would find that their Goldilocks solution is a mostly standard ERP system with minimal to moderate customization and costs. Cloud-based enterprise resource planning programs are suitable for these firms as they are affordable and have the scope to be easily modified to meet the firm’s growing needs in the future.

“After finishing the porridge, Goldilocks felt tired and went over to the living room and found three chairs. She sat in the first one and exclaimed “this chair is too big!” The second chair was too big for Goldilocks as well. The third chair appeared to be just right in size for Goldilocks but as soon as she settled in, it broke apart completely!”

When Goldilocks is tired she goes over to a chair, settles into one that appears just right in size. The chair and Goldilocks both come crashing down. Firms with an enterprise resource planning system that opt for the bare minimal support get the same experience. Much like how the ‘just right’ chair was anything but, firms need to be wary of ERP solutions that provide the bare minimum and provide no flexibility or scope for adapting to a growing business.

As a firm implements the system and starts reaping benefits from the ERP, it starts to increase its efficiency, productivity and growth. The ERP system and vendor should provide adequate support to aid the firm with any troubles it meets along the way. Programs that update automatically and keep the system running on the latest, most efficient system would be ideal for SMEs. A vendor that provides regular support services and is specialized in providing industry-specific solutions would be suitable as they can anticipate the firm’s needs effectively and intuitively as a result of their experience. It is essential that the ERP system and vendor must be capable of increasing the number of modules and services when the scope of the business changes – otherwise the firm may suffer the same fate as Goldilocks.

“Goldilocks feeling sleepy, proceeded upstairs and found three bed. She lay on the first and found it far too hard. The second was far too soft. She tried the third bed, and it was ‘just right’ and she promptly fell asleep.”

   

Just like Papa Bear’s bed, which was too hard for Goldilocks, a large vendor’s solutions may not be suitable for small and medium enterprises. The big names of the ERP industry are more experienced in addressing the needs of large conglomerates. Their programs, modules and systems are all designed meet to the needs of the Fortune 500s and SMEs often find their solutions uncomfortable. Mama Bear’s bed, being far too soft, was also not right for Goldilocks. Similarly, ERP vendors that are too inexperienced or just offer a few individual modules may not be able to provide quality solutions for the firm.

Vendors that are specifically focused on providing solutions for SMEs would be more suitable for compared to the ‘big players’ like SAP and Oracle. An out-the-box solution with minimal modifications is enough to meet all the current and future needs of most SMEs at a fraction of the cost of the big firms.

Much like Goldilocks, firms can experiment with their ERP programs and vendors before settling into their ‘just right’ systems. Firms can draw some wisdom from Goldilocks as well – that is to not settle for anything that is not ‘just right’. When choosing an ERP system firms must keep in mind that it is a long term decision. Unlike Goldilocks, once they choose their bed, they will be lying in it for quite a while.

Custom Road to Failure

How heavy customization doom projects

Big firms such as Nike planned to go the whole nine yards ensuring that their ERP system would be absolutely custom fitted to their needs and desires. Sure, the additional modifications and

customisations would indeed add a few more thousands to their ever growing expenses, and the project may get delayed by a month or two, but in the end it would work out perfectly right? Wrong. The $400 million upgrade to the supply chain and ERP system resulted in the company losing $100 million in sales and their stocks crashed by 20% as a result of this fiasco.

The failure of the ERP system can wreak havoc for any company. Excessive ERP customization is often blamed for these disasters. ERP customization refers to the process of modifying the existing software and programs as per the requirements of the firm. Customizing the ERP program takes a lot of additional resources, time and financial investment –and it almost inevitably results in the project going way over budget and gives a system where the company has to rely on non-tested functionalities. A case in point would be the United States Navy who sunk over $ 1 billion in four different ERP projects that all resulted in failures.

The following are three main reasons why custom-made solutions end up causing more problems than ever before:

Increased Complexity and long term costs:

A company that demands heavy modifications to the system has to invest large upfront capital before they can reap the benefits of the ERP. Often time the changes are very narrowly focused and even minor deviations in business practices or related legal regulations render the entire system outdated. Once the firm has invested large capital in an on premise system, they are financially bound to a certain degree to continue using the system and upgrade the same solution for years to come. The ERP programs have to be individually customized each time the ERP system has to be updated to support the evolving industrial environment.

Upgrades to the system are continually delayed

ERP vendors periodically release new versions of their software and add new features and services. A customized ERP system is not able to mesh fully with the new version and data is often lost in the process. The firm is dependent on customization consultants to alter the customized codes each time that the system has to be updated – which adds a significant amount to the ongoing operational expenses. These additional expenses and problems are a hindrance when the firm decides to update heavily customized system. Companies tend to delay the upgrades to their system – sometimes indefinitely. This makes the company vulnerable as it is not able to adapt to the rapidly changing business environment and requirements.

Best practices are compromised

ERP vendors expend a significant amount on R&D to develop the best, standardized system that incorporate the industrial and legal requirements. Customisations to the system may result in the company failing to adhere to the industrial best practices and cause a lot of financial and legal woes.

If a company finds that it needs to customize the entire ERP system, it would generally indicate that the chosen solution is not the ideal one for them. Looking for an industry-specific ERP solution would help the firm in minimizing the amount of customisations required to make the system compatible with the business needs.

Companies need to understand beforehand that heavily customizing their ERP system greatly escalates the potential for disaster. The initial upfront investments required are exponentially greater and both the short and long term operational costs are significantly higher. The industrial best practices tend to be compromised in the long run and the consistent delays in updating the system leads to the firm becoming a dinosaur in the dynamic business world.






Contributor : Vidushi

Custom Road to Failure

Big firms such as Nike planned to go the whole nine yards ensuring that their ERP system would be absolutely custom fitted to their needs and desires. Sure, the additional modifications and customisations would indeed add a few more thousands to their ever growing expenses, and the project may get delayed by a month or two, but in the end it would work out perfectly right? Wrong. The $400 million upgrade to the supply chain and ERP system resulted in the company losing $100 million in sales and their stocks crashed by 20% as a result of this fiasco.

The failure of the ERP system can wreak havoc for any company. Excessive ERP customization is often blamed for these disasters. ERP customization refers to the process of modifying the existing software and programs as per the requirements of the firm. Customizing the ERP program takes a lot of additional resources, time and financial investment –and it almost inevitably results in the project going way over budget and gives a system where the company has to rely on non-tested functionalities. A case in point would be the United States Navy who sunk over $ 1 billion in four different ERP projects that all resulted in failures.

The following are three main reasons why custom-made solutions end up causing more problems than ever before:

Increased Complexity and long term costs:

A company that demands heavy modifications to the system has to invest large upfront capital before they can reap the benefits of the ERP. Often time the changes are very narrowly focused and even minor deviations in business practices or related legal regulations render the entire system outdated. Once the firm has invested large capital in an on premise system, they are financially bound to a certain degree to continue using the system and upgrade the same solution for years to come. The ERP programs have to be individually customized each time the ERP system has to be updated to support the evolving industrial environment.

Upgrades to the system are continually delayed

ERP vendors periodically release new versions of their software and add new features and services. A customized ERP system is not able to mesh fully with the new version and data is often lost in the process. The firm is dependent on customization consultants to alter the customized codes each time that the system has to be updated – which adds a significant amount to the ongoing operational expenses. These additional expenses and problems are a hindrance when the firm decides to update heavily customized system. Companies tend to delay the upgrades to their system – sometimes indefinitely. This makes the company vulnerable as it is not able to adapt to the rapidly changing business environment and requirements.

Best practices are compromised

ERP vendors expend a significant amount on R&D to develop the best, standardized system that incorporate the industrial and legal requirements. Customisations to the system may result in the company failing to adhere to the industrial best practices and cause a lot of financial and legal woes.

If a company finds that it needs to customize the entire ERP system, it would generally indicate that the chosen solution is not the ideal one for them. Looking for an industry-specific ERP solution would help the firm in minimizing the amount of customisations required to make the system compatible with the business needs.

Companies need to understand beforehand that heavily customizing their ERP system greatly escalates the potential for disaster. The initial upfront investments required are exponentially greater and both the short and long term operational costs are significantly higher. The industrial best practices tend to be compromised in the long run and the consistent delays in updating the system leads to the firm becoming a dinosaur in the dynamic business world.