Posted by: ahmedashfaque | June 18, 2014

ERP implementation failures: some considerations


When any ERP application is rolled out at any enterprise, users as well as managers are either excited or worried about the change it will bring in their day to day working. Despite best efforts put in by the implementation project teams as well as the users, the end results are not always as exciting. Even when the project is implemented successfully, after some time when the application is actually used by users and the actual performance of the application is evaluated, the results they get is less than satisfactory.

Let us see the typical shortfalls where the ERP fails.

1. The business transactions have loopholes and wrong transactions are allowed by the application:

For example, a PO is split into many pieces so that the total PO amount on each PO becomes small and thus each invoice for the POs is cleared by the finance department even though the PO should have been sanctioned only when the finance manager should have authorized it. For instance, the PO value was coming at $50,000 and it should have been cleared only after scrutiny of the finance manager. But since this PO was broken down into 5 POs, the PO amount on each PO came only $10,000. Now this amount was not required to be authorized by the finance manager and thus all of the invoices for these POs were cleared without consent of the finance manager. To circumnavigate established checking procedures, some vendors avail these kinds of malpractices. Not many ERPs are good at handling such scenarios.

2. Traceability of transactions is not enabled:

At many instances, it is not possible to trace complete transaction history of a business process. In such cases, it is possible to miss any part of the payment process or goods receiving process which will result in wrong transactions.

3. Tolerance for over or under delivery of goods:

When received goods are either more or less than the PO quantity then communicating with vendor and settling the invoice becomes a tedious job and in the process, some information may get lost during the process. This may result in wrong transactions being entered in the application.

4. Partial shipment of goods:

In case of partial shipment of goods, invoices can be generated and paid based on partial quantities received. But in such cases, there is always a possibility that some one can circumvent the system and get some bribe from the vendor.

Many of the loopholes mentioned above can be avoided by implementing the application properly and providing watertight checks for transactions.

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