Making a success of MIS

A properly integrated management information system boosts efficiency and profitability. So why have so few packaging converters implemented it, and what are the factors for success? David Taylor reports

A recent survey of nearly 200 packaging companies throughout North America and Europe, by Vanson Bourne, a leading technology research firm, found that the level of sophistication and adoption of ERP (Enterprise Resource Planning) systems was an indicator of better business performance.

The more sophisticated users, with fully integrated ERP systems, enter data only once and then leverage it throughout the entire order-to-cash cycle. 

These users could monitor and mine their system’s data for proactive decision-making, including ‘what if’ analyses to see the impact that changing variables, such as materials costs, would have on a job.  They could then plan ways to minimize the impact and maximize profitability.  They could also easily identify their most and least profitable jobs, clients and plants, and split production across multiple facilities to maximize their resources, while easily managing the associated job costs – a benefit that is magnified greatly for companies with many production facilities.    

Companies that are not leveraging modern systems struggle with basic areas that the more sophisticated users easily address.  Fewer than half were able to offer customer relationship management tools, such as a customer portal, via their systems.  Less than two thirds of these respondents indicated they were able to leverage their system for estimating or job costing – two critical areas for packaging companies to automate and closely manage in order to be profitable.  Only 14 percent of them had supply chain management and vendor managed inventory capabilities and were able to leverage them. 

There are several reasons companies do not invest in modern ERP/MIS systems:

•          Hardware vs Software – A new software system is considered secondary to purchasing new equipment. It is usually easier to calculate the ROI from a new machine, based on additional production capabilities or new offerings to clients, than to understand the improved efficiencies and cost savings that can be achieved through software automation.  Software can also expand the capacity of existing resources and allow visibility into business operations, so they can be further improved.  In order to realize the full benefits of a new system, however, it must be fully integrated, properly implemented and effectively utilized within an organization. 

•          One-off purchase or strategic Investment? – Without a ‘compelling’ reason, many companies lack the desire to invest in a new system if an old one is still functioning, even if there is empirical evidence to suggest a new one would greatly improve their operational efficiency and lead to greater profitability.  

•          Implementation – Surprisingly, over half of all ERP implementations fail – going over time, over budget and/or failing to meet the original objectives. This is perhaps the largest reason why companies hesitate to invest in
new systems.     

What are the critical success factors for successfully implementing an ERP/MIS?

1. Clear project scope

Define your project goals, business processes and expected outcome.

Clearly define your company’s goals from a new system – department by department and benefit by benefit.  The business processes to be addressed by a new system should be outlined for each step of your operations, from estimating and production to inventory management, customer relationship management, procurement and billing. The more effort you put into this initial and critical phase, the fewer changes to scope you are likely to have, making it more probable that you will be able to keep your project on track from both a timing and budget perspective.

Clearly defined scope also enables your organization to complete the project and make the commitment to the new system. It is not uncommon when scope is poorly defined to see organizations go through prolonged or perpetual implementations. Poor scoping can even lead to parallel processing, when organizations use their old systems for some things and their new ones for others. These outcomes can cause disruptions to daily business operations as well significantly increase IT expense.   

2. Executive Sponsorship

The company’s leadership must instill use of the ERP/MIS as part of the company culture.

It is important for company leaders to articulate the value of the new system and processes to the entire organization. Change is often hard, particularly when people have been used to doing things a certain way for a long period of time.  Typically there are enough positive changes from automating processes and gaining ready access to key business information, to offset the discomfort of learning a new system and adapting new processes in day-to-day operations.  But, there will nearly always be some resistance along the way at some point in an organization’s implementation. Not every system is a perfect fit for every organization, and many companies using outdated systems have become proficient at workarounds, leaving some of the personnel to wonder why they are being forced to make changes.

3. Committed users

The value of a new system will not be fully realized if not properly leveraged by those using it.   

Getting users to fully leverage the new system is key to maximizing the return on your software investment.  It is critical to have a defined hand-over process, since this is when the software moves something ‘owned’ by the provider, to something owned by the employees implementing the system. Transition software ownership with a ‘train the trainer’ approach, where key people in each area of an organization are trained in-depth on the application, and they in turn train the other members of their department.  Not only does this provide a greater level of initial acceptance, it provides local resources for expert help and can reduce overall training costs.  Make the investment for several users of the software, from different parts of your organization, to attend your vendor’s annual users’ conference.  It cannot be overstated how much users of a system can learn from one another, especially if they are running the system in a similar type of business. 

4. Business-led project

System software should be led by business units and not IT

The IT group’s job is to ensure that systems are up and running – they are not experts on the operational aspects of an organization.  They can configure a system, but it is the business units that define the needs they have for ERP software – and which are critical. Help the IT group and implementation consultants understand your requirements.  Additionally, IT groups tend to be more focused on technology, rather than the key elements that will make it successful for business operations. 

5. Pragmatic project management

Remember the 80/20 rule; striving for perfection is a recipe for a perpetual implementation.

An implementation, like any other aspect of business, is about focusing on what’s most important.  Like any other asset in your business, a new software system may have more requested projects for it than the resources allow. It is essential to identify the critical items vs. the ‘nice to have’ items, or you risk a wish list that blows the budget and the timeline for the project. It is important to prioritize the processes that are essential to running the business, and which ones belong on a wish list, so you can keep things moving ahead according to schedule. If you absolutely feel you must modify the software, make modifications minor and try to keep them to a minimum. This will keep the project moving forward more quickly and ensure that future upgrades are faster and require less work.  Another reason to put things on a wish list is so they can be used as input for the software vendor.  Many of the changes a software company will make to the system are based on user input. Providing that input is yet another reason to make sure your company is represented in both the vendor’s user community and at the vendor’s users’ conference. A users’ conference is typically where user-driven input for enhancements to the software is formalized, and voting on which items will be included in the next release, typically occurs.  

Conclusion

All of the factors above can help to ensure your next system software implementation is a successful one. This is of course assuming you have selected a system that closely fits the needs of your organization and that you have experienced implementation consultants with extensive expertise in your industry. And on a final note, when starting the selection process for a new system, ask to see a software vendor’s implementation methodology, and ask for resumes of the consultants who would be assigned to your project. A successful implementation will allow your organization to experience the many benefits of a modern ERP system – not least of which is the ability to join the ranks of the industry profit leaders.   

About the author:

David Taylor is responsible for all global strategy, communications and business development for EFI Radius – enterprise software for the packaging industry. He brings more than 18 years of professional and managerial experience in software applications and the printing and packaging industry. He is an active contributor in many industry associations, such as the Tag and Label Manufacturers Institute (TLMI) and the Paperboard Packaging Council.

Pictured: Integrated business information management system

This article was published in L&L issue 4, 2011