Laying the Foundations for a Successful ERP System Implementation
We have recently been undertaking some improvements to our home, which has proven challenging/frustrating at times. During this, it occurred to me that there are a lot of similarities between building an extension and selecting and implementing an ERP system.
I therefore thought it would be useful to summarise the foundations for a successful ERP project, to help avoid some of the common pitfalls:
Fully define your requirements before evaluating ERP systems
Just as you would design a house extension around your family requirements, an ERP system needs to be configured around your business needs.
Before evaluating potential ERP systems, consider and document the objectives for the project and the benefits you want to realise from what will be a costly investment.
Review processes and identify opportunities for streamlining them, quantifying the benefits this can bring to your business. Use this to help develop a business case for any ERP investment and inform your budget. Importantly, also use this to measure the success of the project once the new ERP system has been implemented.
This will provide prospective ERP vendors with the clarity they need regarding your needs and expectations from the project. This ensures they understand what success looks like and, ultimately, how they will be judged.
This process-driven approach also helps to engage people in the project and secure buy-in to the changes to processes that will be required. People are inherently wary of change, so it is critical to involve them in defining new processes. You do not want to spend lots of money on a new system to replicate how you currently work.
Specify a future proof ERP system, but manage the scope
Selecting and implementing a new ERP system will involve significant cost and disruption to your business. It is not something you will want to repeat for some time.
Therefore, it is essential that you consider your business growth plans. This will ensure you select an ERP system that can support your changing business requirements as you grow.
This, however, can be something of a balancing act.
A less capable ERP system may not support your future business needs, and may require the far greater cost for development or replacement in a few years time.
Conversely, you need to be wary of selecting an ERP system that is overkill for your business. It could prove impractical for you to implement, due to the vast scope of functionality available and time required to implement it successfully.
Define clear objectives from a new ERP system and quantify the benefits you expect from it. This will provide focus on the critical requirements for your business and help you gauge the level of investment you can afford. This will also help you focus on the key elements when evaluating potential systems.
Evaluate potential ERP systems and vendors thoroughly
You need to evaluate potential ERP systems against a detailed specification of requirements. Choose vendors based on their track record, accreditations and cultural fit with your business.
Don’t be tempted to cut corners
When selecting and implementing a new ERP system, with costs in mind, it can be tempting to short-cut the evaluation process. Some business go light on defining their requirements, and jump straight to speaking to potential ERP system vendors. This is done on the assumption that vendors will be able to configure their system to any customer’s requirements, using their experience of working with other businesses.
However, there are significant risks associated with this.
ERP vendors sell and implement ERP systems. They are not business analysts. They do not have the resources to review your processes and manage the internal change that will be required within your business. Ultimately, their focus is on what they can deliver, rather than what you may need for your business.
ERP vendors need clear project objectives and system requirements against which they can deliver and be measured. If you provide them with this, it gives you both the best chance of a successful ERP implementation.
Don’t fall into the trap of thinking you can cut corners when selecting a new ERP system by asking ERP vendors to tell you what you need.
Effective ERP project management is critical
Develop a detailed plan defining the deliverables for the project against which it will be managed.
Consider the disruption that implementing a new ERP system will have on your business and the resources needed for it to be successful. Ensure that everyone understands the time they need to commit to the project. Do not under estimate this. Back fill key roles where needed.
Ensure you have a clear understanding of any specification document produced by a vendor before you sign it off. This is the blueprint against which your system will be built. If you are unsure of anything or need some additional information, make sure you ask before it’s too late. Ensure that all relevant people within your business are involved in the sign off process.
Consider independent, external ERP advice
If you do not have the internal experience/skills for a project, engage someone who does who can help you. This is where an independent ERP consultant can be invaluable. A good one can guide you through the process and ensure you avoid the many pitfalls associated with selecting and successfully implementing an ERP system.
If you want to discuss how AHC can provide you with independent support in defining your requirements and successfully selecting & implementing an ERP system, contact us to find out more about our approach and track record.