ERP systems not path to increased profit
- 23 June, 1999 13:05
ERP software is not the answer to improving a customer's profit, says the head of one supply-chain software and implementation organisation.
"CEOs around the country have all had three or four ERP systems over the past 20 years," claimed John Quirk, the CEO of Motherwell Information Systems, Asia-Pacific. "None of them have been very successful and they haven't added to the bottom line," Quirk suggested.
"The real issue for IT is to take profit improvement to these businesses. Companies can improve profits by 3 to 7 per cent of revenue if they implement really good supply planning and optimisation and all those things beyond ERP," Quirk said.
He added that enterprise resource planning system backbones provide the data but what's needed beyond that is very sophisticated optimisation, scheduling and planning for the business.
"The project part is easy and, technically, goes in well. You get 99 per cent of the project right, but the business only benefits by 5 per cent. The CIO then says the organisation can't absorb the changes," he said.
Motherwell gives the example of ERP producing a plan that says a fac-tory should close for three weeks, but the factory manager won't accept that because he's geared all his planning the way he has done it for years.
"What organisations really want to do is automate. New Zealand organisations have done a lot to re-engineer their businesses but they could do a lot more," he said.
ERP is becoming a commodity, Quirk declared, which is why the big vendors are moving down the food chain.
"Will it make a difference? It's like a new car - it will go a bit faster. I'd prefer it if these big vendors shared the risk and reward our profit improvement," he said.
Motherwell's business is ERP implementation and support - it deals in SAP and Ross Systems - and supply-chain implementation, with SAP and Numetrix.
The organisation, which is based in Auckland, has 250 staff in Australasia and a strong presence in the metals industry in the US. Annual turnover exceeds $US21.4 million.