9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION

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1 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION Plan, Plan and Then Plan Some More

2 ABSTRACT Congratulations! You have spent hundreds of hours selecting a new ERP system. Now you can rest for a minute but only a minute! You may not want to hear this but this is just the beginning of a time consuming software installation and implementation project. The key concept throughout this process is management. The system you are about to implement must assist you in completing specific tasks, but of far greater importance, the system must help you manage your business and help you make sound business decisions. 9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION 1

3 1 2 WHO SHOULD LEAD THE PROJECT? Given the fact that many ERP selection projects fail to achieve their objectives or worse, fail altogether, it s critical that firms organize the process effectively, starting with the appointment of a project leader. This person will be responsible for driving the entire selection and implementation project forward. The implementation project leader will be a superb organizer, helping each person understand what needs to be done and by when. PLAN, ORGANIZE, CONTROL AND THEN PLAN SOME MORE This ERP system will not operate by itself. It doesn t know who is supposed to do what. It s completely empty of data and it has no idea what to do with any of the information you plan to input or extract. Detailed planning increases your chances of real success by mapping out a strategy, specific preparatory and implementation steps, and a timeline that takes into consideration what has to be done, how much time people have to devote to this project and do their current jobs as well, and the identification of potential bottlenecks. Planning creates the basis for effective project management and a quality implementation. It forces you and your implementation partner (typically a VAR or value added reseller) to determine the most effective methods by which the system can be implemented. It forces you and your VAR to agree upon a single unified approach. It identifies what steps must be performed by whom and in what sequence. Planning also facilitates communication amongst all parties involved so that all phases of the implementation can be effectively monitored. Finally, it forces you and your VAR to create documentation and training options and materials specific to the people operating the system. Please keep in mind the fact that without effective control, planning is useless. Once the detailed implementation plan has been completed and the actual work begins, the project manager and reseller need a means whereby this project can be monitored and controlled to make sure the plan is progressing satisfactorily. 9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION 2

4 3 STAFF TRAINING AND EDUCATION Training is the gateway to the efficient use of any software product, including ERP systems. Two types of training should be considered. 1. General training would be conducted on some form of demo software to help users become familiar with the new ERP system s functionality. 2. Additional organization specific training would be conducted once the new ERP system has been implemented but before the go-live date. This will enable users to become familiar with the actual system they will be utilizing. Training is defined as specific to a new ERP system, while the objective of education is an increase in a person s basic knowledge- base in order to carry out their jobs more effectively. There is a significant difference between the two. If the work habits of individual people are disorganized or inefficient, some form of education might be required. 4 5 UPGRADE ORGANIZATIONAL STRUCTURE AND BUSINESS PROCESSES It makes no sense for new ERP software to be installed when a firm s organizational structure and/ or business processes are part of the problem that prompted the move to a new ERP system in the first place. In some cases the new ERP system might require adjustments to the organizational structure and business processes. These changes should be made prior to the installation of the ERP system so that there is no impediment to productivity and effectiveness. If you are a relatively small firm, the process improvement initiative could be fairly straight forward. Larger firms or firms with fairly complex business processes might require a more formal analysis and improvement initiative. RESOURCE SCHEDULING The transition to a new ERP system will require that people invest their most precious resource; their time, in this project. Since people must carry out their normal job functions as well as invest substantial time in the new system, scheduling will become a significant issue. Rather than imposing 9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION 3

5 tasks and timetables, the project manager will act as the bridge between the reseller and implementation tasks as well as each user and their existing work schedules. Flexibility is paramount. 6 MANAGE PEOPLE AND THEIR EXPECTATIONS The key to business success rests within each of your employees. They have the ability to help you exceed, and they have the ability to thwart your efforts to increase efficiency and effectiveness. Your reseller will do his or her best to provide you with a highly effective set of financial applications, but the success of this entire process may lie in your ability to change the way people utilize the system, work with each other as a team, or support the objectives and strategies of the organization itself. The objective here is to make sure the installation and implementation process is carried out as efficiently as possible by providing your employees with advanced knowledge of what will be expected of them, when specific tasks will be carried out, and the rationale behind specific tasks. This knowledge will reduce conflicts and misunderstandings as the implementation moves forward. 7 DEVELOP DECISION SUPPORT SYSTEM ERP functions help people complete specific tasks (e.g. sales order entry). The reporting system presents relevant information in a timely manner that will help people make sound business decisions. As such, the reporting system is the most critical element of any accounting or ERP system. True decision support requires that the business model itself changes from one which is based upon the accounting process to one based upon the needs of the organization. Rather than reviewing results in the past, the business model must become more proactive by predicting results in the future, thus allowing managers to react more quickly. The business model must concentrate not on the Chart of Accounts, but on products, services and projects as well as non-financial measurements such as revenue per employee and other forms of performance metrics. 9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION 4

6 Please keep in mind one critical realization. You cannot make a decision unless you have all three elements that contribute to effective decision-making: 1. Where have we been? 2. Where do we seem to be going? 3. Where should we be? Reports with rows and columns, bar charts and pie charts and any other single point business metric present a snapshot of conditions at one instant in time and therefore do not support the decision support process. The decision support system must be created first because it will drive the variables and data fields that will be defined during implementation. Two key decision support elements need to be analyzed. (1) What information do people need and (2) how will that information be delivered? There are many delivery options: standard reports generated by the system, reports created in report writers and spreadsheets, data warehouses, ad hoc reports, business intelligence, dashboards, and performance metrics. Business information is actually far more important than business functionality. 8 DEVELOP SYSTEM ENHANCEMENTS While most accounting and ERP products are powerful and flexible, some modifications may be required to meet your specific needs. Hopefully, these modifications will be minor. Whether they are minor or major, there are several points you should try to keep in mind. Try to eliminate the need for modifications in the first place by asking yourself Do we really need this specialized functionality, or can we adjust our business processes to match the ERP system? If modifications are required, look first to third party enhancements that have already been created and tested by existing users of the ERP system you are purchasing. If modifications are required, try to create these enhancements without having to touch source code. Finally, if modifications are required, be prepared to accept full responsibility for their design. 9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION 5

7 9 POST IMPLEMENTATION MANAGEMENT Once the system has been installed, and is fully operational, your task as project manager will be complete, but comprehensive system management will still be required. It s just the nature of the management that changes. You and your VAR will need to establish an on-going relationship to ensure this system continues to operate at peak efficiency. System here is defined as the software/ user combination. The software itself has to operate effectively, and it has to be used effectively as well. In addition, you have the responsibility of making sure the system delivers what you expect, if not more. That s where you and your VAR can form a management relationship to evaluate the system on a continuous basis. User issues are quite easy to identify. You need to make sure people have the tools, motivation, training, education and software in order to carry out their jobs efficiently and effectively. Never assume the status quo is acceptable in the long term. CONCLUSION An ERP system is no more than a tool; a very powerful tool, but nevertheless an essential tool. Your success isn t dependent upon what product you purchase. Your success is dependent upon how each person in your organization uses this tool together with their knowledge and experience to make sound business decisions and serve customers more effectively. You have an opportunity to create a truly efficient and effective organization, but only if you take this one step further. Go beyond the ERP applications. Help your employees excel individually, and they will help the organization excel. That s the path to greatness; knowledgeable and motivated people acting as a single powerful entity to create something which could only be imagined before. Form a strong relationship with an ERP partner in your area: or browse ERP articles written by industry experts: 9 STEPS FOR A SUCCESSFUL ERP SOFTWARE IMPLEMENTATION 6