Many companies embark on an ERP project with an expectation that the new system will act as a magic wand to make all business problems disappear overnight.
The reality is however that ERP systems aren’t simply pieces of software. To get an ERP system to work for your business it is necessary to go through a focused exercise of determining what real business value it could add. Only once this question can be answered will you be able to ensure that the ERP investment delivers as much as possible value to the business.
In order to ensure a successful ERP implementation, you should consider a few key areas prior to initiating the project.
Don’t confine the ERP decision to the boardroom
Make sure you really know why you are embarking on an ERP project. Implementing a new system just because your current system is old is not a good enough reason.
Actively apply your mind and collaborate internally with all levels of the organisation in finding the true reason for needing an ERP system. Know exactly what your current system – manual or old ERP – does. Not just what someone thinks it does. Ask an employee; “If you get stuck on your job, who do you ask for assistance?” You will be surprised about who really knows what is going on; often this is not the managers or supervisors. Make sure all these knowledge holders are integral to the project.
By speaking to the people who use the current systems on a daily basis you will get to know what works, what doesn’t, what is consuming too much time, and what is stopping people from being effective in their jobs.
Only buy what’s on the shopping list
It is extremely important to list what you need the new system to do before speaking to vendors. This will allow you to compare the core offering of the various vendors without getting lost in the fancy add-on features of a product or impressive-sounding project methodology.
Vendors must be evaluated on how passionately they care about your success; not on how many shiny features they can add to the software they are selling. These features are often used by sales teams to differentiate one software system from another, even if these features may be in the early stages of development.
Problems arise when these add-on features have become core requirements in the mind of the client and it turns into a custom development specification when it is realised that the feature does not work as advertised. This consumes additional budget and puts pressure on the project timeline.
As with grocery shopping, a good rule of thumb is to buy only what you need from a vendor you trust. Fancy features can be added on if there is budget and time available after the implementation of the core project.
Create an ERP team, don’t just choose vendors
By knowing very well what you need a system to do, and how you will use the data generated and analysed by the system to help you make better business decisions, it will become easier to choose an ERP vendor.
Once a mutual understanding of the design necessary to meet the business objectives has been established, all parties are in a much better position to negotiate project deadlines and budgets.
Implementation speed and project costs promised during the sales process should however not be the primary deciding factors.
Choose a services vendor that has a good relationship with their software vendor, but that is willing to form an even better relationship with you as client. Ideally, your services vendor should be willing to advise you on managerial or operational changes your business can make, even if the services vendor could make more money by selling you an additional piece of software to solve the problem.
When you find a vendor that can act as both business consultant and ERP implementation vendor, you will find that you work together as a team towards achieving the true purpose of your business.
Plan reporting first, and system design will follow
Make sure you really know what information you need to steer your business. It often happens that reporting, business intelligence, or analytics get moved to the back burner when budget and deadline pressures loom.
The problem with skimping on the layer that needs to deliver insights is that many companies go live with new ERP systems just to end up flying blind because reporting and information delivery was de-scoped due to budget constraints.
If you can’t see the data in a way that helps you make business decisions, the system will never see a return on investment.
Don’t underestimate the influence of clean data
Not even the most expensive ERP systems available can deliver useful results if the input data has poor integrity. Your data is never as accurate and clean as you think; there are always duplicated stock items with slightly different spelling, different stock codes from different vendors for the same thing, and duplicated customer and supplier master records.
Make a concerted effort to clean up data before you start any new project. While this is hard work and requires focus and discipline, many ERP systems fail purely due to the quality of input data.
Make change management more than lip service
Your staff members all have day jobs that effectively keep them busy for a whole day. Adding a new ERP project onto their plates will lead to overburdened employees that aren’t motivated to help achieve the project goals.
Consider hiring temporary workers to lessen the day-to-day burden of employees so they can focus on the successful implementation of the ERP project. Develop incentive programs for your staff to ensure they are rewarded for the extra work they need to perform and to ensure that are vested in the success of the project.
Lastly, make sure the KPI’s of executives and senior managers are aligned with the project. People act the way they are measured. You do not want an executive and their department to behave in competition to the project objectives because their KPIs requires different behaviours to achieve their end of year bonuses.