The apparent tension between high precision strategic configuration and operational / tactical configuration is arguably the greatest challenge within ERP implementations today.
Introspection of several key aspects and grey areas will hopefully make the situation a lot clearer.
The conundrum – 19 out of 20 dissatisfied vs most are satisfied
It is an all-too-familiar conundrum in business – surveys that emerge with completely opposite conclusions about the same subject. There have been surveys that state ”19 out of 20 ERP implementations do not deliver what was promised" and yet others that indicate a high level of satisfaction with ERP.
The resolution of this conundrum lies in the disparity between the successful tactical and operational implementation of ERP and the near total failure to implement ERP as a strategic resource in support of corporate competitive decision making that enables the organisation to thrive.
ERP is necessary for most medium and large businesses to compete
The reality is that ERP is necessary for most medium and large businesses to be credible contenders in the current global and local economy.
Without the inventory, warehouse management, replenishment and other operational and tactical agility that is afforded by big brand ERP systems, many organisations would not make it onto the playing field at all.
An ERP is necessary to support the ever increasing complexity and velocity of business in most sectors. Many implementers are able, to some degree, to successfully implement ERP at this level -, albeit frequently with massive cost and time overruns.
The problem arises when executives want answers to strategic and competitive questions, and justifiably expect their ERP to supply the necessary hard measurements required.
Process efficiency is generally tactical NOT strategic
Process efficiency or ‘business process optimisation’ or other similar nomenclature is viewed by many as being synonymous with ERP and represents the core emphasis of the vast majority of ERP implementations.
Due to the fact that process efficiency is inherently operational most ERPs are implemented by the operational personnel in the organisation and not by the strategic personnel - and particularly not the executive team.
In focussing on process most implementation companies and most software companies lose sight of the fact that process efficiency is a natural outcome of a strategically implemented ERP.
It is not necessary to place great emphasis on process efficiency PROVIDED that the implementation of the software accurately models the real world in which the business operates at a strategic level. In other words, it models the ESSENCE of the business and how it thrives. Once this is done process efficiency almost ‘falls out of the tree’ – it is inevitable.
Thus, a large amount of the effort that is devoted to traditional ERP implementations is, in fact, not required IF the ERP is strategically implemented – a significant amount of the time on operational configuration is replaced by comparable time and effort on top down strategic configuration.
And this, in turn, as a by-product, gives rise to greatly increased efficiency of operation of the ERP and resulting reduced life-time costs and in many cases reduction in overall implementation cost.
Automatic micro level daily replenishment is increasingly necessary for many businesses to compete and grow
The speed of replenishment and complexity are vital to competing in many sectors today.
A visit to your local big brand supermarket will show what I mean. There is massive complexity in terms of the mix of products on the shelves and, in the case of low volume products, there may only be one or two items on the shelf.
Replenishment takes place daily and the entire manufacturing network and supply chain is geared to this level of just-in-time micro replenishment.
A retailer that is not able to maintain these micro levels of inventory replenished daily will be rapidly defeated by others that have this ‘licked’. The same comment applies to logistics and distribution organisations and to manufacturing organizations. It also applies to banks and, interestingly, even applies to the national Revenue Service – ERP HAS enabled MUCH greater levels of complexity and flexibility at the operational level than was the case a few years ago.
But most organizations are NOT making better decision than they did five years ago?
Countering this, Gartner reported a few years ago, following a survey of 1,300 CIOs of major corporations that had made substantial investments in ERP and Business Intelligence software, that "most organizations are NOT making better decisions than five years ago".
And so we find ourselves faced once again with that apparent conundrum – ERP and BI have enabled many businesses to maintain their competitive edge and even become more operationally competitive, but executives are not making better decisions than they did five years earlier.
One of the great promises of ERP is failing to deliver.
Why? Because a bottom-up operational ERP or BI implementation will never tie the logic of the business together strategically.
The implementation must start top-down commencing with a high level strategic view of the business and where it is going to be in five or ten years' time. Then it must drill down to the detail within this high level strategic framework.
The core frustration
One of the core elements of frustration can be summed up by the statement "I cannot get answers to the questions I have only now thought to ask".
It is a fallacy of modern ERP implementation that “User Requirements Workshops” that are focused on the current reports and ways of doing things, will do anything other than deliver a new system that works the way the old system worked – not meeting the strategic needs of the business.
At the strategic level the issue is NOT "can I get the report I have had for the last ten / five / two years?” it is "can I get the report I have never previously thought to ask for".
And, can I get it NOW?!... Will it be accurate and reliable? And if I ask the question three or five or ten different ways, will the answers correlate and be consistent and congruent?
After all, surely it is reasonable to expect that if the data is in the system I can get answers to any question I can conceivably think to ask?
Yes, of course it is reasonable!
Problem is that most implementations are executed in such a way that it can take days, weeks or months to get answers and it is quite common that the answer is simply not available without massive manual effort or even not available at all.
Why? Because the system was not implemented with this goal in mind.
In order to achieve this outcome the software must be configured from the ground up to contain strategically logical "information bins" in the information warehouse that is the ERP database.
This requires design at a sufficiently fine level of strategic granularity that the data can be added up every conceivable way possible in accordance with a clearly defined high level strategic (thrive) view of the business, one that accurately models the essence of the business and how it thrives.
This applies to the Item Master or Product Class, the Customer Class, the Supplier Class, the General Ledger Chart of Accounts, the plant maintenance classifications, etc, etc. AND it applies to the fine nuances of what differentiates products, services, etc viewed from the perspective of the executives of the business AND their customers.
Precision engineered strategic configuration and taxonomies – the greatest ERP opportunity today
The answer to the problem outlined above is what I term "precision engineered strategic configuration" at the heart of which are "precision engineered strategic taxonomies". These taxonomies catalogue every possible attribute of the business, its products and its services in such a way that they can be quickly and rapidly summarized in ways that make sense strategically in response to questions that have never been asked before.
Coupled with this is the use of advanced statistical and other analytical tools operated by highly qualified statisticians, economists, engineers and the like in order to better understand the economic dynamics of the business and optimize the operation of the business in accordance with the insights that flow from precision analysis of the data.
The big opportunity today is – precision taxonomies coupled to precision configuration coupled to precision operation of the ERP coupled to precision analysis of the information in the data warehouse resulting in significantly better business decisions than the competition are making.
Thus, the taxonomies and the analysis of data made available via the taxonomies are essential attributes of a high value ERP implementation.
Increasingly I am recommending to clients that in addition to the taxonomies, they look at hiring an analyst with a Bachelor of Commerce degree majoring in statistics and economics with ten years' experience in advanced statistical economic analysis. The challenge is that the analyst only becomes economically viable once the precision taxonomies and configuration are in place.
The total cost of a precision strategic configuration with precision taxonomies is roughly the same or less than the cost of a conventional configuration. However the life-time operating cost is substantially less and the strategic and competitive return on investment is orders of magnitude greater. Software is under development by the writer in order to maintain the integrity of the configuration and taxonomies.
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Business Systems NOT delivering?
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Dr James A Robertson -- has been involved in the effective application of Business Information Systems, including but NOT limited to ERP, since 1987 and in the profitable and effective use of computers in Business since 1981.
Drawing on a diversity of experience, including formal military training in Quick Attack techniques at the Regimental Commander level, Dr Robertson has developed highly effective methods of investigating any sub-optimal Business Information Systems situation -- be it an established system or a stalled project or any other source of Executive frustration -- quickly and concisely diagnosing the root cause of the problem and prescribing concise practical actions that Business Executives can effectively act on see the Pulse Measurement page and also the Sample Reports page for redacted real reports.
He has also developed highly effective methods of strategically enriching systems to unlock the full potential of existing investments, see the Precision Configuration page and couples this to architecting small pieces of clever software that harness the full potential of your investment, see the Software page.
If you are having problems with your systems, your project or your IT Department, call The Business Systems Specialist
Business System Failure is RIFE -- we offer insight into why this happens AND WHAT is required to prevent it.
Failure is at epidemic levels with massive damage done to client companies -- if you are NOT aware of the extent of the problem please visit the About Failure page for a catalog of major failures running to billions of Pounds and Dollars.
All evidence indicates that the established players do NOT know how to deliver stable, reliable high value solutions that WORK.
There HAS to be a better way!
This website provides information relating to that way with a large collection of white papers, presentations, standards documents, etc that you can use to start bringing the situation under control
We also offer high level advisory services with regard to the application of the principles advocated on this website
We offer an ENGINEERING APPROACH to addressing these issues
By Engineering I mean the formal, structured, highly disciplined, highly systematic, highly practical approach that consistently delivers results in ALL areas of human endeavor where formally trained and certified engineers are the ONLY practitioners permitted to operate -- think large buildings, factories, motor vehicles, aircraft -- highly complex systems that work at a level that we take it for granted that they WILL work and where failure is all but unthinkable and, when it happens, attracts immediate public attention and rigorous investigation directed at ensuring that such failures are prevented in the future -- in fact, everything that the management consulting industry that implements complex software systems is NOT
This approach is discussed further on the Engineering Approach page.
In 2003 I undertook an in-depth analysis of all the information and experience that I had gathered with regard to the factors giving rise to Business Information System failure including ERP and general IT and classified this information into a number of categories including "The Factors Causing Failure" and "The Critical Factors for Success" based on this I developed a two day Course "The Critical Factors for Information Technology Investment Success" which is still offered today.
Based on this I wrote the book of the same name, which is available in electronic form here for download:
James has a very detailed profile on LinkedIn should you require further information about him.
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There is a large body of white papers, articles and other content produced by Dr James Robertson available on this website
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About Dr James A Robertson PrEng -- The Business Systems Doctor -- and Other Topics
Catalogue of Major Business Information System Failures
About the Engineering Approach
James Robertson's Value Add
Attributes of a HIGH VALUE solution
Recognizing Business System Failure
The Critical Human Foundation
Old Software IS Viable
From South Africa
Competencies of Dr James A Robertson PrEng
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Table of Contents
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Comments relating to the Business Systems Industry and other topics
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Achieving High Value Business Information System outcomes
Executive Custody -- What is it and HOW do you get it?
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Part 1: Introduction
Part 2 -- Mythology and Lack of Executive Custody
Part 3 – Strategic Alignment and Precision Configuration
Why your ERP is NOT delivering and HOW to FIX it
IT Project Management
CEO Anthony Lee Comments on his experience of the Pulse Measurement
No Charge Guarantee on the Pulse Measurement Service
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Critical questions regarding the Pulse Measurement™
The Pulse Measurement Workflow
The Critical Factors for Business System (ERP+) Investment Success in the Pulse Measurement
Indicative Pulse Measurement Durations
What is a JAR&A Pulse Measurement?
Survival of the fittest – why it makes sense to measure the pulse of your business
Examples of Pulse Measurement Outcomes over 24 years
Sample Pulse Measurement Reports
Strategic Essence: The Missing Link in Business Information Systems
Strategic Essence: Overview
Strategic Essence: Part 1 -- Strategy Defined
Strategic Essence: Part 2 -- Differentiation
Strategic Essence: Part 3 -- The Essence IS Different
Strategic Essence: Part 4 -- The Essence should be the Point of Departure
Strategic Essence: Part 5 -- Discovering Strategic Essence
Strategy -- the Essence of the Business: What is it and how do you develop actionable strategic plans?
Simple Steps to Increase the Strategic Value of your ERP Investment
Free Strategic Snapshot Toolset and Manual
A strategy focused planning system beyond traditional budgeting
Tough IT and ERP Procurement and Contracting that Works
Robust Business Systems Procurement
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Highly Structured Strategic Chart of Accounts -- a Vital Element of your Corporate Information Arsenal
The Product Catalogue -- an Essential Element of any Precision Configuration
Attributes -- answers to the questions you have NOT yet thought to ask
Case Studies of Notably Successful Projects with high value Precision Configuration
092 Doing things differently and better -- ASCO Case Study 2-- BPM Summit 2013
088 Strategic ERP Invesment -- ASCO Case Study -- Service Management Conference and Exhibition Africa
026 Information Architecture and Design of FIS for Rennies Group -- Financial Information Systems Conf
018 CRM Risk Control: Designing and Implementing an Integrated Risk Mgmt Sys -- Integrated Risk Mgmt Conf
011 V3 Consulting Eng: Benefits of MIS to Professional Practice -- SAICE 15th Ann Conf on Computers in Civil Eng
Strategically Enriching your Business Information Systems
Part 2 -- Principles of Data Engineering
Part 3 -- Steps in applying these recommendations
Simple Steps to increase the strategic information value yield from your Business Systems Investment
The Full JAR&A Taxonomy Manual
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Part 2: Why Use JAR&A, Required Knowledge and Experience, Cubic Business Model and Chart of Accounts and Taxonomy Software
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Example General Ledger Manual
Business Process -- Irrelevant, Distracting and Dangerous
The RIGHT Approach
Custom Strategic Software Design and Oversight of Construction
Standards for Custom Software Specification
What IS Software?
Critical Factors for I.T. Success
A Moral and Ethical Dilemma -- Systems that Fail
Case Studies examining Business Information System failures
The BBC Digital Media Initiative Debacle
The Bridgestone -- IBM Conflict
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ERP and IT Procurement that Delivers Results
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