The Value of a Thorough ERP Selection
I know what you’re thinking, ‘Selecting and implementing a new ERP system is an expensive proposition’. Whether you’ve gone through the process before or not, it can be pretty daunting.
Many companies go blindly into reviewing and selecting new systems without following basic due diligence, which is staggering, given that it is likely to be one of the most important business decisions they will ever make. An ERP System implementation will impact every part of your business and its eco system, including your employees and potential vendors.
By looking at the common reasons why ERP selections and implementations fail, you can avoid the pitfalls and stay on the right path!
1. Are your ERP expectations realistic and achievable?
Problem: A combination of lack of definition of your detailed business requirements, plus oversell by the vendors. With one playing off against the other it’s a race to the bottom.
Solution: Before you even think about contacting any vendors make sure you have fully documented your requirements with a ‘scoring’ or ‘grading’ system. This makes sure that you can easily compare the solutions you decide to consider. However, if you don’t have the skills to do this inhouse, google ‘ERP Advice’ to find an independent advisory organisation who will be able to assist you.
2. Are you putting shiny new technology before your people?
Problem: Underestimating the role of your employees and ignoring the very culture of a company. Most companies think that change management is simply a retraining exercise, it is not!
Solution: Yes, we all want the best available technology but don’t make this your sole focus. You need to put organisational change management at the front and centre to make sure the transformation is as smooth as possible. Listening to and managing the worries and requirements of each area of your company will create a high level of buy-in to move the process along.
3. Do you really understand your business processes?
Problem: Being dazzled by your ERP options so you lose sight of what you really need to function.
Solution: Instead of investing in bells and whistles you don’t need, make sure the system you choose covers your current and future business processes. If you jump into a project without carrying out a thorough business process management assessment, you won’t understand how you currently operate. So, you won’t be able to make any critical process improvements in the future. If you select the wrong system you’ll be forced to invest in expensive, time-consuming customisations to get the software to fit how you work.
4. Do you have executive buy-in for the project?
Problem: Thinking the job of the executive team is just to approve budget!
Solution: If the executive team aren’t on-board the project is doomed before it starts. The executive steering committee needs to make decisions about resource allocation, timelines and budgets and then communicate them to the whole company. Executive involvement makes sure the ERP implementation fits into the company’s overall strategy to maximise benefits and competitive advantage.
5. Can you spare the time to fully train everyone?
Problem: People don’t understand how to use the system so they resist.
Solution: If users don’t understand how the new ERP software works, they’ll revert to their old, familiar workflows. To mitigate this risk and improve user adoption rates, you need to ensure everyone knows everything they need to do their job. So, training sessions led by the key business area need to take place before the system goes live so that employees have plenty of time to ask questions. Ideally, you should conduct multiple rounds of training to help employees retain information over time.
6. Do you know how clean your data is?
Problem: An ERP system is only as good as the data it contains. Transferring data from a legacy system into a new ERP platform can be challenging. However, it’s a necessary step unless you plan to start from scratch. And it’s a step that can’t be rushed.
Solution: Assigning the right person with the right skills to manage this task is critical. They need to know which data to transfer and what format it should be in. Have a plan to combine multiple data sources and add additional data to match the new requirements. This means they need an advanced understanding of how your new system works.
The ERP Selection Process
It’s often impossible to pick just one exact reason for an ERP project failure. It’s usually the result of multiple issues that compound each other, creating a domino effect.
After 30 years of developing, implementing, and managing ERP implementations it still surprises me just how many companies don’t take the time to prepare.
There’s a simple process to follow when selecting a system which includes:
- Understand why you need an ERP system
- Determine your IT strategy
- Build an ERP selection team
- Determine, score and document your business requirements
- Improve your business processes
- Determine a Data Management Strategy
- Build a long list of ERP systems
- Match ERP systems to your requirements scorecard
- Build a shortlist of ERP systems
- Schedule ERP vendor demos
- Conduct a Business Readiness Assessment
- Negotiate with ERP vendors
As you prepare for your own project, just do one thing: Ensure you understand common reasons for ERP failure and you will know what to avoid. And then you can put strongholds in place to ensure your project is a success