It all began back in the early 1990s when the large consultancies started
offering industrial giants the promise of huge efficiency savings.
Their proposal was ‘business process re-engineering’. Hoards of consultants
were deployed across operating units armed with benchmarked statistics on ‘leading
companies’ and those dreaded ratios – 1:100 finance/employee, 1:150
To deliver these benchmark savings, corporations had to invest millions, not
only in consultancy and change management fees, but in complex IT – Enterprise
Resource Planning (ERP) systems. The prize was set, the business case written
and the figures delighted the chief finance officer. Back came the consultants
in their droves to help the implementation.
But why did ERPs fail?
First, not many organisations had the necessary skills to implement such
large-scale change programmes, they used costly external resources from
management consultancies and IT vendors. Knowledge transfer was non-existent
leading to two major problems, a solution based on an IT product and a lack of
skills to fully sustain the change.
Second, with the scale of investment in technology, it was normal to see a
senior IT manager leading the project. Again this lead to an IT based solution.
And finally, there was a lack of buy-in by middle management, fuelled by
cultural resistance to common processes and organisational change.
So where did that leave the hundreds of organisations that tried to deliver
efficiencies through ERP?
The business case often anticipated a significant reduction in headcount,
but a lack of fundamental process and organisational change across many
businesses meant they weren’t delivered.
Millions were wasted on consultancy fees and complex IT systems, with
over-functionality driving projects over budget. And organisations were seduced
into allowing the development of a highly customised IT solution, creating a
continuous over-reliance on expensive IT support, maintenance and upgrades.
So why have so many of us followed this trend over the years? Is it peer
pressure, have we been led by finance or do we just follow the trends?
In the current climate, this level of IT spend without measurable results
cannot be sustained. Also, the internal customer wants far more from HR than
these ERPs can deliver.
Don’t let ERP stand for Eat Revenue & Profit. You have to get the
implementation right if you are going to achieve sustainable results.
HR must start with a clear understanding of what services internal customers
require; it needs to streamline the processes across the organisation to ensure
a common approach; it needs to re-organise the HR teams utilising a shared
services approach; and it needs to implement appropriate technology as an
enabler to the service provision. In the right hands this will deliver far more
than just e-HR.
By Alan Bailey, Head of HR business process outsourcing XChanging