This is the third in a three-part series on developing an enterprise resource planning (ERP) strategy. The first article explored the steps to take when determining the need for an ERP system in your organization. The second article offered a step-by-step guide for finding an ERP vendor.
Now that we've examined how to evaluate your ERP readiness and how to purchase the right system, let's look at the burdens of an ERP implementation and the organization's responsibility in meeting them. At the same time, let's consider how to maximize your organization's ability to capture ERP's potential, boost your ROI and avoid common mistakes.
Define the ERP implementation strategy
Even with a perfect business survey and total understanding of the enterprise, any organization faces formidable implementation challenges regarding ERP. Any true IT leader has experience with other projects and core implementations, and knows this: Not only is the human equation involved (by virtue of changes in methods, practices and jobs), but all of the organization's data, enterprise programs and systems also are up for review and potentially radical change.
As with any major business or IT change, define the ERP strategy in advance. Avoid going into any aspect of ERP if the business has a murky understanding of the technology, or if IT is making assumptions on the business' behalf. Business drives business, with suggestions and support from IT. Do not proceed into any area without proper business understanding and sanction.
Be certain to complete a comprehensive survey that captures whole-enterprise resources for true ERP and management. Don't overlook efficiencies to be had, costs to be cut or shared, redundancies that can be eliminated, and customizations that can be "umbrella-ed" over multiple areas or process -- or that can be repurposed to other areas with minor tweaks.
What to avoid in an ERP implementation
The experiences of other organizations should help you avoid common mistakes, so perform due diligence as you would with any change management program. Keep in mind this survey conducted by Panorama Consulting Group LLC:
- More than half of companies that implement ERP systems get no more than 30% of the business benefits they expected.
- Of the 1,600 organizations surveyed, 72% said they were "fairly satisfied" with their ERP package. But this can be misleading, according to the study: "Some executives are just happy to complete projects ... and give little thought to whether or not the company is better off with the new software or whether or not they're getting as much out of the system as possible."
- More than half (51.4%) of ERP projects went over budget, and about 35% of the respondents said their projects took longer than expected, the survey found.
How to avoid mistakes in an ERP implementation
The IT leader must engage the senior executives, achieve full-business buy-in, hold business' and stakeholders' feet to the fire about defining needs and expectations accurately, deliver ERP as a jointly owned system, and enable and ensure best use -- and that's it! Easy, right?
Highly recommended is a business implementation team (BIT). It's headed by the IT leader, and involves key business stakeholders and IT staff members, who are steeped in knowledge about your organization's business processes from the front- and back-office perspectives. The BIT must be recognized and sanctioned by senior executive management, thus ensuring engagement of members who are fully committed to traction and forward momentum.
By branding the team a business implementation team (as opposed to a technology implementation team or, in this specific case, the ERP implementation team), the emphasis is where it belongs -- on the business of the organization, the business process and the business people. This is an important cultural distinction for the team and its subsequent engagement with ERP: It protects the IT leader and staff so they don't get too far ahead of business' desires, understanding and fully vested participation.
- First and foremost, ensure executive support: Know where you stand, what your sanctions are and the levels of support for every aspect of ERP. Executive buy-in is vital to ultimate success.
- Diagram existing business processes and map existing workflows, have "business eyes" acknowledge their accuracy and document them with a business sign-off.
- Diagram proposed changes to business process and new workflows in service to the business.
- Expose any "shadow" systems, procedures, workarounds and so forth, that fly under the radar. Unless it's absolutely necessary, avoid continuing them because they would obviously undermine ERP's advantages, reach and purpose. (In fact, your survey of the business should help tease these shadow processes out, and assist in documenting and formalizing them.)
- Ensure that financial support exists for customizations.
- Develop ROI measurements and analysis to expose present opportunities (and initial customization needs), as well as evolving opportunities against which you can assess the adaptability and affordability of an ERP system.
- Ensure that expected levels of customization are supported by available or future staff, and that consolidations of resources and any job eliminations are fully understood so as to serve true ROI. As such, the human resources department (HR) should have a presence on the BIT.
- It may sound obvious, but management and end users must be involved in every step of ERP implementation planning. Seek feedback through all steps and brand ERP as our shared system driven by business.
- In concert with business, define intentions and goals. Establish metrics for progress and the rapid exposure of problems for fast resolution during the implementation period, as well as use post-delivery.
Avoid going into any aspect of ERP if the business has a murky understanding of the technology, or if IT is making assumptions on the business' behalf.
Determine whether a phased or all-at-once approach makes sense for your enterprise. The all-at-once approach may create too much disturbance and interruption, so part of this decision will be determined by the overall skill, culture and willingness of the organization's business and IT staff. It will also be determined by the expectations of senior executive management and their sanction.
Organizations that have weathered comprehensive, challenging implementations have the experience, and therefore the culture to remain positive and push toward ultimate success. If your IT staff is a little green, or if your business counterparts are nervous, you may be better served by a phased approach.
Post-ERP implementation considerations
A post-implementation assessment of your ERP system is an important step, and should be followed by periodic reviews and actions:
- Following delivery, have an established roster of surveys and measurements to expose level of use versus best (expected) use of the system. Be prepared to modify and institute better surveys according to needs.
- Deliver survey results to senior executive management and respective functional business areas.
- Help the business carry out ERP's effects: Close gaps in performance, conduct training, make suggestions, seek advice from the vendor and so forth.
- Place specific surveys and responsibility for reporting in business areas -- in other words, tether ERP's ROI to stakeholder observations.
- Guide all post-delivery business engagement regarding ERP through this prism: the maximization of all efforts toward best fit and best use.
- Survey for routine updates.
- Survey to anticipate necessary corrections.
Bottom line: Ensure sanction from senior executive management to make certain there is full stakeholder engagement in each functional area of business that comes under ERP's influence. This will serve the implementation and its associated challenges, and will ensure ERP's best use for maximum ROI.
David Scott is a Fortune 100 IT professional. He is the author of I.T.Wars: Managing the Business-Technology Weave. Contact him at David-Scott@david-scott.net.