Software is not a magic wand. If a company adopts a program that is designed to integrate its various functional areas, the managers must ensure that the company’s people are provided with adequate incentives to take advantage of the anticipated efficiencies. Unless the company’s managers help their staff embrace new technology, the result can become a communication blockade with inefficiencies spanning the organization.
Researchers Majed Al-Mashari and Mohamed Zairi at the University of Bradford in the United Kingdom examined the efforts of a major Middle-Eastern manufacturing company that they code-named Manco.
The Technology Solution:
These researchers investigated Manco’s failed efforts to implement SAP, a sophisticated enterprise resource planning (ERP) system. SAP is a computer-based system that unites the information used throughout a company. In that way, diverse departments such as accounting, inventory, sales, and distribution can tap into a single, integrated data model and boost efficiency across the company.
Although the promise of seamless information sharing throughout a company makes perfect sense on paper, turning the concept into reality may not be a simple effort when the company’s culture isn’t flexible enough to accommodate new and interactive procedures. As the researchers noted, “Unlike many software installations, SAP R/3 installation is a difficult undertaking in that its success necessitates managing adequately a complex context, which involves organizational changes across various key areas related to strategy, technology, culture, management systems, human resources, and structure.” Unfortunately, Manco focused on the technical aspects of the software implementation without adequate attention paid to the other managerial issues.
As a result, instead of using SAP to become a more customer-focused, efficient, and cost-effective competitor in its market, Manco discovered that its responsiveness, reliability, and manufacturing effectiveness plummeted.
The first decision that triggered Manco’s problems occurred when the company Manco tapped for its SAP support recommended a more robust IT infrastructure to facilitate SAP’s complex applications. The company spent $2.8 million to implement SAP, only to achieve a negative return on its investment (ROI).
The key factor underlying the failure stemmed from Manco’s management team underestimating the impact of employee anxiety. When top management first evaluated the expected ROI, much of the savings offered by SAP was based on a resulting reduction in Manco’s labor force. In other words, the people who were expected to help integrate SAP were the very people the software would eventually make redundant. Although there were other issues that further contributed to the failure of Manco’s SAP adoption, it was this initial misstep that represented the fatal flaw.
This was a clear case of how a lack of internal communication can cost a company dearly. The next case study at DataDocsDailyDose.com will show you how communication improvements not only improve employee morale, but also improve the corporate bottom line.
–J.D. Mosley-Matchett, Ph.D.
“The Data Doc“
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