Inspired by a recent discussion in Connek forum and my conversation with a friend, I decided to take a look at the ERP hype in Vietnam and point out the problems as well as solutions for those.
In my opinion, Vietnamese ERP market is definitely in the “Slope of hype” (which I will explain later in this series). All the IT papers and Web site dedicate a large part for ERP, CRM, or the like. Companies bring to market a new product every month. IT companies are talking about ERP, students are talking about ERP, even some blue-screen business managers are doing so, too. In Mao’s words, it’s a “hundred flowers blooming”. Is this a huge market? I would argue it is NOT YET a market. It’s just the beginning of a hype cycle. The reasons why it can go wrong at the same time explain why it’s a hype. Some of them come from IT vendors, some from customers and the rest is the communication problem between these groups.
Within the remaining time I have today, I will point out the first problem with the vendors and leave the rest for the next posts.
I. Problems from Vendor’s side
Why I start with IT vendors? Since the situation in Vietnam is a selling hype, where vendors are using “inside-out” approach to sell their new products. The opposite is “outside-in” approach, where vendors look at the real needs of customers and build products to address these. Some will argue that IT vendors did take these needs in mind and create cool, suitable products. It’s easy to check. How many ERP customers and how many vendors and products are there now? There are a large group of vendors chasing a handful number of customers. How many customers have adopted ERP so far? If it’s a real demand, why did it take so long? Now, can anyone claim it’s “outside-in” anymore?
I.1. Lack of Process Engineering Mindset and Capabilities
The most fundamental problem I see is the lack of process engineering mindset and capabilities among the IT vendors. If Bill Clinton had talked about ERP in Vietnam, he would have just modified his election campaign’s slogan and said: “It’s process, stupid!” Vietnamese IT vendors didn’t learn the lesson of the dotcom bubble burst. Where the value is really from? In Dr. Kalakota’s words: “It’s not about technologies. It’s all about processes“. (By the way, Dr. Kalakota is a guru and a strategist in e-Commerce, e-Business and m-Commerce, and the author of many excellent books.) Many companies back in 1999-2000 tried to put their money into IT, or open Web sites and trading platforms. These efforts went down to drain as there was no process designed to create, deliver and capture value. Amazon.com and Dell were different because they were very smart in designing and implementing the processes, for which IT was an enabler. Now, let’s do another reality check. How often do you hear or read somewhere in Vietnam about process design and value from process reengineering in ERP implementation? If you cannot remember, don’t try to hard. I found only one article written by a foreign expert, but it serves more to wow than to educate readers of the importance of process engineering.
The root cause, at the same time, where it may go wrong, is the lack of available expertise in this area. In Vietnam, there is no formal training for process analysis and design, which normally taught as a part of Industrial Engineering elsewehere. Scanning all the technical programs offered in Vietnam, none has something coming even close to this discipline. Graduates from overseas in this area coming back to Vietnam? I know only one case, but he is doing his Ph.D. now and he will not go back and do process design in a foreseable future. I would imagine if there are in fact some others, I can count them with just my 10 fingers. How many lucky customers can afford a proper foreign consulting company to do process redesign?
To take an example, let’s look at an article with a catchy name, “The need to differentiate foreign and Vietnamese(-made) ERP systems”, on PCWorld Vietnam. The author claimed that foreign ERP systems do not factor in the issue of accounting posting correction, which happens very often in Vietnam. However, I would rename the article “The need to differentiate foreign and Vietnamese(-made) business analysts and software architects”. In fact, this type of issue should be taken from the process analysis and design with flags and preventive KPIs (Key Performance Indicators) to check whether exceptions happen too often to have corrective measure. Any good ERP system should be flexible enough to accomodate such a configuration at deployment, not to hard code it in the software design. The author, who didn’t know about that fact, claimed only his system can. A more serious underlying issue here, which is representative in Vietnamese ERP, is the ignorance of process design and consider this a part of software design. This leads to a process inflexibility at design and all the consequences I will mention in part I.2 of this series.
This all boil down to a painful fact that Vietnamese software development and implementation teams had not taken process analysis and design seriously. By doing so, they charge a huge price but miss the customer’s key objective, the source of return on investment. I would call this dilema “the folly of chasing A while hoping for B” if you will. So may God save the customers’ souls if they have deployed ERP already, and then save the vendors as well, since they will be out of the business soon after.
Coming next:
I.2. Over-customization and Lack of Process Best Practice Knowledge (or Marking the Side of the Boat)
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