“The biggest room in the world is the room for improvement.”
Helmut Schmidt, Statesman
Investing in any technology or automation solution can be risky business. Will you gain the return on your investment as promised by the vendor? Will your employees embrace the new technology? Will it be a success or a dismal failure?
As a small business owner, especially an owner of a family-run manufacturing operation, you likely started your business with a lot of hope and high expectations to create an enterprise that you would be proud to turn over to your son or daughter. You may have reached a point that you are now anticipating that next step and wondering whether you have built up the business to that point where you can successfully turn it over to the next generation rest assured that you have done the best that you could. As part of this process, you may be considering technology investments either for the shop floor or front office to automate or streamline key business processes or specific manufacturing operations.
Anytime you are considering a technology investment you should consider the impact of that investment as part of the much larger picture. Take one such technology consideration–implementing a new ERP solution. Often shop owners, have the mistaken impression that a new ERP software will be the solution to all of their front office issues–that it magically will solve all of their process problems and enable them to be more efficient just by virtue of the capabilities of the solution. Unfortunately, that is not always the case.
In a recent survey, by Panorama Consulting, it was reported that 60% of companies that implemented a new ERP solution failed to realize the business benefits that were expected as a result of that implementation. However, in a similar survey a full 80% said that they would choose their same ERP solution again. So, what does that tell us? At the end of the day, it probably wasn’t the product so much as other issues. What could those other issues be?
ERP implementations can be disruptive on the people of your organization. In the same Panorama survey, 52% of organizations said that they faced material operational disruption at the time of “go live”. In many cases, the reason for this disruption is that the people weren’t adequately prepared for the impact of the new solution. They may not have been involved in the decision-making process. They may not have been trained well enough. They may not understand the “why” of the change. To prepare your people for any significant change in an organization (and ERP implementations are significant), it is important to have the involvement of key stakeholders along the way. Important strategy considerations to overcome these people-related issues should be:
- Key stakeholders should be members of the initial technology selection team
- Team members should represent a cross-section of the company
- Team members should be selected based on their knowledge of the company and not just their title
- All users of the new technology need to be adequately educated and trained on the new solution
- All employees need to understand the “why” or WIIFM (what’s in it for me)
Just as important as the people issues are the process-related issues that should be addressed during any new technology implementation. Firstly, you need to set realistic expectations of what the new technology can do and have a clear understanding of the objectives you are trying to achieve. The new solution should not be “just a prettier version” of what you have today. It should truly streamline and automate the process. Only in that way, can your company achieve significant results. Often, the challenge of a new technology solution, especially an ERP solution, is that the company is unwilling to challenge and change how they do things. They are stuck in the mode of “this is how we have always done things.” Unfortunately, the reason for that is that the old solution–whether manual or automated–required that and really wasn’t the most efficient way to do things. To really get to the “root cause” of why something is being done a certain way, you often need to ask the “why questions” four or five times. Only when you understand the root cause, can you decide if that is the BEST way to do something or if there is room for improvement. Implementing new technology is often the perfect time to re-define how things are done to achieve the greatest gains.
Implementing new technology and automating processes can be daunting tasks, but it can have great rewards as well. At the intersection of automation, people, and process improvement can be impactful results. Is your organization ready to achieve that?