How to Avoid ERP Disappointment

Transcription

1 How to Avoid ERP Disappointment With planning, installing ERP software in your business will create all the business transformation you ve hoped for. 1

2 How to avoid ERP disappointment Commercial decisions come in different sizes. Choosing whether to invest in your first, or a new, ERP system is probably one of the biggest you ll make. Because of this, and perhaps because you ve had bad experiences with software projects in the past, it s also an easy decision to keep putting off. Reasons why you might not invest in ERP: It costs money It s time-consuming and disrupting Your staff won t want to change If it fails, you ll be out of pocket. Reasons why you might invest in ERP Gartner, 2011 Deployed correctly, a new ERP system will: Reduce administration Significantly improve your productivity without hiring more staff Improve your relationships with customers Make you much more competitive Provide a solid platform for growth. ERP is about people, not just technology, and organisations that ignore the people-centric issues run a significant risk of project failure. Enterprise Resource Planning (ERP) computer systems span an organisation, integrating sales, production, logistics, and management processes and reporting - and indeed your wider supply chain if using supplier portals, for example. This wide scope means they take time to install correctly, but once running, they allow businesses to do much more with the same, or fewer, resources. Because they are complex systems, some ERP implementation projects do fail. The reasons are many and varied, and often have nothing to do with the software itself. 2

3 According to Deloitte, the top four barriers to ERP implementations are: 82% 72% 65% 54% Resistance to change Inadequate sponsorship Unrealistic expectations Poor project management How to squeeze maximum benefit from your ERP implementation 1. Know where you are going Set some specific and measurable goals for your big project and think about how these will translate into improvements to the bottom line. These numbers will help you decide whether signing that software contract is worth the money you ll be paying. Your goals could be: Decrease the amount of cash tied up in stock by reducing inventory Increase the number of units produced each week Improve customer satisfaction by cutting production times Improve on time delivery performance Reduce administration costs by eliminating inefficient data processing. 3

4 2. Choose the right software Selecting the product that s right for you means looking beyond the sales patter and slick presentations. You re not buying a product off the shelf; you re entering into a relationship with the software vendor, so they must be an organisation you can trust. Questions to ask: Are you the software author? How easily will the software grow with my business? Is the software designed for my industry, and who else in my industry uses it? What do existing users think about the software? How much ongoing support will we get? Don t assume that your existing supplier, if you have one, will be right for the next stage of your business s journey. You want to work with a supplier who understands your industry, is on top of the latest technology and has plenty of satisfied customers. On top of that, you want the security that they ll still be there tomorrow, and the day after, to provide the support you need. The results are worth undergoing change for. A Computing survey asking users What has ERP done for your organisation? revealed: 70% 63% 61% 52% 70% now enjoy better financial reporting 63% now suffer less duplication and time wasting 61% now have better alignment of cross-departmental processes 52% now benefit from better cash flow and liquidity. 4

5 3. Plan, plan, plan Preparing for the potential roadblocks and pitfalls will reduce risks and smooth the path to success. A big project needs lots of planning. As they say in the military, A plan is a basis for change. It s important to have a plan, but expect it to evolve as the project develops. Issues to plan for include: Deciding who will provide the clear leadership needed to ensure success Establishing a clear and precise method of project communication Ensuring key staff take time out to help develop processes for the new system Preventing territorial squabbles between teams from holding the project back Making customers aware before any changes affect them. 4. Win hearts and minds Resistance to change is the single biggest reason why ERP implementations fail. There will be plenty of reluctance to change in your organisation, but there are ways of converting this into a willingness to adapt. Always adopt the most vocal naysayer to your project team. To reap the best rewards, you and your team must remain positive and communicate your optimism to your staff and your customers. Getting everyone onside involves: Clear communication at all times Involving staff at all levels. Your most junior workers may have some great ideas Encouraging inter-departmental dialogue, to help everyone see the bigger picture Providing the right training for your staff 5

6 Tips for securing success Reward those who identify genuine opportunities for improvement Celebrate wins. Little and often is more effective than one big party at the end Identify and involve advocates for change in every team. A Panorama consulting survey asked ERP users How easy do firms find change during an ERP implementation? The response: 15% 48% 23% 13% Very difficult Difficult Neutral Easy 5. Measure the benefits Go back to where you started. How far have you moved towards achieving the initial goals for the project? What unexpected advantages have you gained? Scoring your success: Find the processes that are faster, smoother and cheaper Identify the additional benefits to customers Spot any gaps that have emerged and find ways to fill them. The top five benefits of ERP Consistent information is available across the whole organisation - eliminating "multiple versions of the truth" More accurate and timely financial reporting Reduction in duplication of effort and wasted time across the firm Departmental operations more closely align to the business as a whole Improved compliance with statutory rules and regulations. 6

7 Not all the benefits of implementing an ERP system are easy to measure. Improved customer relationships, a more consistent approach to information sharing and better internal communication all make a positive difference that feeds through to the bottom line. According to a Panorama Consulting poll of ERP users, how long does it take to recoup the cost of implementing ERP? 29% 29% 6% 36% 1 year or less 2-3 years 4 years 5 or more Journey s end? Once your ERP software is up and running, you ve reached the end of one road and the start of the next. Having created a culture of change, perhaps for the first time, it s important to maintain the momentum for continuous improvement. Your new software and processes are just a step on your business journey and, once they re in place, look ahead to the exciting results that come next. Sources: 7

8 Download our eguide: Finance Director s Guide: Nine key opportunities for using ERP Finance Director s Guide: Nine key opportunities for using ERP Finance Director s Guide: Nine key opportunities for using ERP Under pressure to get systems in order, produce accurate reports and boost profits? An ERP system is the right place to start. Under pressure to get systems in order, produce accurate reports and boost profits? An ERP system is the right place to start. Download Now!