So your organization is getting ready to start implementing an Enterprise Resource Planning (ERP) system in your organization. If you have never been through the process, it can be a daunting endeavor depending on the complexity of your business and the scope of the implementation. As you prepare to start this journey I would like to share five suggestions that I wish someone had made to me the first time I went through an ERP implementation. Depending on the type of project, some suggestions may carry a bit more weight than others. I am not saying you have to take all five suggestions to heart on every type of project. Just consider how applicable each one is to your situation, and make your best judgement. Some of these suggestions have a cost, but relative to the overall cost of an ERP implementation project, the costs should be relatively small and the payback substantial.
1) Start with Clear Vision of Success for Your Project
In order for your project to be successful, what has to happen? Obviously going live on time and on budget are important, but that was not the reason the project was initiated. Your goals should be clearly stated in your business case and shared with the project team. Specific, Measurable, Achievable, Relevant, and Time Bound goals for your project should be your North Star. They should guide your decision making and should be reviewed throughout the life cycle of the project to make certain that what you deliver meets the objectives of the business.
Avoid vague or ambiguous statements in your vision for success. Adjectives such as transformational or revolutionary are inspirational, but practically useless when it comes to designing a new solution. What does that mean? If you are a brick and mortar store than needs to change to compete with online companies such as Amazon, then say so. Draw a vivid picture of what your business must become to continue to succeed in the future. It is easy to say in a paragraph or two, but much harder to do in real life. It takes time, and it takes leadership.
2) Find the Right Executive Sponsor and Change Champions for Your Project.
Executive sponsorship can make or break your project. Executive Sponsorship is ultimately responsible for the project, and will be the ultimate champion of the vision articulated above. Your executive sponsorship should work with stakeholders, and build a network of change champions that will be part of the core implementation team as well as the line managers running the business after you go-live with the new solution. Change is one of the most difficult things to manage in an ERP implementation. It does not happen without the support of key people throughout an organization.
Executive sponsorship will also engage with the organization’s senior leadership team to ensure the resources are available, that the project has priority in the organization, and assists in resolving conflicts between the various stakeholders. If you are very fortunate, your ERP project will be the only major change initiative active in your organization. Odds are, that will not be the case. In that environment you may be competing for resources for your project, priority in the organization, and you may need to be working to coordinate and align your design with other projects.
You need executive sponsorship who will be engaged and visible throughout the duration of the project. Sometimes a Director from the IT group or CIO will serve as the project sponsor. You are implementing a computer system, after all. However, I am always a little wary when the project sponsor comes from the IT group, rather than the business. The greatest impact of an ERP project is to the business areas that are within the scope of the implementation. That is not to say that well respected IT leader cannot be the Executive Sponsor, but if you are trying to drive change in the business, having a business leader lead the effort may be a better option. After all, an ERP project is really much more of a business project than an IT project.
3) Focus on Meeting Business Requirements Without Customization
One of the biggest traps to avoid when implementing a new ERP solution is to recreate all of the existing functionality of your legacy systems inside your new ERP solution. This is a very common occurrence. Nothing crushes your budget or schedule like large amounts of complex customizations. Moreover, if you invest a large amount of money to rebuild all of your existing functionality so you can continue to run your business using the same processes you have today, why implement a new system?
To illustrate this point, look at the list of reports your users will provide in the requirements gathering phase of the project. In their mind, the new system needs to be able to produce all of those reports in order to meet the user's requirements. However, those report are not the business requirements. Those are the user's current way of fulfilling the business requirements. It is important to dig into how those reports (or any other functionality) are used and why. There maybe many layers of legacy functionality to sift through before reaching the actual business requirement. Once you have the business requirements always strive to find a way of meeting the requirements using the inherent functionality in the ERP solution you have selected. Sometimes this means significantly altering the way one or more business processes are done.
I am not advocating banning all customization, but be selective and use it cautiously. Sometimes there is no practical way to meet a unique business requirement with an off-the-shelf solution, or the change to the business is too profound/risky. I have seen companies require executive sponsorship approval on all modifications. I believe that is an excellent approach so long as the sponsorship is willing to challenge the implementation team on each customization.
4) Invest in the Core Implementation Team
The core team is the group of people from your organization who will work closely with the consulting team to implement your ERP solution. Who you select for the project and how they prepare for the project can substantially impact the success of the project. Try to select the best possible people for your project; people who know your organization, your existing processes and systems, and your culture. Try to select people who have credibility within your organization so that others will listen and trust them when the new solution is rolled out.
There are four ways to invest in your core team:
- Backfill for core team members so they do not need to try to do their day job at night while spending their days working on the project. Most ERP projects demand a substantial amount of time from your core team and managing conflicting demands of regular business and project activities will slow the project down and cost more in the long run.
- Train your team on the new ERP system early in the project. This is something I always recommend to clients because the more your core team knows about the new system’s capabilities, the more informed that design sessions with the consulting team will be, and the better the core team will be able to understand and assess any proposed solutions that your consultants might offer. Do not rely exclusively on your consulting team to learn your business and propose how the ERP system should be implemented. Your core team and your consultants need to be able to work together.
- Your core team will not know everything there is to know about every process and role in your organization. Help them to identify where the gaps are in their knowledge and provide Subject Matter Experts (SMEs) to support them in areas where they have responsibility but are not considered SMEs themselves.
- Create a team environment and foster that team mentality at every opportunity. ERP solutions are integrated solutions. One team member’s output will be another member’s input. People need to be able to work together in a shared space with quiet areas to work individually, and meeting space for group discussions and workshops. Do not be afraid to sponsor a few team building events, and acknowledge and reward the team when people make extra effort to achieve a deadline.
5) Manage Stakeholders and Change Throughout the Project
Change management is a core component to most ERP implementations, and often it is overlooked or thought of only in terms developing and delivering training on the new system. However, it really starts early on with that vision of success and how through the entire project will you move from your current state towards the desired state. The path of change to that desired vision of success never seems to be a straight line. It is an ongoing process of negotiation between what the business is willing to do, what the ERP solution you selected is capable of doing, and ultimately what is best for your organization.
In most ERP projects you should perform a stakeholder’s analysis to identify everyone who will be impacted by the project and/or who can impact your project, and establish a plan for managing the different stakeholder groups. Make certain you are communicating with key stakeholders throughout the project. Business Process Owners should be consulted on any significant process changes, and the reasons for the process change should be clearly communicated. At the end of the project, the system will need to be accepted by the business. User acceptance testing should not be the first time the business sees the results of the team’s effort. You may find a much higher level of resistance waiting until the end to review all of the proposed process changes, than if you actively communicate with your stakeholders throughout the project.
If you are just starting the path to implementing an ERP solution, I hope you find these suggestions helpful. However, do not stop here. If you have never implemented an ERP solution, you probably do not know what you do not know. Take some time to do your homework and gather lessons learned from others who have gone before you. This might be on a reference call when you are selecting an ERP package, or by reaching out to user groups for the ERP solution you are implementing. The more you can educate yourself and your organization early on in the process, the greater your odds of success.