ERP Implications of Realism – Theranos Cuts Workforce – Update

A few days ago, we used Theranos as an example of the way tech companies are often more optimistic about their own technology than warranted. Today Theranos announced that it are closing blood testing facilities and eliminating 40% of its workforce.

Does this mean it’s bad tech?

Truthfully, I don’t think so. Theranos might (note that I said might) come up with a revolutionary product. The issue is that they got ahead of the curve and sold more than the product would actually do. Some day, the company might release a product that is marketable, or even revolutionary. Since I don’t have insight into the company’s products or market, I don’t know. How this applies ERP systems does interest me.

Realistic ERP has benefits

ERP (Enterprise Resource Planning) either changes the game or just improves it. Businesses with some degree of automation of operations (not just accounting) will likely find that ERP is provides improvement. Automating manual processes improves efficiency. For example, a company shipping manually (with a vendor product) that implements integrated shipping improves shipping efficiency. EDI makes ordering and receiving more efficient, depending on the specific messages implemented through EDI. Manufacturing companies find that MPS (Master Production Scheduling) increases efficiency and customer service. But these are not the end  of the benefits.

Second Tier ERP Benefits

The biggest benefits often come from second tier features of the system. A second tier feature is one that requires implementation of other features. In the examples above, a second tier effect of integrated shipping is the ability to quote shipping and rate shop at order entry time. Salespeople can propose rates to customers. EDI can automate restocking of key inventory; orders are transmitted to suppliers when products fall below set levels. Finally, implementing MPS effectively will enable the use of Order Promising. This allows order processing to calculate the earliest delivery date of particular orders, even for manufactured products.

Why harp on Theranos?

So if I’m really interested in the implications of business software, why do I keep using Theranos (a company in the blood testing market space) as an example? I’m really pushing toward a principle: it’s important to understand technology–including both capabilities and limitations–before falling in love with it. The right process for implementing technology involves knowing both your business and technology and matching the two.

Expectations are terribly important in this process. Expectations that are too high lead to disappointment or the feeling that the technology doesn’t work or won’t work. Expectations that are too low lead to reduced incentive to move forward with implementation. Realism is key. Many times, tech firms sell tomorrow and not today. Buy only today.

At the end of the day, technology and business software can make dramatic differences in business. Being realistic is key.