WHY IS THIS A PROBLEM NOW?

ERP packages and their associated brethren have at­tempted to standardize the way to manage information within the corporation. For the most part, they have been successful. These systems have allowed for the replace­ment of many varied homegrown or out-of-date systems that inhibited change and made modernization diffi­cult. The problem is that the proliferation of new sys­tems on the periphery is outstripping the ability of ERP packages to grow and incorporate these various data collection points into a core application that is avail­able for the corporation as a whole.

Proliferation is occurring for a number of reasons: (1) it is fairly easy to create a database using MS-Access and many end-users are doing this and avoiding corpo­rate IT; (2) information systems development and de­ployment time has been cut considerably, enabling a new system to be rolled out soon after new requirements are defined; (3) most new hardware comes with a computer system; and (4) business processes are changing at break­neck speed.

Mergers and acquisitions have added to the prob­lem because of different cultures and systems that were standard but are now immediately nonstandard. Dis­tance is another element added to the mix. A standard­ization effort that would be fairly straightforward in a single location becomes extremely difficult in multiple locations and with different organizational structures.

The above paragraph argues for standardization and a rational manner of evaluating systems or processes before accepting them into the corporation. Of course each person or group that brought in one of these sys­tems was keen to a key fact—they were bringing in some­thing that was an improvement over the previous way of doing things. Hence, the rub.

As we enter a new century, we are hearing two seem­ingly contradictory terms. One is standardization. This call is being driven by cost, ISO/QS 9000, standardized work instructions, quality, international demands, and technology—to name a few. The second is innovation. This call is being driven by competition, a need for prod­uct and corporate differentiation, and speed—to name a few. These competing demands are similar and related to the old centralization versus decentralization argu­ments of the past.

Just as the centralized versus decentralized arguments went, there needs to be a rationalization. Complete de­centralization leads to cost overruns and confusion, while complete centralization leads to slowness and a detachment from the business. One must look at each individual function and decide where it makes sense to perform the task. One of the key success factors is to make sure you keep some of the task local while cen­tralizing the main function. This type of relational man­agement has been in place for years and generally appears to be working.

The innovation versus standardization argument needs to mimic the centralization versus decentraliza­tion decision process. You cannot have only innovation or only standardization. There must be a plan in place to make these types of decisions in a rational manner and for the best purposes of the corporation. This plan must have multiple prongs. The decision is too impor­tant to leave to seat-of-the-pants decision making.

Continued

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