The key facts behind a successful ERP implementation
There is no question that today’s organizational challenges are best managed by Enterprise Systems that marry Best Practices with internal requirements. The problem resides in actually forming an effective, efficient and cost-effective solution to a multitude of problems while dealing with numerous interests, all of which are pulling in opposite directions.
There are three components involved in an ERP implementation exercise.
- The software provider who’s objective is to sell a basic package at an apparent low cost, while insuring that in the long run, you will be saddled with a multitude of modules purchases and maintenance contracts that will make you a life-long captive customer and generate fees for years to come. Very few companies consider the life cost when signing up for a particular ERP package
- The implementation consultant whose revenue depends on the length of the exercise and the number of consultants involved, thus defeating the main objective of the client, which is to insure a quick and effective implementation with controllable cost.
- The client (you) who’s primary goal is to deliver on the promise land of efficient management at a predictable cost.
For obvious purpose, I maybe using generalizations but they all stem from acute personal experiences, across ALL major platforms, using a number of top-tier implementation partners.
The suggestion that these three contributors are ineffective or cross-minded in any way could not be further from the truth. In fact, leading ERP providers are world-class and very good at what they do. Their solutions use a multitude of Best Practices and are incredibly effective at delivering what they promise. There are a multitude of factors to consider when picking a software solution but once a thorough due-diligence is conducted, your company will benefit from increased efficiencies, centralization of data, improved communication and accurate reporting amongst others.
The key resides in the implementation process, which in itself has the potential to dilute a good percentage of the benefits.
For the purpose of this article, we will assume that, as the CEO, you have already made a decision on which provider to use as your ERP package. This is valid for both an in-house or cloud based hosting of the system. Let’s also assume that you are a multi-location / multi-disciplinary company with sites that are physically decentralized.
The main reason you chose to upgrade to a new ERP platform may be due to a number of acquisitions over the years that have led to a multitude of internal systems, that do not speak to each other or require various level of updates on internally developed solutions for which the expertise has long departed your organization. You suffer from poor communication, ineffective internal controls, the inability to standardize process, increased lead-times, excess inventory, etc.
Your platform provider will undoubtedly tell you that they work with 3rd party consultants that are “certified” and have been trained to quickly and effectively translate your needs into customization of the software platform.
You will meet with a number of the proposed consultants, discuss your expectations, negotiate a price based on your common understanding and buy into a team that is presented to you as the cream of the crop in this consulting organization. The lead consultant will spend days with your senior team, going over a preliminary analysis, predicting what he and his team can do to minimize cost and facilitate the process at all levels of your organization.
You are sold! The price is right, the timing is perfect and you really like the team in front of you.
Here is the rest of the story…
On day one, you will be asked to form an internal ERP panel, empowered to deal with both internal needs and implementation direction with the consultant team.
Most companies are told to pick representatives from all departments and very often, picking this team is left to various senior staff or in some cases to the IT team, which is often “in charge” of the project.
- Start from the bottom up. The biggest drag on implementation will be resistance from the rank and file, who are not adept to transition or change. The staff is faced daily with tasks that are not immediately clear to middle or upper management and eliminating misunderstandings upfront will save you tons of time, effort and dollars in your implementation efforts.
- As a CEO, you must be involved and omnipresent at every ERP related event in the early phases of the process. As previously mentioned, no one embraces change willingly and having the CEO involved early and often will drive the process and convince everyone that this is a top priority.
- While the IT department is the most adept at dealing with technical issues, they are often the least informed in terms of Industrial or Commercial necessities. They will often go for solutions that they favor based on their training and experience. They are not the best solution in running the exercise and should serve in a support and facilitator role.
- Rather, plan ahead and hire an ERP czar with years of implementation experience, while making sure they are not beholden to the Consultants. Give this person full powers to implement the direction that you and your Board will have determined in advance. Any deviation should require prior approval.
Soon, the team will make good progress in mapping out the internal systems as they stand and starts mapping out how to best integrate those systems into the new ERP package. This is called customization. STOP!
In my opinion, customization is the single largest cause of implementation delays and failures known to man. The consultants are happy to accommodate this customization request and if left unchecked, will cause thousands of hours of work and not necessarily deliver the efficiencies and cost savings you envisioned when embarking on this ERP journey.
We have already determined that your key reason for spending hundreds of thousands of dollars, possibly millions, into a new ERP system is to eliminate the internal inefficiencies in your organization. We have also talked about the fact that employees are notoriously opposed to change.
Why would you consider taking an inefficient process and bake it into the new one?
Rather, you should:
- Realize that your platform provider has the benefit of thousands of installations and millions of customer feedback in terms of Best Practice and Efficiency.
- If at all possible, you should use the package, as is, out of the box and ban all customization, save some specific issues, such as customer facing requirements. When possible, your internal systems should be adapted to the Best Practices baked into the package and make appropriate internal changes to match those practices. This is not easy and will require internal soul searching, retraining, radical changes in attitude and work methods, but in the long run, you will achieve this internal efficiency that has eluded you for so long.
- All customization, big or small, should be debated at the highest level and require an approval by the CEO before it becomes instructions to the consulting team.
With these few recommendations come dozens of important does and don’ts but none more important then the need to go through a deliberate internal soul searching process, prior to making any decisions on a method, a provider or a consultant. Any time you spend up-front, discussing the options with those of us who have gone through the process numerous times or with your peers will save you countless months of agony during the implementation process.