Updated ERP systems offer several improvement opportunities for organizations such as integrated processes, enhanced capabilities, and ease of information sharing and collaboration. Many executives, however, argue that the promised results are not delivered from their ERP investments. Most often, after we evaluate these ERP project efforts, we come across a number of mistakes regarding the initiation and execution of the project.
Here are a few key elements organizations must consider in order to achieve significant results:
- Business Vision – In order to properly plan for a strategic solution such as an ERP system, organizations must have a clear vision that includes well-defined goals and objectives for the next three to five years. It’s critical to have an understanding of which new products, customers, and markets your organization plans to pursue.
- Technology Plan – ERP systems are technology solutions and as such must fit within your organization’s technology stack in order to be better integrated and managed with other systems and applications. Not having an overall technology plan could result in selecting an ERP system that will not be the optimal technology fit for the organization.
- Formalized Evaluation Process – Many organizations confuse participating in ERP demo sessions with conducting an evaluation process. Software demo sessions are fine-tuned to achieve a vendor’s sales goal and, as such, are not directed towards addressing a client’s detailed needs. Having a formalized requirements document
and a well-thought-out evaluation process are essential.
- ERP Team – It’s important to have the right number and mix of people involved in the selection process. If only a few individuals are involved in the process, there is a risk that others may not accept the system. On the other hand, involving too many individuals may be inefficient and cause the decision-making process to be difficult. The best approach is to have an empowered team of representatives from each department act as an ERP team on behalf of the organization in the evaluation process and provide updates to executives and all other employees on a periodic basis.
- Realistic Implementation Plan – Many organizations are not experienced with ERP implementations as they may go through such an exercise only once every 10 to 15 years. It is very common for ERP proposals to be loaded on the software module and licensing side and be very light on the services side. Initially, vendors sell as much software as possible so that customers will need to purchase additional services down the road. It is critical to establish a realistic set of goals and timelines before committing to a solution and ensure they are incorporated in the vendor’s proposed implementation plan. This entails listing resources needed not only from the vendor but also internally within your organization.
- Implementation Resource Mix – In order to have a sustainable solution over the long-term, organizations cannot heavily depend on external consulting resources for their implementation needs. External resources are not employees and will not be there afterwards to ensure the system is continuously improved after the initial Go Live. Significant benefits are derived after the initial implementation period when internal resources act as process champions to leverage the new ERP tools in order to introduce new capabilities within their departments. Internal resources must work in conjunction with expert consulting resources to capture their expertise and apply it to future improvements that will benefit the organization.
- Training and Change Management – Our experience has shown a direct correlation between the amount of time spent on training and the ability to manage change with a new ERP system. Less training results in less change management, which in turn results in the organization doing things the same way it did before but with a much more updated and expensive application. This usually leads to the development of extensive customizations or creation of side systems (e.g., Excel spreadsheets) to make sure the old ways of doing things are not abandoned.
These are truly exciting times for middle market organizations to leverage emerging ERP technologies in order to grow their capabilities and flourish in the marketplace. Carefully considering the fundamental elements listed above could significantly improve project success rates.