May, 1998 Feature Article Mid-sized Firms Face Rough Road with ERP Adoption Nearly half of the large companies which adopted enterprise resource planning systems (ERP) over the past five years experienced significant delays and cost overruns, according to a study by Cavanaugh Leahy & Company (Princeton, N.J.; idt.net/~tjell/), an organizational consulting firm. Mid-sized companies, which are now undertaking ERP implementation, are expected to fare even worse, the study indicated. "Although three-quarters of the major companies have completed ERP, our interviews and research reveal a pattern of reengineering difficulties, unanticipated costs, prolonged implementation and employee dissatisfaction," said T.J. Elliott, research director for Cavanaugh Leahy. "It's critical that companies in the range of 1,000 to 5,000 employees, which are not considering ERP, recognize the challenges clearly as they start ERP implementation." Mid-sized firms, moreover, are by nature more at risk in adopting ERP since there are fewer resources to devote to the process, said Elliott. "They have smaller IT departments and less experience with such large-scale projects and greater dependence on consultants. At the same time, they're wary of getting caught up in a cycle of expensive consulting. And once a company has started the process there's no turning back." According to Elliott, the most frequent, but often overlooked, cause for implementation problems is ignoring the "people issues." Elliott cited the "people issues" identified in the study: a lack of effective communication between those designing the systems and those who will use the systems a scattered sense of commitment and urgency among those who will be the process owners in the new set-up, which translates into failures in cooperation a scarcity of trust as groups which previously may have competed are asked to cooperate an uncertain understanding of roles and acceptance of accountability post-ERP implementation "laundry lists" of what's wrong by affected managers rather than corrective actions the lack of a plan for engaging the entire company in the initiative, which results in a failure to get employees' hearts and minds behind the new way of operating According to Elliott, dealing effectively with the people issues requires senior management to do three things. First, they must recognize what are the particular people issues for their situation; second, they must take the time to create and carry out meaningful meetings with employees on these issues; third, they must follow through with a broader project integration that includes not just systems, hardware, functions and processes, but also the minds and hearts of their people. The Manufacturing Report © Copyright 1999 by Lionheart Publishing, Inc. All rights reserved. E-mail Editorial Dept: tmr-editorial@lionhrtpub.com Lionheart Publishing, Inc. 2555 Cumberland Parkway, Suite 299, Atlanta, GA 30339 USA Phone: 770-431-0867 | Fax: 770-432-6969 E-mail: lpi@lionhrtpub.com Web Design by Premier Web Designs E-mail: lionwebmaster@preweb.com