ERP is a massive Change-Management exercise. It can catapult the organization to a higher level of performance with increased process effectiveness, considerable cost savings, customer satisfaction and consistent order fulfilment.
However, just like any other project there is a probability of failure of ERP implementation project too. It has been reported that the ERP does not fulfil most of the customer’s expectation in more than 60% of implementations. Large Conglomerates with million-dollar ERP implementation budgets have also failed in their first attempt of ERP Implementation. There are classic cases like Nike, Hershey, Revlon, Nestle, Lidl, HP and others who learnt their lessons, the hard way.
Small and Medium sized organizations (SMEs), cannot afford multiple attempts to transition from legacy systems to ERPs. It becomes much more important that SMEs adopt a measured approach and make all efforts to de-risk their ERP implementation project. ERP implementation is a resource-intensive exercise both in terms of money and manpower deployment. SMEs, specifically, cannot afford any failures as it will impact them in financial terms as well as impede their future growth.
We have some suggestions to make which will act as catalyst in the success-story of your ERP implementation project.
Do-it Yourself Approach – The owners / founders know their business, the best. However, if a person has not gone through an ERP implementation exercise earlier, it is difficult for him to understand the intricacies of ERP and how best to utilize the features and functionalities of ERP. ERP is a generic software which is designed to be configured to meet needs of different businesses and address uniqueness of their business processes. It is beneficial for business owners to reflect on their existing business practices, but also look at the best practices. A small study on business process re-engineering would take into account all the best practices for the specific industry which are available in the ERP software. Therefore, it is imperative, that business owners engage some experts to augment their team, which will also be busy with day-to-day production and operations. It will compress the implementation time and also help business owners get a third-eye to look at various business processes.
Internal Team Selection – When taking up a new project, generally, there is a tendency to engage people who are available rather than putting in best equipped resources, as, most of the time, these same resources are critical for business-as-usual. However, considering the nature and criticality of the ERP implementation project, it needs people who understand the business processes, in-and-out. Therefore, business owners should select the internal team with care. They may like to provide additional manpower support to the key-user from respective department so that the person can spend time both on his normal duties as well as the time and effort required in the new project.
Data Cleansing & Readiness – One of the most important, time-consuming and mission-critical exercise for ERP implementation, is the data readiness. The business may have an existing / legacy software in use, which might make it a little bit easier to collate the data. However, the ERP needs data in specific formats with specific mandatory fields. Additionally, the data tables like, Item-master, Customer-master, Vendor-master, BOM & Routing, Chart-of-Accounts etc, require a lot of attention and consideration to finalize. The business owner or the managers may like to review the existing data thoroughly to ensure that any duplicates, items not in use or obsolete, do not find their way into the new system. Data cleansing and readiness is very critical and time consuming. It needs time and resources to get it right.
Communication – Like most of the big organizational level projects, ERP is also, largely, a Change Management exercise. One of the critical pillars for change management exercise, is Communications. You have to engage and inform the whole organization. The benefits, change in the way-of-working, expectations from each role, has to be communicated effectively. One of the major concern of employees is that any automation or software implementation may result in job-loss. You should have a strategy ready to deal with this issue and concern and communicate it to your team.
Top Management Commitment and engagement – As mentioned, since ERP implementation is an organization level change, the top management needs to be on-top of the project status all the time. As mentioned before, it is important that it meets with the future needs of the business, hence Business Owners must be engaged in design of governance and management information system. The business owner should also have involvement, buy-in and commitment of all the top management team members. This is critical to success of ERP Implementation.
Training – ERP is a new way of working and requires training and practice by each of the team member involved. Business Owner must factor-in sufficient time and resources for training before Go-Live. The contract with implementation partner must include required training days and methodology so that the team gets sufficient knowledge on navigation in ERP and operate it from day 1.
Testing – Users can only ensure that the system works as per requirement by extensive testing and by conducting functionality checks in ERP. This is very important. Time and resources, both from internal team and ERP implementors, need to be planned and deployed for testing each and every functionality, every report, every scenario and every work-around. Without this, the users may be in for unpleasant surprises once they are “Live” on the system.
There are many other success-factors, including selection of right product and implementation partner, planning and control mechanism, infrastructure readiness, etc, which can make or break a project, but I have focused on points that need to be taken care-off during the actual implementation of ERP.
All the best….