Who is an ERP for?
A diagnosis of the status quo for how the software industry supports our country's manufacturers.
I’d like to start off my inaugural post by sharing a quick story of a man I know. We have an employee at my company, let’s call him Dave, that helps with the general custodial upkeep of the production floor. On a typical day, you can see him sweeping the floors with a worn out broom and dustpan, doing his best to keep up with the waste that a 100k+ sqft facility generates every day. This is just one of the many tools he uses.
This past week, as a trial run before making a purchasing decision, we provided him with a riding floor scrubber to make his job easier. I saw more light in his eyes when he was driving that thing around than ever before. He was ecstatic that he was provided with a tool that would allow him to better do the job that his team was trusting him with. Although small, it was a great reminder that his story is not unique, and that’s what I’d like to take the rest of this article to explore.
The “E” is for “Enterprise”
Read any article about the history of how Enterprise Resource Planning (ERP) software came about and you will quickly realize that, just like all advances in technology, the largest, most powerful companies in the world were the first to pioneer their adoption, largely out of necessity.
ERP can trace its roots back to the 1960s when computing machines (yep, those room-sized ancestors of today's computers) were first applied to inventory management. These inventory control systems were designed to support large manufacturers and the complex value adding processes they were selling. Very quickly, by the 1970s, these Inventory Control systems had evolved into Material Requirements Planning (MRP) systems.
MRP was a way to automate the scheduling and coordination of raw materials, processing operations, and finished good production. For large manufacturers, this new way to reduce waste was a boon that only the most capital-rich companies could profit from, given the size of machines needed to perform the computations.
As computational power grew and costs came down, more and more companies were taking advantage of this new technology. By the 1980s, the era of MRP II had arrived, giving companies better capabilities, more granular scheduling, and a larger degree of control over the production process from end-to-end.
Enter ERP. As companies saw the benefits of integrating their entire production process into one, this idea quickly spread to the desire to incorporate ALL business functions into one source of truth. ERP II quickly came about with advances in technology that saw greater amounts of functionality be shipped to customers as ERP vendors started to target specific industries with the packages they offered.
As the internet grew, so did the adoption of cloud-based ERPs with some vendors leaning heavily into the benefits being offered as their differentiating feature. Without the need to maintain expensive hardware, ERP is now widely accessible to businesses of all sizes to the point that once a company has more than a few dozen employees, those in charge start to seriously consider purchasing their first (topic for another time) ERP.
Vendors prefer to move up-market
While there may be plenty of companies now that target the lower end of the market with their products, the goal is always to find a way to attract interest from larger enterprise customers. These companies have the resources to purchase larger packages and drive more revenue for the ERP vendor.
This incentive structure naturally caters to the needs of the big players in the market. Now this does not mean that down-market customers don't have products specifically built for their size of business, but the general vendor preference is to grow the amount of revenue per customer, which is exactly what enterprise customers can provide.
Even though not all ERP systems cater to enterprise, it's clear that every ERP system is trying to solve the problems of their customers, namely the businesses who purchase their products. Don't get me wrong, this is a good thing. Many of the goods that we can afford to enjoy today is in part because manufacturers actively use ERP systems to produce higher quality products for less.
After 50+ years, this has proven to be a double-edged sword. The companies that have built our current ERP systems have successfully been solving the business problems they've been tasked with, but in this success, have overlooked a fundamental aspect of how organizations operate.
Managers focus on the employee
Pick up any resource on managing a company and you will quickly be met with the advice that “employees focus on customers, managers focus on employees.”
There's a lot of truth to this adage. A company's primary vehicle for delivering its products or services to customers is indeed its frontline workers. It makes sense that everything managers do should be oriented towards helping their employees be the most successful they can be. A managers success is directly correlated with the success of their team.
When the frontline worker has been maximally enabled to do their job, managers see their teams’ performance improve dramatically. In a sense, good managers care about removing roadblocks that prevent their teams from best executing the company's mission and fulfilling their promise to the customer.
This charge managers carry to enable their teams is broad and can take many forms. The one we care about here is through the software tooling that managers are providing their people with. In our digital age where we are saturated with information, software is what makes or breaks a company’s competitiveness in the operational arena.
An ERP should focus on the employee
We come full circle to the ERP. As previously discussed, ERP vendors have been very successful at solving business problems for a very long time. Through this relentless focus on automation and efficiency, we have forgotten the human beings tasked with using these products.
We all know the few individuals in our orbit who absolutely know the system inside and out and serve as the subject matter expert for any questions anyone might have. At least on the operational side, everyone else is generally much more focused on becoming better at their chosen discipline, and learning the company's ERP is simply viewed as a necessary evil.
But this is almost a natural byproduct of the focus vendors have had on the decision-makers in their target companies. The result is that employees must often overcome steep learning curves, create work instructions for their teams, and struggle with un-intuitive user interfaces that make most shudder at the prospect of using the ERP. As a daily user of ERP systems, I feel this and hear this first hand.
Some companies have made a concerted effort to focus on designing more pleasant user interfaces, and this is a commendable step in the right direction. But this seems to miss the point. It appears more likely that in order to reignite the excitement teams feel when being asked to use an ERP system, the design of this system has to focus on the employee and their experience as a core component from the very beginning.
If a manager’s focus should be on enabling his team, wouldn't it make sense for an ERP system to align itself with that focus? When someone enjoys using a tool, their effectiveness increases and both they and their manager benefit from their success. Seems like a win-win to me.
Maybe we’re overdue for a change. Maybe its time we get a riding floor scrubber.