The Evolution of ERP Implementation

2024-09-04 Share:

There’s no denying that ERP systems have revolutionized how businesses operate and manage their processes. With over 20 years of experience in ERP implementation across various roles, I’ve observed several key changes in how these systems are deployed and perceived: Shifts in Approach and Expectations: In the past, implementing ERP systems, especially those from major… The Evolution of ERP Implementation

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There’s no denying that ERP systems have revolutionized how businesses operate and manage their processes. With over 20 years of experience in ERP implementation across various roles, I’ve observed several key changes in how these systems are deployed and perceived:

Shifts in Approach and Expectations: In the past, implementing ERP systems, especially those from major vendors, was relatively straightforward. Companies were eager and willing to adjust their organizational structure and processes to align with the “standard” features of these systems, as outlined in global case studies. Customers were often satisfied with a system that met 80% of their needs, even if some functionalities did not work as desired. Over the past two decades, however, ERP vendors have focused heavily on that remaining 20% to meet specific customer requirements. While standard features have seen numerous improvements and added functionalities, they still often fall short. This shift has led to more intense price competition and a higher risk of implementation failure.
Changes Driven by Customer Demands: Evolution in ERP products is inevitable, but customer expectations have also become a significant factor. For instance, a CEO who previously worked with SAP software at Company A might move to Company B and demand that Oracle EBS be customized to match the processes they used before. Even key users who have experience with multiple ERP systems may impose requirements based on their familiarity with previous software or processes, leading to unique customization demands that do not always align with best practices.
From Recording to Operational Focus: In the past, ERP systems primarily served as tools to “record” past events. Today, they are more focused on supporting day-to-day operations, requiring changes in templates, workflows, and increased user participation. Consequently, operational functionalities must be user-friendly, accessible on mobile devices, and responsive to real-time job demands.
Technological Advancements and Changes in Application Architecture: The rapid advancement of high-speed internet at lower costs has revolutionized ERP architecture. Previously, companies had to deploy offline data entry software at remote offices and then push the data into Oracle EBS via dial-up connections at the end of the day. Today, such methods are obsolete as ERP systems run smoothly over WAN networks, and the location of application servers has become irrelevant.
Integration of Services and Expansion of the ERP Ecosystem: The exponential growth in integration services has increased customer expectations. While in the past, integration was mostly limited to bank transactions via e-banking applications installed on internal computers, it now encompasses a broader range of services, such as Bank as a Service (BaaS), e-invoicing, partner integration, logistics, e-commerce platforms, social networks, and more.
Industry-Specific Customization Gaps: Despite the extensive development time and numerous case studies, ERP products from various vendors still struggle to fully meet the unique needs of every industry. The biggest difference between these products often lies in their ability to cater to specific industry requirements. Even within the same industry, operational processes can vary significantly. Ideally, specialized in-house software should handle these niche requirements. However, either the customer demands or the solution provider’s desire to “own” the entire solution leads to attempts to make the ERP system do everything. This approach might offer some advantages but also increases the risk of failure during ERP implementation.
Rising Demand and Reduced Consulting Quality: The number of customers opting for ERP implementations has increased significantly, while the number of implementation companies has struggled to keep pace. Previously, implementing an ERP system typically took 6 months to a year; now, customers expect it to be done in 6 months. This rush often forces implementation partners to focus on simply gathering requirements rather than providing valuable “consulting” services to enhance the process. The quality of consulting personnel has also diminished as the number of projects increases rapidly, exceeding the firm’s capacity to scale effectively.
Lack of Rigor in Contracting and Implementation: Consulting partners often sign contracts without thorough analysis, resulting in gaps (GAPs) that need to be addressed later. Due to technical capabilities and large teams, consulting firms are quick to decide to modify the standard product. This is one of the reasons why projects are prolonged, require repeated modifications, and ultimately fail to deliver as expected.

Despite the many changes in ERP products over the past 20 years, the “key success factors” for ERP implementation projects, in my view, remain unchanged: “80% comes from the teams on both sides, and 20% from the product itself!”

(Pham Tho Tam – CTO Digital Biz)

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