- The ERP vendors make many promises that they normally cannot match with the reality of its functionality.
- We cover some of the major issues in this area.
This article will not be like other articles you have read on the topic of ERP oil and gas industry functionality. A primary reason for this is that most of the advice around ERP system selection has strong financial biases built-in, which is why so much information publishing on ERP systems is incorrect.
See our references for this article and related articles at this link.
Mistake #1: Selecting a Poor ERP System Selection Advisor
This is normally not a mentioned item. However, there is a greater probability that the company will select a financially biased ERP system selection advisor than not do so. The straightforward reason for this is that most ERP system selection advisors have a financial bias. They are hiding from customers. The content produced by nearly every entity that offers ERP system selection services that we have read will normally parrot the claims made by ERP vendors. This shows a lack of independence from the industry. This means the selection advisor is very unlikely to tell the customer the truth about the ERP production systems functionality and try to get the customer to overestimate their functionality.
Mistake #2: Not Making Manufacturing a High Priority in Selection
The main argument for ERP systems is very much focused on the integrated nature of the system. ERP vendors focus on this because the actual functionality offered by ERP systems is generic. ERP systems are not some “competitive advantage” for manufacturing companies. In fact, ERP oil and gas industry functionality is a subset within the broader process industry category (so chemical manufacturing, metals, petroleum industry, etc..) This is a type of manufacturing that sometimes but not always deals with liquids. The defining characteristic of process industry manufacturing is that the finished goods cannot be disassembled back into their constituent parts and be usable. ERP oil and gas industry requirements are different than other process industry manufacturing. However, ERP systems normally do not even have much in the way of process industry manufacturing functionality, much less ERP oil and gas industry functionality. And much of the functionality that ERP vendors say they have is normally quite exaggerated for sales effect. I have been on multiple SAP ERP implementations. While SAP sales promote their “repetitive manufacturing” industry solution, after analyzing it on several accounts, I don’t believe the functionality is good enough to bother using. However, these industry templates have been used repeatedly to sell SAP ERP to customers who saw very little value or even negative value from using that supposed specialized functionality.
What Happens After ERP Implementations
After the ERP implementation is complete, normally, there is a phase where the company works out the kinks, but essentially the manufacturing planning and analysis just goes offline. That means that the company will normally move to a spreadsheet for doing the planning. The ERP system is sufficient for creating the transactions (production orders, purchase orders, etc..); however, it does not take the users very long to understand that there are many shortcomings in these systems for the entirety of what is required for manufacturing. Companies that use the MRP procedure in their new ERP are normally worse off than before they bought the ERP system as ERP systems again have very generic and difficult to adjust MRP logic.
This could be avoided if the company did not simply accept the claims of the ERP vendor and consulting company. However, seldom do sufficient research, and they rely on advisors who do not serve their interests.
ERP oil and gas industry functionality is typically generic. Its processing is not optimized (such as with MRP and DRP). Its usability is lower than specialized applications — it is normally weak ERP oil and gas industry functionality. Companies that buy ERP systems normally bet heavily that the ERP manufacturing functionality will be excellent and are disappointed. In fact, it cannot be said that ERP systems have improved manufacturing management after all of these years (since the 1980s) that ERP systems have been widely implemented.
ERP systems should have an external manufacturing system connected to them. However, very few companies as a percentage of all manufacturing companies with ERP systems go this route. One logic is that the company at that point has spent so much money on the ERP system that they are resistant to purchase specialized applications. In this way, the ERP industry saddles companies with functionality that competes not based on its capabilities but the oversimplifying idea that all one needs are standard ERP functionalities.