The Soft Stuff is the Hard Stuff

A colleague of mine correctly points out that Enterprise Resource Planning (ERP) is really about a codified set of principles, policies, processes and practices and not about software. Enterprise software may enable ERP processes, but implementing Enterprise software does not ipso facto deliver the business transformation or disciplines required to truly embrace ERP. There is no software silver bullet. That is not to say that an organization that implements Enterprise software cannot derive benefit from the effort. Many of the ERP processes that are transactional (execution) in nature, such as customer order processing, procurement and production execution, can be enhanced by the integration and best practices delivered by Enterprise software. The planning processes of ERP, such as Sales and Operations Planning (SOP) and Master Scheduling can be enhanced to a degree by Enterprise software, but the real business benefits will only be realized if the enterprise makes the organizational changes and adopts the policies and practices required for ERP.

I have been assisting clients with ERP initiatives for sixteen years. While the scope of the effort has varied from client to client, most have opted for an integrated approach that includes both their logistics planning and execution processes. For example, many of my industrial clients have deployed master scheduling, material requirements planning and capacity planning processes alongside order processing, procurement and production.

It has long troubled me that a minority of my clients has attempted to implement SOP, which is one of the most valuable and powerful ERP processes. I believe that this is largely because the business transformation aspects of the SOP process are more critical to the success of the deployment than the software aspects. SOP is in many ways a "social" process. Many firms lack a cultural framework to enable the cross functional collaboration that is a pre-requisite to SOP. The ability of all the parties involved, including Production, Finance and Sales and Marketing to agree on the "one plan" is predicated upon the active leadership of senior management and willingness to compromise. For all too many organizations, particularly those that see software as a silver bullet, this "soft stuff" really is the "hard stuff."

In recent years I have been following the emergence of social business collaboration (SBC) tools with great interest. I have since refined my point of view. Perhaps the SOP collaboration that has been lacking in the past was partly due to a lack of capabilities. It is possible that this barrier to the effective deployment of SOP can be overcome through the use of SBC tools. I can foresee critical components of the SOP process, such as aggregate demand and supply planning and the pre-SOP meeting being enabled by a collaboration layer that is fed by the underlying Enterprise applications. For example, the demand planning process starts with a forecast and then incorporates the inputs from a variety of stakeholders before a demand plan is generated. A marketing or product manager could subscribe to the demand planning data in his activity stream or dashboard and provide feedback and inputs to the demand planner with a minimum of effort.

The introduction of more technology alone will not solve the problems of an unreformed ERP initiative. However, if the deployment of SBC tools is combined with an effective business transformation initiative then the likelihood of achieving the full extent of the business benefits from an ERP implementation will be greatly enhanced.