Implementing enterprise resource planning (ERP) systems can be hard, expensive, and risky. Most companies need them and many companies dread it. Fortunately, the last several years have brought with them a plethora of innovations in enterprise software, many of which make it faster and easier to implement robust ERP systems – particularly for mid-sized companies.
At Citrin Cooperman, our Strategy & Business Transformation practice built a modernized selection process from the best of the old methods and the highest value of the new technologies. In this article, our specialists provide a few insights from our experience in choosing and implementing these systems in a new world.
You are no longer simply selecting a software product and an implementer. You are now designing the business concept for your ecosystem of solutions. ERP vendors have become much better about building industry-specific functionality into their products, which means it isn’t as necessary to focus on basic functionality of the systems but is even more necessary to identify the small number of truly value-added features that will be important to how you operate your specific company. Therefore, when selecting a new ERP solution you’re really doing three things –
Do not short-change selection. A good selection process will define a set of solutions that will drive demonstrable value to the business. Selecting the wrong system creates a lot of challenges: it is expensive, hugely disruptive, and even more resource intensive to change ERP systems in quick succession. Although a robust selection process adds some cost up-front, it greatly reduces business risk and in most cases, reduces the total long-term cost of ownership.
Among the benefits of a modern approach to ERP is that it’s easier to break the project into multiple phases. The leaner the company, the smaller the phases should be. This improves your chances of success, as long as the phases and interdependencies are thought-through.
This allows you to:
Again, this should be thought-through – at least conceptually – up-front. You can adjust how the phases are broken down as you go, but knowing which features of the system need to be designed and integrated approximately at what time is important.
A significant part of the project’s budget should be invested in getting people to change. Good ERP implementations do more than put new systems in – they transform the business with better structure and processes too. That’s a lot of change for people to absorb.
Good change management starts during design by involving people who will make sound, forward-looking decisions and have credibility with their peers. It involves constant communication about what is changing and why. Of course, it involves a customized training program, preferably one that uses case studies and simulations to teach people how to use the new system in a real business context. Additionally, it doesn’t stop when the system goes live – it continues for months afterwards, reinforcing the benefits, creating new reference materials and 1-on-1 management, and announcing what is changing and how the solution is being improved.
It seems obvious, but disciplined project management is crucial to big, complex projects like these. It is easy to try to shave project costs by limiting project management but that nearly always ends up hurting you in overall project cost and quality. There is an art to having a tight project plan that is carefully resourced, with clear dependencies and vetted timelines. Likewise, things like issue tracking and status reporting need to be done in a manner that follows best-practice disciplines and is tailored to the company’s culture and style.
This is an area where outside project managers can make a big difference. Most companies don’t have people who have managed a lot of these projects, fewer have people with the time to manage them, and there is often value in an independent party who can hold both the vendors and the client accountable.
When done right, ERP can add tremendous value to a business. If you follow these guidelines and select the right long-term partners, your company can be successful too.