Monday, October 7, 2013

The Paradox of SCM IT Complexity

This week’s reading about the technology and company SCM is pretty thought provoking.  Like many managers, I used to think the same that investments in more advanced technology will improve the business process for sure, making the process more efficient and improve the bottom line. However, it turns out that there are lots of cases where IT failed to create value for SCM and there are many pessimistic opinions about SCM IT.

According to the article, it seems that there is a paradox involving complexity. Complexity, which enables the ERP system to deal with tough enterprise questions and creates value, also puts challenge to it. More advanced ERP system entails more complexity and more complexity makes enterprises customization extremely difficult. It required large follow-up investment and higher risks of failure.  It says in the article that a typical ERP has millions of codes and it is definite that there will be some technology glitches somewhere.

The key for an ERP success is whether the real customization can be realized efficiently and cost-effectively.    I think for those companies that are considering getting into this game should be asking themselves the following questions:

1.     What are the business strategies that will accommodate the technology change?

2.     How much support is available inside the organization (from all levels). What kinds of possible resistance in the organization might surface? (Some resistance can be subtle. For instance, the implementation of a new SCM IT system may result people getting fired?  Or will this involves a lot of training and extra work and thus conflicts with employees’ resistance)

3.     How much organization resources are ready to be deployed?  Real customization and configuration take long time and commitment to happen.  Especially for industries that are very past-paced and dynamic, would the companies in the industry still has the luxury to commit that much time to do the IT transformation?  If yes, what specific strategies and measures should be put into place?

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