The Elements of a System
“The System”
Although the name ERP (Enterprise Resource Planning) was originally applied to a specific class of application software, these days it is used as shorthand for any business application that integrates two or more functions in one package. Software on its own will do nothing, and a business system is more than just software. In the context of ERP, it is helpful to think of “the system” as five distinct but interconnected and interdependent elements:
- People
- Processes
- Data
- Technology
- Environment
In effect you could consider your whole business as “The System”.
People
An implementation is not a technology challenge, it is a people challenge with an element of technology.
ERP implementation isn’t a case of hiring some experts to come in, install something, and then leave; much of an implementation must be performed by your employees under the guidance of suitable expertise.
Properly executing an implementation, while your organisation continues to trade as usual, is one of the most difficult and demanding things you can ask your employees to perform. Nobody believes how much work an implementation entails until they have done one. Your employees must be persuaded, motivated, educated, empowered, encouraged, and rewarded – and that will primarily take people skills, which not everybody has.
Processes
If your implementation simply transplants an unchanged process onto a different piece of software, you will probably have missed a trick or two. So a main objective of your implementation must be business process improvement.
The creativity of your people and the leverage of technology should make your processes faster, more efficient, with better oversight and control, and fewer opportunities for errors, omissions, and malfeasance.
Data
To implement a new system you must identify and extract all relevant data – employees, clients, suppliers, orders, contracts, projects, resources, and so on – from wherever it currently exists, convert it into a compatible format, and load it into your new ERP database, without errors or omissions, while your business continues trading normally.
You may hear this process referred to as “ETL” (Extract Transform Load), or “data migration”. It is technically complex, and hard to execute properly, and because implementations take many months, the data that is eventually migrated will be materially different from the data that exists now – it’s a constantly moving target.
You should engage specialist expert guidance for your data migration, but the more you leave data to outsiders, the more errors and omissions you’ll get. Your employees will be the only ones who understand the data itself – who else but your receivables manager could look at an extract of your debtors ledger and know intuitively that it is complete and correct? Therefore your employees must be closely involved with migrating the data relevant to their individual functions. Getting them to devote sufficient time and mental horsepower to data will be one of the major challenges of your implementation.
Technology
The specific technology you choose for your implementation is irrelevant to the principles you should apply. Properly developed ERP will be fully documented, have an established body of knowledge and readily available training material, be largely bug free, and behave predictably, consistently, and logically. It will do what it is told to do.
Technology is your enabler; your force multiplier. Think of it as a power tool to be used by your employees. It is inherently reliable, but it must be configured and used within the constraints of its design.
You wouldn’t hold the chainsaw responsible if a lumberjack felled the wrong tree. Similarly, you should not blame technology for problems caused by your implementation methodology. Problems that are pinned on ERP are usually attributable to one or more of poor selection, poor training, poor processes, poor data migration, poor configuration, badly executed customisation, or some other deficiency caused by substandard implementation. All of these are largely avoidable if your organisation is properly prepared before you steam ahead into your implementation.
Environment
Everything that impinges on, or intersects with, any element of your business system is part of the environment in which the system operates. This includes – but is not constrained by – the following list:
- Business culture
- Organisational structure and governance
- Physical premises
- Clients
- Suppliers
- Industry legislation and regulation
- Regional and national taxes, laws, and regulations
- International taxes, laws, and regulations
Of all the components of the environment, arguably the most immediately important to a successful implementation is the business culture. There is a considerable risk of an implementation derailing if the culture of the implementation is misaligned with the culture of the organisation.
As the CxO, it will be part of your role to maintain the health and alignment of your implementation culture.
The ideas and opinions in this article are my own; other opinions and methodologies are available.
Copyright © 2025 Henry Dale “The ERP Bloke”