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Seven Steps to Successful ERP Implementation
Date: 02 November 2015

Every ERP (Enterprise Resource Planning) vendor or partner will have their own methodology. These are great but are inevitably supplier-centric. Here I have tried to jump back over the fence and provide a business-centric view on some important considerations when embarking on the journey of upgrading the system you will be using for the next 5-10 years.

Since being involved in my first MRP (Manufacturing Resource Planning) implementation project in 1990, I have been involved in many more implementations of MRP then, more recently of course this evolved into ERP. The success of these projects is not always easy to measure. It is certainly a truism though that it is only possible to measure improvement on that which we are measuring.

Seven Steps to Successful ERP Implementation Precise Business SolutionsStep 1 then must be to define objective criteria by which to measure the project success, which should be based, at least to some extent, on the business case put forward when making a decision to embark on the change. If your goals are not clear, it will be unclear whether you have achieved them or not.

When thinking about “putting in a new system”, what are the success criteria we can use? Here are a few examples. Some of these are quantitative in nature whilst others are binary, that is to say they are either achieved or not:

  • Eliminating the duplication of data entry
  • Data should only have to be entered into our systems once and used many times
  • Reducing the number of spreadsheets used to perform our core processes from say 30 to a maximum of 3
  • It is not always practical to eliminate the use of spreadsheets completely, but it is a common desire to have all of the essential “workings out” available on the ERP system and visible to all those who need to know
  • Achieve “One version of the truth”
  • Multiple systems invariably lead to discrepancies between the data contained within them, which then puts the validity of all the data in doubt
  • Reduce the administrative overhead within the business
  • This can be expressed as reducing admin headcount by x FTE or having the ability to expand the business by x% without additional resource, but it is important to ensure that the administration tasks are not merely dispersed amongst a number of other resources who may be less efficient at discharging the tasks
  • Reducing the number of working days to complete month-end tasks from say 8 to 4
  • Reducing the number of AR invoice queries by x%
  • Reducing Inventory values by x%

This one can be tricky as generally speaking the reduction happens over a period of time, and the inventory needed to effectively support the business may change as sales trends fluctuate

In terms of which measures to use, this will vary from business to business, but the measures will focus the whole implementation project team, so choose carefully.

Choose the right ERP system for your business_Precise Business Solutions

Step 2 is to choose the “right” ERP system for your business. There is no “one size fits all” solution, and each vendor will claim that their system is the best, so how do you choose? There are third party consultants who can advise on this but they can be expensive. Alternatively, engage with an implementation partner you feel you can trust, and who takes the time to understand your business and requirements.

This brings us to step 3. The implementation partner will probably be more than willing to take on as much of the implementation as you can afford to pay for, but they will not be able to effectively implement the system without significant input from the business. As such it is important to nominate the internal project team. In a small business this may be one or two people. The largest team I have seen was 200 strong, but this was for a 50,000 user multi-national company. In any case the day-to-day operation of the business has to continue, so employing “back-fill” resources for the duration of the project should be seriously considered. This has the benefit of making your team members freely available during the implementation and better placed to become self-reliant after the go-live, rather than having to continually rely on the implementation partner to provide improvements.

Be Clear_step4 Step 4 is to be clear on the methodology that the project is going to follow. Whether it be a waterfall methodology, where each stage must be 100% complete before starting the next stage or an agile methodology, make sure that you understand all of the steps, and communicate this to the rest of the business. This ensures that everyone knows what to expect, and when you are in the detail, can see where the task fits into the overall project context.

Step 5 Now you have started the implementation and are starting to realise what could be achievable using the new system, it is important not to get carried away with great ideas. Stay focused on the project objectives, budget and timelines and control the project scope. Scope creep is a real danger in every implementation. However great an idea is, if it involves additional effort it will have and time and / or cost impact on the project. Also be open to the idea of changing your business processes to take advantage of the new system functionality. Too many times I have seen a business desperately clinging on to “the way we have always done this” which leads to modifying the system behaviour, which costs time and money, when the system process could be adopted if the business were prepared to agree the output of the process and trust the implementation partner to guide them in achieving this using the new system processes.

This takes us to Step 6. Remember that although the project has a beginning and an end; the system go-live is not the end of the improvements. It is a step-change for sure, but go-live is also a new beginning and once the new system is “bedded in” there will be many improvements to be made moving forward, so not every dream must be realised in the phase 1 implementation. In short, be realistic in what can be achieved in the timeframe.

Step 7 actually needs to be in place at the start – Allow some contingency dollars in the project. However thorough the discovery / business analysis, something unexpected will crop up in the project. If you plan for it and don’t need it, you are covered and the business doesn’t actually spend the money. If you don’t secure the contingency budget up front it is much more difficult to go back and ask for more when the unexpected happens. Between ten and twenty percent is a common contingency to carry.

Summary

Step 7   Allow some contingency dollars

Step 6   Be realistic in what can be achieved in the timeframe

Step 5   Control the project scope

Step 4   Be clear on the methodology that the project is going to follow

Step 3   Nominate the internal project team

Step 2   Choose the “right” ERP system for your business

Step 1   Define objective criteria by which to measure the project success

 

Note: Provided you follow all of the steps, the order in which you address them is somewhat arbitrary, apart from Step 1.

ABOUT THE AUTHOR:


BrianBrian Ellison
Consulting Manager – NetSuite at Precise Business Solutions.

Brian joined Precise in 2009 and quickly strengthened the Project Management processes needed for successful ERP implementations. In his current role he oversees the team of project managers and consultants delivering ERP implementations and ERP support.

Prior to joining Precise Business Solutions, Brian had been involved in successfully implementing a range of ERP solutions internationally including BaaN, SAP and Pronto within a broad spectrum of industries including Aerospace, Medical Devices, Mining Services and Manufacturing. Brian also has 25 years of hands on experience in manufacturing logistics and supply chain management.

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