Do and Don’ts in ERP Implementation
The implementation of ERP systems is complex. Up to this point, there has been an acceptance of the general use of the term ‘complexity’. There are various “Dos” and “Don’ts” affecting the success or failure of an ERP implementation.
Most experts in Information Technology agree that such failures occur far more often than they should. What’s more, the failures are universally unprejudiced: they happen in every country; too large companies and small; in commercial, non-profit, and governmental organizations; and without regard to status or reputation.
Some of the critical success factors, needing focused initiative, are appended below:
Involvement of Top Management: Senior managers are key stakeholders in any ERP implementation project; engaging and communicating with these key stakeholders is vital to the success of the project. A deep commitment and active involvement is needed from them and bare monitoring and oversight may not suffice. They should also ensure that the most knowledgeable executives are engaged in the project and released from routine functions whenever needed.
Providing Necessary Resources: An ERP project needs significant financial commitment and budgetary support throughout the project. Ideally, it should have been factored into the overall project budget, but often we find that organizations fail to adequately recognize internal project costs. Surprising the Top Management with additional unexpected costs is not to be recommended! If you’re involved at the budgeting stage then make sure to factor in all your costs, not only direct expenditure relating to the ERP package but a host of indirect costs such as integration with other software, gathering and cleaning of input data, archiving data from a legacy system, engaging expert/consultant, additional support need, provision for contingency, etc.
Selection of ERP and Consultant: Choosing the right technology is pivotal, as a wide range of ERP solutions is available ranging from monolithic and mid-market ERP solutions through to industry-specific ERP solutions. A variety of parameters must first be considered before a solution is chosen, including depth of functionality, future development path, flexibility to the changing business model, and Cloud versus on-premise reporting.
When it comes to choosing an implementation partner, it is best to look for companies that “aren’t tied to one ERP solution.” Companies working exclusively with a certain product will undoubtedly recommend that solution, which may result in better-suited products being overlooked.
Looking for a strategic partner involves finding one that is “stable, financially secure, well-referenced, and reliable.” An ERP project involves stakeholders and mission-critical business processes, which means a high quality of work is required, with the scope of customization and the need for technical support.
ERP Manager: An empowered project manager, supported by IT and functional experts and appropriate project management methodology, is key to the success of ERP implementation. Setting up of project team, resource allocation, milestones, and deliverables, etc form an important part of project management. Tailor-made training programs for different types of users and a predefined change management process are also crucial.
Legacy Information: If you’re implementing your new business management software, you may find yourself with a great deal of data from your legacy software. Now is the time to review this data and ensure that your new system will capture everything you need, and nothing extraneous. Review the data fields from your legacy system. Are all of those fields still useful? Now is your best chance to clean your old system of any unnecessary data fields. Maybe your business model has changed, so some data you used to capture is no longer important. Identify any information that you no longer need to capture, so the new ERP system can start fresh and run efficiently.
In some cases, you may still be using your legacy system for other functions. If this is the case then you may be integrating it with your new ERP software. In order to integrate systems, your team will need to review and clean any incorrect or redundant data. Next, you will need to develop uniform definitions that apply to both systems, so there is no confusion.
Implementation of Enterprise Resource Planning systems (ERPs) is a complex and costly process, which usually results in serious failures.
Some specific concerns of failures are mentioned below:
Unrealistic expectations: ERP system is not an all-cure silver bullet. Users often like to see an immediate improvement after installation. There are bound to be initial periods of frustration that may snowball, undermining confidence in the system.
Too much software customization: For many companies, ERP software is viewed as too rigid or restrictive. However, responding to a lack of perceived flexibility by customizing the software before fully investigating re-configuration options, business process workaround, or an interim period of trial before committing to customization can violate the integrity of the software, delay project progress, lead to excessive costs and impose a significant risk to project success.
Insufficient training: Implementation project teams and external consultants are famous for short-changing user training. It’s also common that during cost-cutting sessions, training is one of the first things to go. Don’t fall into these traps. Training is essential to leverage the system's capabilities and realize the benefits. Training updates in at least short bursts are advised after each new version upgrade.
Information overload: An ERP system contains hundreds of reports and queries. Too much information creates a lot of confusion amongst users. Notwithstanding information overload, many a time, users feel cheated as the system fails to generate identical reports to which they are accustomed.
Points to remember:
The success of an ERP project is governed by various factors including need assessment, the software is chosen, vendor support, and the capability of your organization to handle such a project.
Also, it is true that ERP software needs some degree of customization for every business due to varying needs.
But over-customization diminishes the value offered by ERP software.
It is a natural tendency of senior employees to further simplify the processes offered by ERP.
You should question every customization effort made by them.
Always keep the project manager and vendor in the loop if you plan to customize.