Selecting a new Enterprise Resource Planning (ERP) solution can be daunting for any organization, but once the selection process has been completed, the real work begins. The task of realizing value from this sizable software investment requires a thoughtful and methodical approach focused on solving real business problems. Whether you have selected Oracle, SAP or a manufacturing focused solution such as PLEX or Infor, it is extremely important to gather targeted requirements that focus on specific high-value business goals. This is the first step towards managing complexity, automation and achieving scalability.
We recommend the following critical success factors to any ERP implementation:
- Identify targeted business problems from an “As Is” Assessment
- Ensure re-engineering is complete before implementation begins
- Document ERP Requirements (Business, System and User Requirements)
- Build a Core Team (plus SMEs)
- Determine the Phase I Scope (Plans, Schedules, Milestones, Resources, Timeframes and Cost)
- Perform Risk Identification and create a Risk Mitigation Strategy
- Ensure that data is clean
- Conduct Conference Room Pilots to identify issues
- Perform full Test Cycles (SIT / UAT / Parallel)
- Educate, Train and Communicate with staff throughout the process
Having a diversity of skill-sets in business modeling, re-engineering, system architecture, integration, UX design and Change Management will help ensure your organization’s success. While these elements are critical to ERP implementations because of the enterprise scale and complexity, they also apply to other complex SaaS implementations such as HRIS, CRM, BPMs and CLM implementations.
Understanding the Vendors Perspective
In order to ensure a successful implementation, it is first necessary to understand the nature of ERP vendor motivation. ERP software vendors are perpetually trying to increase the value of their functionality and capabilities to solve more complex problems. This push to increase their per employee per month (PEPM) value is the goal of every software company. While this may enable a select group of Enterprise businesses to improve efficiency, it also serves to increase the complexity of implementing the software for the majority of users. The ability to realize results from an ERP implementation requires a maniacal focus on key value drivers specific to the individual organization. This focus can easily be lost in trying to understand the full capabilities of the software.
Specific value drivers need to be determined upfront, prior to the implementation, as they will drive the decision-making process over the course of the design and development phase. Understanding how the ERP software will positively impact internal and external business processes, end-user behavior and overall analytics is central to a quality implementation. This involves simplifying complex software functionality down to a manageable scope that aligns the software and integrations to specific business objectives.
Implementation Planning
Creation of a detailed implementation plan with key milestones is essential to achieving time to value goals. Manufacturing organizations that simply dive into the implementation without a plan can often end up among the 65% of ERP customers that have delayed or failed ERP implementations. Implementation planning should include accurate scope maps, budget and timeline estimates, resource allocations, project goals, risk mitigation plans along with training expectations for each of the stakeholder groups. In addition, advanced data migration planning needs to include time for data clean-up especially if the information is housed in heterogeneous distributed systems.
As part of the implementation planning cycle, integration analysis should also be conducted upfront. Our experience has shown that approximately 30% of the ERP implementation effort is absorbed by integrating existing applications to the new ERP system. Depending on the sophistication of the existing environment, parallel tests are also required to ensure proper Day 1 processing.
Change Management and Training
Analysts estimate that 60% or more of ERP implementations actually go over budget, and the average delay to “Go Live” is approximately four months. The primary reason for the delay is not technical in nature, but can be attributed to change readiness, organizational discomfort and lack of training. End-user training and IT operational readiness is essential to align the ERP solution to the newly created operational processes. The highest correlating failure factor for ERP implementations is insufficient investment and focus on organizational training throughout the entire project lifecycle.
One of the factors that impedes progress is resistance to change. Without training and a properly designed communication strategy, organizational resistance to unfamiliar processes and systems can mean implementation failure. This is especially acute in project involving a manufacturing lifecycle where order generation, procurement, production and post-sales activities are all highly inter-related. Complex operations such as manufacturing that rely on efficient predefined repetitive processes require a unique level of design thinking and analysis. Creating the proper ERP operational structures and automation upfront prevents costly system rework and ensures efficient scalability.
Conference Room Pilots
Another critical analysis tool during the implementation process is establishing a framework for process simulation in the form of Conference Room Pilots (CRPs). During these sessions, stakeholders simulate manufacturing operations, evaluate ERP functional configurations and integrations and identify issues that affect individuals and departments.
Organizations that conduct CRPs thoroughly are able to establish appropriate ERP workflow and reporting structures upfront that will facilitate their long-term success. Along with an experienced team, following these ERP implementation best-practices will lead to fully automated and accurate procurement transactions, optimized logistics, product lifecycle management, inventory and accounting accuracy and efficient shop floor operations.
Summary
HBSC Strategic Services works with a diversity of Future 1000 clients to evaluate, select and implement leading ERP technologies. If you are interested in rapidly digitizing your business by leveraging the latest digital innovations, HBSC can help. For more information, please contact us at client-development@hbsconsult.com or call us at 1-800-970-7995.