14 TRUTHS: How To Prepare For, Select, Implement And Optimize Your ERP Solution

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1 2015 ERP GUIDE 14 TRUTHS: How To Prepare For, Select, Implement And Optimize Your ERP Solution Some ERP implementations can be described as transformational, company-changing events. Others are big disappointments that never meet the expectations set at the onset of the project. How do you attain the former and mitigate risks of the later? Having managed over 6,000 ERP implementations, there are few scenarios we have not seen. We ve taken this experience gained over 25 years and pulled forward 14 pieces of advice to help companies prepare for, select, implement and optimize their ERP solutions. We hope you find this useful. To learn more about ensuring success with your ERP project, contact Columbus today.

2 2015 ERP GUIDE 14 TRUTHS: How To Prepare For, Select, Implement And Optimize Your ERP Solution Preparing Your Company For ERP 1. Build a Business Case. Mid-market ERP solutions can cost between $100K to more than $1M and take up to a year to deploy. Building a business case can help you justify the expense and set realistic expectations that your investment can be measured against. A good comprehensive business case should include business benefits, costs, potential risks, key performance metrics and a positive ROI to support funding. Analyze your current and future states and the strengths and weaknesses of your existing system. Establish KPIs to help you measure performance. What are the business benefits of transcending productivity and efficiency bottlenecks or reducing the drawbacks of disparate legacy systems. A good software partner can help you construct a business case. 2. Plan Early And Often. A lack of sufficient planning may be the biggest culprit for ERP implementations that do not meet expectations. The complexity of an ERP project requires extraordinary planning. Financial planning, solution evaluations, partner selection, understanding best practices, aligning resources, building project teams, managing changes, requirements planning, data migration, training, system testing the list goes on and on. Recognize the value of early planning. Invariably, we see companies that invest more in upfront planning recoup the investment in shorter implementation times, less expensive deployment costs and shorter time to value. 3. Align Your ERP And Business Strategy. Do you have clearly stated ambitions for your ERP project that directly support and accelerate your business strategy? You should view your ERP initiative as a business transformation project that can reduce costs, add efficiencies and help you deliver on your business strategy. Start by knowing explicitly what you want to accomplish well before evaluating costs, benefits and requirements. Your business strategy should be the guiding principle before, during and after your implementation. Do you want to increase inventory turns, improve customer satisfaction, enter new markets or shorten time to market. Your strategic business goals should drive your ERP initiative. 4. Demand Executive Support And Involvement. It is critical to have the ongoing support of the senior management team that owns business strategy, controls resources and sets company priorities. Senior management should evangelize the initiative and create a complete understanding with all stakeholders and users of the importance of ERP and the expected benefits. Include your executive team as a steering committee to keep them informed on progress and to use as decision makers when issues arise. Frequent communication from executives about ERP implementation plans and changing processes are vital to helping build consensus and even excitement across your company. 2

3 Selecting A Solution And Partner 5. Rigorously Determine Requirements. Once you have clearly defined your ERP objectives that accelerate your business strategy, it s time to audit business groups and key stakeholders to understand the critical business processes and opportunities for improvements. Too often, companies concentrate more on the technical aspects of ERP software, rather than on critical business processes that will reduce costs and deliver new efficiencies to the business. Business process mapping allows you to completely analyze and define all the processes that are at work in your business. Many times we have seen that the supply chain presents the largest opportunities for new efficiencies, in functions like shipping and receiving, logistics, fulfillment, inventory and warehouse management. Relationships and interactions with customers, vendors, trading partners and outsourced logistics may also see a positive impact from close scrutiny and innovative planning. Think through the human aspects of how jobs and business processes will change. You should spend as much time prioritizing requirements as defining them. We have seen far too many implementations where non-essential or nice to have requirements slow down projects, add expense and provide very little benefit to the company. Fully understanding your new requirements is critical in evaluating and selecting your ERP solution, your implementation partner and the degree to which you might need customizations. Take this opportunity to create a new competitive advantage for your company. 6. Deploy Industry Best Practice. Learning from the thousands of deployments that have preceded yours is smart do not replace like with like. When it comes to defining business processes and system requirements look to best industry practices. The workflows that are best for your company are likely to be a combination of standard processes that others in your industry perform and processes that are unique to your organization. When evaluating partners, ask them if they have captured and refined through experience many of the de facto best practices and use them in industry templates. During business process mapping you can use visual process flows to discuss which template processes do not fit your business and need to be altered. Using proven best practices ensures operational efficiencies and delivers a more predictable implementation. The right partner can share with you best practices in your industry and connect you with like-minded companies that are willing to discuss and share their experiences. 3

4 2015 ERP GUIDE 14 TRUTHS: How To Prepare For, Select, Implement And Optimize Your ERP Solution 7. Find An Exceptional Partner. In many cases, a failed implementation has less to do with selecting the wrong software and more to do with selecting the wrong partner. Only work with a partner that understands your business and has solved similar challenges to yours. Can they challenge your business and old ways of thinking. Can they deliver your project on time, on budget and provide world class support after the go-live. Partner channels are filled with companies that are technically competent. They understand the products and are relatively adept at customizing and installing them. Less common, however, is the partner that understands your business and your industry and can bring new insights. Unless you expect minimal value from your investment, do not select a deployment partner. The right partner delivers value and consultation and can demonstrate a long history of successfully deploying solutions in your business category. Conduct deep reference checking and use your network to investigate the partner s history. Find out which implementation methodologies the partner uses and which standards they incorporate, and to what extend they are recognized in the industry. Is the partner financially strong, will they be there with you for the long haul. You need to be certain the partner you select has the tools, experience and resources to create a long-term business relationship. 8. Budget For And Control Costs. Work to establish a detailed budget that includes all ERP-related costs. Understanding the real costs for acquiring, implementing and operating an ERP system is essential to your ability to forecast and control costs throughout the project. Once your budget is set, it requires constant monitoring and change control. Identify and address budget variances as early as possible. Using a master budget document can help you maintain accountability and transparency toward your executives and financial managers. Proactive, continuous management of the budget is the only way to forestall overruns and unplanned changes to the project. If you decide to deploy your ERP solution in the cloud, your short term costs may be lower, but you will still have to plan and budget for deployment, hosting, on-going support, solution enhancements, training, change management and customization. Your trusted technology partner will be able to disclose all expense items related to the services to be performed and can also help you budget for software and hardware. 4

5 Implementing Your Solution 9. Construct The Right Project Team. It might seem obvious, but many companies fail to adequately staff their ERP projects. Build your team with individuals that have a broad understanding of business concepts across all departments with one or more experts in each chosen function. Staff with high potential, experienced and passionate individuals with a vested stake in ERP success. A prerequisite for a successful ERP implementation is a dedicated project manager who is involved in both planning and ongoing management. They should be adept at conducting ongoing reviews of project phases throughout implementation, with full participation of all inside and outside resources. Select a project manager with strong project management skills who can facilitate team communication, address any issues that may arise, and keep the implementation on schedule. Take into consideration the day to day responsibilities of team members and how those responsibilities may affect availability for the ERP project. It is critical there is a good working relationship between team leaders with the client and the partner, and between the strategic and operational resources with both parties. Removing key members from the team during the implementation process can be detrimental. 10. Create And Execute A Smart Data Strategy. Too often, companies underestimate the amount of time required to extract, transform and load data. Many companies tend to focus on software testing and configuration and put off dealing with data migration until late in the implementation process. An attribute of successful ERP implementations is that data migration is put into the project plan as early as possible. A company s data is one of its primary assets and migration problems between a legacy system and a new ERP system can have negative consequences. Once the scope of the data migration is defined, activities such as data scrubbing and mapping can be performed independent and concurrent with the larger implementation process. Consider incorporating data components into your testing processes, so that data is tested within the software along with business processes. Another important decision is how much historical data should be brought into the new system. Some companies retain data for compliance while others simply set a policy of keeping everything to avoid dealing with myriad decisions and complexity. Nonetheless, all companies should establish a data retention and storage strategy. The best ERP system in the world cannot fix bad data problems. 5

6 2015 ERP GUIDE 14 TRUTHS: How To Prepare For, Select, Implement And Optimize Your ERP Solution 11. Minimize Modifications From Standard. Without question, one of the reasons that ERP implementations take longer than expected or fail to achieve their expected benefits can be attributed to the high degree of code customization used to tailor ERP systems to business requirements. Too many companies modify standard software functionality to align with their company s existing sub-optimal business processes. The risk of scope creep can be mitigated but focusing on standard software and prioritizing must customizations from nice to have customizations. Customizations invariably create instability, project delays and erode client satisfaction. Down the road, they often add to the cost of upgrades and maintenance. The issue of whether customizations are necessary to satisfy a new business requirement is often raised during the implementation process. In these cases, investments in customization can be evaluated according to whether they fit the requirements defined in the business case, based on performance metrics that are quantifiable, rather than subjective. Always try to limit all ad hoc processes and customization changes during implementation as it adversely impacts interdependencies, continuity, timelines and budget. When it comes to process changes, rigorous review and approval should be undertaken by a discriminating review board. 6

7 Optimizing Your Strategy 12. Create and Execute A Support Strategy. In many instances the overall effectiveness of an ERP system starts to slowly diminish immediately following go live. Work flows change, people change, business strategy changes and the system does not keep up. Having a partner that knows your system, knows your business and is a phone call away is critical. Make sure your partner has an enterprise-level support system that meets your needs, your budget and can optimize your ERP investment. Establish adequate budgeting and resource allocation for after go-live maintenance, enhancement and support. Set regular intervals to measure and refine your solution. Keep up to date with technological innovations that can enhance your system, like mobility. 13. Invest In Training And Change Management. ERP implementations don t just affect systems and business processes; they also involve your employees who may find themselves in new roles or may find it difficult to adopt to new processes. Training can make the difference between user acceptance and user apathy. Too many companies cut corners on training to compensate for cost overruns earlier in the project. Design training curriculum based on real roles, responsibilities and requirements. Putting off training until late in the project is never wise. Managing change is a constant, ongoing process that needs to start early and continue throughout the implementation to the end-user training at the close of the project. Some systems can produce audit reports to show how well a system is being used, which helps identify training and capability gaps that need attention. Throughout the ERP solution s lifecycle, training will remain a critical enabler of the system s value to the organization. Always document and publish help and training content. Budget for regular refresher and remedial training whenever possible. 14. Evolve Your Solution Post Go-Live. Continue to evolve your ERP solution by means of annual planning and budgeting to meet your changing business needs. Review the original goals you articulated in the initial buying process for relevance and completion. Are their gaps to be addressed. Often times some of the purchased Business Intelligence capabilities are not deployed before go-live. Maintaining your full executive sponsorship for your system s lifecycle is important. Budgeting should still be an annual occurrence with discrete projects to not only maintain but to evolve your solution with an eye toward transformational capabilities. Have you considered mobility. Or ecommerce in your supply chain. Make sure your technology infrastructure isn t a barrier or creates unnecessary risks to the business. Be clear on your processes and policies to perform data cleansing, archiving and management. Perform periodic system performance reviews and health checks your partner can help you with this. 7

8 Ten Tips for Successful ERP Implementations We have asked some of our Columbus experts to answer these questions to help you get the most from your solution. Watch the videos below that look at business process management, implementation recommendations and after launch advice. Watch this video at: ABOUT COLUMBUS Columbus is an industry-based consultancy and award-winning technology developer focused on the manufacturing, food processing, and retail industries. We are the preferred consultancy for ambitious companies wanting to streamline business processes, improve operational efficiencies, reduce costs, and improve visibility into their businesses. Our approach to solving our clients issues can best be described as proactive. We challenge our clients traditional ways of thinking, help them see new opportunities for improvements, and take responsibility to drive change in their organizations. We ve delivered these business benefits for over 25 years to many of the leading companies worldwide. WANT TO KNOW MORE? For more information about Columbus, visit: or call