1. Avoid Budget Overruns
Why did respondents’ projects have budget overruns? Some of the main contributing factors relate to a lack of planning upfront – scope expansion, underestimated consulting fees and unanticipated organizational issues. Project managers and team members need to account for all of these things before ERP evaluation.
We can’t tell you how important it is to get the proper requirements gathered as you’re documenting your current state and future state. Many companies don’t have the proper requirements, and they can’t tell the story well enough to the vendor to have the vendor properly design the system.
2. Avoid Timeline Overruns
Why did respondents go over their original timeline? The time frame was the unrealistic, and that really goes back to not properly gathering requirements. Also, respondents experienced data issues, scope expansion and organizational change management issues.
Both timeline overruns and budget overruns can be considered an ERP implementation failure.
3. Focus on Benefits Realization
Many companies think they need all this advanced functionality in order to receive benefits. However, in our experience, as companies are implementing basic out-of-the-box functionality in phase one, they are receiving all sorts of benefits. Because of the new technology, users are figuring out how to leverage information and data differently.
An example of basic functionality that delivers benefits is workflow automation. The ability to automate processes, such as a purchase order approval, makes your organization more efficient.
After a year or two of basic functionality, our clients then start to pick and choose where they want to implement advanced functionality. That’s when they’re going to realize benefits tenfold of what they’ve already seen.
4. Focus on Change Management
The key lesson learned from these project results is to focus on change management. This is because . . .
Employee adoption determines the success of the ERP project. In many of our software expert witness cases, we’ve noticed that this was a key ERP failure.
If team members are not engaged in the project, they find ways to work around the system. You don’t want to invest in technology, take the time to implement it and then have users do workarounds.
5. Determine Your Ideal Implementation Approach
Many companies in our study are choosing a phased approach by module. Another popular approach is the big bang approach. Companies with multiple locations that use this approach typically don’t go live with all locations at once but choose one or two locations with similar functionality. Many of these companies implement basic functionality all at once, which accounts for most, but not all of the ERP system.
There’s not one right approach. What we do with our clients is determine the best strategy based on unique factors, like culture and ERP project team dynamics.
6. Use ERP Consultants
The report indicated that most companies do use ERP consultants for ERP projects. Working with a consultant is like having a fresh pair of eyes since the consultant is a third party. ERP consultants can walk into companies and ask, “Why is it being done this way?”
Companies will often answer, “It’s just the way it’s always been done to work around certain people or give certain people certain positions.”
Many respondents did not use consultants for process and change management, which is interesting because in my career as a CEO, that’s what we usually used consultants for. In my experience, consultants were useful because they taught us “how to fish,” and left us with deliverables and documents that could enhance our team’s performance in the future.
7. Define ERP Success
How should you define success? That’s a very interesting question because there’s many different perspectives, and every organization is going to define success differently. For executives, success if often about creating value for the customer, remaining competitive and achieving ROI. When you think about achieving ROI, you could achieve it from a financial perspective, but you can also achieve it via innovation and employee retention. Technology is just an enabler to all this.
From an end-user perspective, success might look like the ability to do your job more efficiently. Once people are trained on the systems, they realize the importance of data and the upstream and downstream effects.
For example, it’s very important for the sales team to capture the right amount of data around pricing. The proper input of this data has a ripple effect throughout the organization. If end users take the extra minute to populate more data fields, then other parts of the organization, like operations or finance, will benefit.