The ERP system is the single largest IT investment many companies will make. It is an investment that makes the CIO’s job both easier and more difficult.
The CIO can breathe easier because the ERP system:
- Consolidates disparate systems
- Modernises the IT database infrastructure
- Provides capable reporting and analytic tools
- Gives a foundation for extending capabilities from a standard platform
ERP also makes the CIO’s job harder because:
- The company becomes extremely dependent on IT’s ability to operate the system
- The CIO is drawn in to the business process optimisation discussion
- Governance of IT usage and spend becomes more important as the company seeks to leverage ERP
Figure 1, based on data from Aberdeen’s ERP in Manufacturing 2011: Defining the ERP Strategy report, shows how companies we surveyed organise their IT infrastructure for ERP.
The figure compares the Best-in-Class (defined as the top 20 per cent of the respondents based on their superior operational costs, inventory accuracy, and on-time performance) to Average and Laggard companies.
Best-in-Class companies are more likely than others to obtain senior management buy-in and use cross-functional teams for ERP selection.
However, Best-in-Class companies really stand out in making line of business leaders accountable for ERP implementation and usage.
This capability is almost universal among top-performing companies, while less than half of Laggards are so accountable.
I've seen the value of including the Line-of-Business in the ERP selection and implementation process first-hand.
In a previous job, I was charged with modernising a plant by, among other things, implementing Lean Manufacturing and adopting an ERP solution.
The project lasted over a year. The ERP deployment was filled with conflict, angst, and was an overall success.