…and software can’t manage people.  This is the tag-line for our Thrive product.  Why?  Because this is true.  Software by itself typically adds no value to the process it is analyzing (this is a very scary thing for a software vendor to say!).  It is the interaction with software…the entering of data, the analysis of data, the interaction with the data, the interaction of people together in response to the data.  That is where the value comes into play.  Software enables people to be more productive..it streamlines operations in collecting, analyzing, and managing information that surely could be accomplished manually, but when was the last time you used an abacus?  It enables them to see data in an aggregated visual manner that otherwise couldn’t be accomplished with a cursory glance at a set of data.

Robert X Cringely discusses SAP implementations on his blog (link courtesy of Kevin Meyer at Evolving Excellence from his blog entry).

Putting in an ERP system isn’t going to improve the business by itself: you still have to figure out what the data means and make decisions.

Of course, this is often the case: that people expect that just by putting the system in place they will see impact to the bottom line.  He goes on to say:

The problem is there is not enough return on investment from the ERP system itself to justify the cost. You need more. The real savings must come from improving your firm’s business processes. So a huge business redesign project is often coupled with many ERP projects.

And this is where I would argue you generally don’t get the information you need to improve your business processes.  The ERP is so financially focused (and the information is always end-of-the-month reactionary data), it does not effectively expose where the true operational waste is coming from.  A department that appears to be over budget could be that way because of waste caused by upstream or downstream operations.

Cringely’s article is interesting, because he argues that ERP’s are difficult to use by design, so that the ERP companies can pull in more revenue through consulting.