Searching for the Silent Killer of ERP Systems
There are many things that can go wrong in an ERP implementation or undermine the effectiveness of existing ERP systems. Lack of organizational change management, poor fit with business requirements, scope creep, poor project governance and controls – these are just a few variables that make routine appearances on “Top 10 reasons for ERP failure” lists, including our own.
As if there weren’t enough things to worry about with your ERP system, there is another and lesser discussed killer of ERP initiatives: Microsoft Excel spreadsheets. Yes, that simple tool that everyone knows, loves, and is so comfortable with could actually be silently killing your ERP system. It’s a slow, subtle, and often overlooked reason for failure, which is why we don’t often hear about it.
Here’s the reason why: while most ERP systems are implemented with the notion that the software will centralize data and business processes, those pesky little spreadsheets are running counter to the goals you’re trying to accomplish with your ERP software. The beauty of Excel is that anyone can use it to manipulate and manage data any way they would like, but that is also its downfall when it comes to ERP. Throw in the fact that people fear change and will stick to what they know (e.g. Microsoft Excel), and changing people’s mindsets can be very challenging.
This issue is further magnified by the gaps in your ERP system’s functional capabilities or your employees’ lack of understanding of how to use the system. Employees are generally intelligent and want to do what’s right for the company, but when push comes to shove, they’re going to do what they need to do to get their job done. So if the report they want or need doesn’t exist, they will create it in Excel. If they can’t or don’t know how to find data in the system, they will track it themselves in Microsoft Excel. Multiply these small examples by however many employees you have in your company, and it’s easy to see why hundreds or thousands of Excel spreadsheets may be proliferating through your organization. This is a slippery slope – now you have silos of data that your ERP system was intended to eliminate or consolidate.
So what’s one to do? Banning spreadsheets altogether probably isn’t a viable option, so that’s out. And even if it were an option, most people are resourceful enough to find another way to address the challenges that Excel helps them solve.
The real solution lies in understanding the underlying root causes of the problem. Microsoft Excel isn’t the problem, but lack of ERP training, software functionality, or defined business processes are the more likely culprits. Start with those root causes, implement solutions to address them, and you’re likely to see decreased usage of these “black market” workarounds outside the ERP system. And if you haven’t yet implemented your ERP system, address these potential challenges early via a well-designed system that addresses key business requirements, clearly defined business processes, and effective organizational change management and training. These are the only ways to truly disarm the silent killer of ERP systems.
loading...
About Eric Kimberling
After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change, and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP initiatives, including Kodak, Samsonite, Coors, Duke Energy, and Lucent Technologies to name a few. In addition to extensive ERP experience, Eric has also helped clients with business process re-engineering, merger and acquisition integration, strategic planning, and six sigma. Eric holds an MBA from Daniels College of Business at the University of Denver.
Eric,
I like the title and the topic of this blog. I agree Excel isn’t the problem and is likely the symptom. All of the reasons you’ve identified for its continued use (familiarity, agility, ease of use) remain. However, instead of trying to exterminate the silent killer, why not bring the assassin into the fold? Instead of trying to bend the business to fit the software or bending the software to fit the business, leverage the generally intelligent, purpose driven employees to improve the business starting with Excel.
The next generation of Enterprise applications build off of the existing ERP (no replacement, modification or integration), consume all of the common “signals” such as spreadsheets, telnet screens, xml files, etc. and produce all of the signals in return. The lack of fit, agility and ease of use of an ERP makes it impractical to keep pace with business. As you’ve said, employees will find the way to get things done in spite of the ERP. It is just a law of nature; business moves faster than IT can keep pace. This is why the most agile, easy to use and familiar tool for business is still Excel. I would add to that Outlook and Word, too.
I am not making an argument for Excel based businesses. As you’ve said, the double edged sword of flexibility also allows for quality/data errors. Instead, allow Excel to be the starting point for an enterprise app that is built specifically for the business or process in need. Enterprise applications require solid databases with sound logic that Excel cannot replicate nor scale to support. BabbleWare has bridged this problem by allowing the ERP to remain untouched, the business to “custom-build” enterprise apps in an hour that take input from and create output to spreadsheets (as well as all other recognized formats) via User Apps. These browser-based apps are then used by the “doers” of your company. Without any disruption to business, IT, customers or vendors businesses can close the gap between their ERP and their needs and still not have to abandon the Excel, Outlook and other tools the end user relys upon 90+% of their day.
loading...