Reasons for ERP Software project delays

ERP Implementation

ERP Implementation

Evidence suggests that majority of ERP software projects are delayed or doomed by cost overturns.  Even when ERP projects are completed on time or within budget, users often complain that the software they have paid for does not meet their expectations in terms of quality, or features or both.

In other words, a great deal of software that is developed never gains user acceptance.  No respectable field of engineering has comparable failure.  That would be a catastrophe, and construction and automotive engineers would not make a living!

  • Why does the distinguished software industry have such an abysmal track record? A big part of the answer is ‘scope definition’, a phenomenon that causes users to be highly inconsistent and unpredictable, about what they wish their software to do. Experienced software engineers often say that users are notorious for their inability to clearly articulate their expectations from software. As a result, it is alarmingly common for the development (construction) of software applications to begin with insufficient requirements and ambiguous specifications.
  • ERP project is taken as ‘by-the-way’ project whereas in true sense it should be the only priority during implementation phase.
  • And because software is intangible (impossible to see and touch) while it is under development (unlike other forms of construction such as bridges and cars), it is commonplace for needs to keep evolving as the software gets built. With every round of change and clarification. The scope of the project changes (as earlier assumptions are negated and new ones introduced). And timelines are pushed out to accommodate new expectations. This is analogous to building a house for which the architectural design keeps shifting with the changing priorities of the owners. Human experience suggests that moving-targets do not lend themselves to happy outcomes. And so it is with the timelines and budgets of numerous ERP projects.
  • Untreatable as it may seem on the surface, scope creep (changes) is an eminently treatable problem. For example, world-class ERP organizations now employ the use case method to manage user requirements. Instead of asking users what features they want in their software, the user case method guides them to describe their current and future processes and behaviors in terms of stories and scripts (much like playwrights write plays) that are stuffed with actors, actions and entity. It turns out that humans are fundamentally better at narration than specification, and the requirements that originate from this method are decidedly more robust.
  • Further, the software implementation and development process has itself become less linear and more cyclical. These days, large ERP projects are broken down into a series of short, burst sprints that last between 30-60 days each.  Sometime, module wise implementation helps building up confidence.
  • Only a small set of requirements are addressed in each sprint, and no changes in scope are permitted while a sprint is progress. Finally, users themselves play an active role in software evolution. As each iterative cycle draws to a close, representative users (or focus groups) interact with the ‘live’ (albeit partially complete) system, and provide critical feedback. The feedback is analyzed, course corrections engineered, and scope creep managed in a controlled fashion.
  • Software engineers are devising early warning systems that will allow them to predict well in advance how serious the downstream effects of unmanaged scope creep can be. An innovative measure that is gaining currency is the requirements clarity indicator, a metric that allows a panel of software experts to review a set of project requirements early in the life-cycle and determine how well the stakeholders even understand what they want from their stability indicator. Low scores on requirements clarity or requirement stability ought to be sufficient to assume that a project is headed for serious trouble.
  • In conclusion, scope creep remains a major threat to the success of every software project.

However, its impact can be minimized by leveraging best practices that are part of the emerging repertoire of leading IT organizations. Good software engineering is all about deciphering what users need, and not getting distracted by what they demand. It is also about managing scope creep intelligently. Use cases, iterative sprints, task group feedback, as well as indicators that measure requirements clarity and stability allow modern software engineers to do just that.

Above write-up is based on Jyoti Zaveri’s experience of software development and software projects implementation experience.

Year ends on March 31 – Are you ready?

Due priority should be given by all stakeholders on 31 March 13 in India

Financial Year in India

Financial Year in India

Year-end procedure.

In India, the accounting year is April to March. Accounting year 12-13 has ended on 31st March 2013. Important procedure is given below to plan the ‘year ending’ in ERP.  Due priority should be given by the stakeholders.  There are two kinds of closing balances that needs to be focused:

  1. Accounts closing balance: Debtor and Creditors / Assets and Liabilities.
  2. Closing balance of stock.
  • For efficient supply chain management it is necessary to record physical stock of all locations such as depot, warehouse, godowns  stores, cold storage (if any), CFA, distributors, and so on.

It is important to note that both inventory and accounts are tightly linked in ERP.  FAQ: “Can we enter creditor / debtor balance and closing stock, later?” The answer is NO.

Step-by-step procedure to GO LIVE is as follows:

1. Before doing anything take backup. Copy on once writeable CD; take the backup media to another location (different building).
2. Task: Enter closing stock for Inventory items.
3. Count stock. This exercise should be done very carefully. This is important for ‘going-live’.
4. Enter the closing stock, as on the cut-off date, from that date onwards, ERP will prepare the inventory related books, as well as accounts books, automatically.
5. E.g. closing balance as on March 31, mid night is opening balance for April 01.

6. Task: Enter ALL items in the item master.
It is strongly recommended that for EACH location stock balance be taken. E.g. stores, rejection location, scrap location, WIP (work-in-process), third-party (subcontractor location), etc.
7. Task: Take location master printout (excel sheet showing all locations) from the ERP (not from Tally). The list will also show names of subcontractor locations.
8. Bought out items, raw material, consumables, spares, etc. Items that are supplied by vendors (supplier).
9. Sub-assemblies, semi-finished goods, factory made item, etc. This may include items that are received from third-party, if it is semi-finished goods. (WIP).
10. Finished Goods, (FG or product that usually appears in the sales invoice).

11. Task: Prepare the Item list using ERP software instant excel sheet option. You can prepare category, sub-category wise, separate list. Give to concerned person to take physical stock (count) and write on the excel sheet itself, put date and sign. This is strongly recommended to avoid confusion of item code / description.
12. Use this list (hard copy) to enter closing stock figures in ERP.
13. From that moment onwards, every transaction must go through ERP.
14. Depending on your judgement  estimate time required to do the physical count and the exercise to enter the data in ERP. This will depend on number of persons allocated for the task.
15. During the stock taking activity, there should be NO material movement. All goods inward and sales issue has to be suspended. For instance some companies would like to do this exercise on 1, 2 and 3 April and start the year on 4 April 08. Some companies stop the manufacturing activity on 30 and 31 Match.

16. You may find items that are physically present but not in the list – enter in the item master and enter closing balance.
17. Account Closing Balance are required for the following:

  • Debtor (customer),
  • Creditor (vendor, service provider, and third-party) balance pertaining to 11-12 balance will be carried forward automatically.
  • Pass JV (cr. Note or debit note if necessary to get the correct balance). Make sure the bank-reconciliation exercise is done well in time for ensuring correct ‘Trial Balance’ statement in ERP.

18. In case you have already gone “Live”:
Count physical stock for each item and write on the excel sheet printout, next to ERP stock statement (book stock) figure. Ideally, both should be same. If not write the difference (plus or minus). You will have to get explanation from stores-in-charge and pass SAN (stock adjustment note) to get the book stock same as physical stock.
19. You may find item that are shown as stock in hand but there is no such item. Check that there is no confusion in item name. Any case one must reconcile the stock.

20. You will have to do this exercise for each location. Especially stock lying with the third-party (if any).
21. Print separate list for FG, WIP, Stores items, consumables, packing material, etc. from ERP software.
22. You will need people so plan in advance, inform your team (staff), this is not one or two persons task. More people are required depending on number of location, size of the inventory, and so on.
23. At the time of login, into the ERP, select appropriate year (the first screen where you give log in name and password).
24. New document number series will start from the New accounting Year – e.g. April 1, 2012.
25. ERP System will allow you to enter 11-12 transactions even in April 2010, (for this select year 11-12). Finally, when the audited Balance Sheet is available one can make a “closing JV (Journal Voucher). This may be sometime in April / May 12. Whereas the current year (11-12) transaction can be entered from 1st April itself (these will be in new document series).
26. Cut-off date is ‘as on’ date in the Closing Balance data entry screen.
27. In item ledger and item stock statement ‘From’ date should NOT be less than Closing Balance, date that is used for entering closing balance.
28. User must press ‘enter’ key after entering the closing balance stock.
29. Once closing stock is entered, user should check, and if mistake is found, then enter again; this will over-write previous figure. Once all closing balance is checked, printed and confirmed then REMOVE access to the closing Balance menu-using user manage. No one should enter again cl. Bal. because this is one time exercise.
30. Only after disabling, the cl. Bal. menu user should be allowed to enter inventory transactions.

31. Closing balance Rate or value:

  • While entering stock closing balance, user also should enter rate. This is required to calculate the value.
  • For item that are purchased from outside – pl. enter the Weighted Average Rate (WAR) rate (weighted average rate), or last purchase Rate, if WAR rate is not available.
  • For all factory made items – SFG (Semi-Finished Goods or sub-assemblies) or FG (Finished Goods)– user should enter ‘cost rate’.

Video lecture (excerpts) about the year ending.

Case study video clip:
Marico, ITC, Emami. “Emami’s recent investment in I. T. has ensured finalization of its balance sheet in a record 35 days against the 60-day norm”.

Hope you are ready to embrace the New Year with more confidence and financial discipline that is so important in the competitive world.

I will appreciate your comments / feedback.

Additional resource to learn ERP

Join ERP Groups on Facebook and LinkedIn and Follow on Twiiter

Join ERP Groups on Facebook and LinkedIn and Follow on Twitter

Connect and regularly access to get many valuable benefits that these sites provides.

Learn CRM, Supply chain management and Enterprise Resource Planning software.  This web sites are good reference for various key functions managers, such as accounts, purchase, sales, production, etc.  It is not just additional resource but also a companion sites for corporate commandos.

Join Facebook ERP group

Let us discuss ERP, any ERP. Join Facebook Group ERP Like Facebook Page ERP

Join ERP LinkedIn group

Join ERP LinkedIn group Join LinkedIn Group ERP, E-business Forum

Follow @followERP on Twitter

Follow @followERP on Twitter Follow

ERP training videos

Subscribe. ERP training videos on YouTube. Over 100 K video views.  Subscribe

Follow on Scribd - ERP PowerPoint presentations.  Over 100 K reads.

Follow on Scribd – ERP PowerPoint presentations. Over 100 K reads. Follow

Follow on slideshare.  ERP presentations with videos

Follow on slideshare. ERP presentations with videos Follow Presentations with YouTube video

Created for e-Learning by Jyotindra Zaveri, ERP Consultant & Trainer. 

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