By Merit Solutions August, 2015

Transcription

1 By Merit Solutions August, 2015

2 Introduction... 3 Traditional Challenges in Global ERP Implementations... 3 Documenting Your Implementation Process: A Crucial Step for Success... 6 The Impact of Ineffective Change Management during ERP Implementations... 7 Data Migration: Know Your Route before You Fly... 8 Project Communication: Having (and Following) a Plan... 9 Choosing the Right ERP Implementation Partner Measuring the Success of Global ERP Implementations Conclusion About Merit Solutions Merit Solutions, 1749 South Inc. Naperville Road, Suite Wheaton, IL

3 When you think of the prospect of implementing a new ERP system, does your stomach begin to twist itself into knots? Do your hands become clammy with sweat? Those reactions might sound a little extreme, but some business leaders cringe at the idea of implementing this complex software. Implementing a new ERP system need not be a gut wrenching experience, though. This guide contains information about overcoming the challenges inherent in the process through to measuring the success of the project. By putting the information in this white paper into action, you ll find that the ERP implementation process doesn t have to be a hassle. Instead, it can go smoothly and successfully when you manage it properly. ERP solutions have helped today s industry leading companies revolutionize their global supply chains. Global ERP systems have enabled firms to drive operational efficiency in all areas, connect individuals and teams across the world, and gain real-time visibility into global supply chain data. These benefits allow companies to improve decision making, increase productivity and efficiency, and accelerate growth and expansion. Why don t all enterprise companies use a global ERP solution? you ask. Research from Gartner shows ERP implementation failure rates at anywhere between 55 and 75 percent. First of all, global ERP implementations are complex and warrant in-depth planning from subject matter and industry experts. This equates to up-front investments in time and costs. Another reason companies are hesitant to implement global ERP solutions is because recent research and media attention have shone a spotlight on failed ERP implementations. Researchers consistently find that more than half of companies surveyed reported receiving less than 50% of the benefits they set out to achieve in their ERP implementation. And it seems like new multi-million dollar lawsuits are filed every month due to failed ERP implementations. ERP implementations face a number of risks and challenges due to their complexity and the transformational impact they have on companies. These risks can be further amplified in global ERP implementations where distributed teams, cultural differences, local requirements, and other factors provide additional threats to the implementation. Identifying and understanding the Merit Solutions, Inc. 3

4 challenges inherent in a global ERP implementation is paramount to achieving the benefits this software can bring to businesses. But it s just an IT project, right? The largest challenge facing organizations implementing a global ERP system is that it is commonly considered an IT project so executive decision makers are absent throughout the entire project. A global ERP implementation should not be viewed simply as changing software systems. Instead, it should be viewed as an opportunity to transform and align an organization s people, processes, and technologies across multiple departments, locations, and countries. And due to the enormous impact on the day-to-day operations of the business for example, many locations that previously worked separately in silos of data now have to be tightly integrated together it is critical that executives take an active role during the selection of vendors, through systems and process blueprinting, change management, implementation, and training. Reengineering Business Processes As mentioned above, global ERP implementations involve more than just replacing a business management system(s); they also require the reengineering of current processes. The most fundamental driving force for a company's success is its people. However, the way people perform the tasks and processes necessary to complete their workloads can make the difference between success and failure in today s markets. In order to transform their business, organizations need to identify opportunities to streamline processes, reduce waste, and automate paperbased or manual procedures. At the same time, they need to manage changing processes with employees, ensuring that their day-to-day activities are easier, more efficient, and more productive. Project Management Effective project management is critical to ensuring a successful implementation. All projects are constrained by four factors: time, costs, quality and scope. For any project to succeed, these four constraints must be in equilibrium. If any constraint is out of balance, the project is headed for disaster. Merit Solutions, Inc. 4

5 Make sure you work with a partner that has a consistent, repeatable, and flexible methodology that provides a better implementation experience and less risk to your company. Also, choose a partner that has a track record for providing consistent communication and reporting to help keep you informed and up-to-date with the project s status. Differences in Culture, Language, and Compliance When undertaking a global ERP implementation, firms need to be concerned about whether their implementation consultant and ERP system can enable the company to be successful in multiple countries. From a systems standpoint, the ERP software needs to be able to handle multi-compliance, multi-currency, and multi-language requirements where you and your partners operate (or intend to operate). Implementation consultants also must be able to manage differences in culture, language, and local compliance regulations to implement the solution across the globe. This requires working with partners that can find the proper balance between using enterprise best practices and global templates with local requirements knowledge and experience. Selecting the Right Partner Organizations going through a business transformation project need more than a software reseller; they need subject matter and industry experts that have deep experience and a successful track record of aligning processes with the people and technology solutions that support them. The right resource can provide the right services and support to ensure that your process and technology investments help you and don t leave you in the 50% of customers who never realize the benefits of their investments. Today s world is increasingly flattened by technology, global complexity and new global competition - making it critical for a business to be able to rapidly see and react to signals, threats and opportunities. Going one step further, in this world where the pace of business is constantly accelerating, imagine being able to anticipate rather than react to those signals. Success today and tomorrow increasingly depends on information insight and efficient business processes. When implemented correctly, globally adopted systems and processes can allow a business to overcome the challenges of globalization and operate more efficiently, effectively, and profitably. Merit Solutions, Inc. 5

6 One of the most important, but often forgotten, parts of an ERP implementation is documentation. Because of the complexity of the project and all of its moving parts, it's necessary to have a clear record of every bug fix, process change, and training class. Also, being able to show progress made and exactly what needs to happen next keeps the project on track helps to build its business case. But what exactly do we need to document? Luckily, the answer isn't everything, but it's pretty close. Spending weeks detailing your current business processes on paper is not the number one priority; during your implementation, hopefully your business processes will be changed or created to reflect a new, ideal operating environment. Therefore, your current processes are less important than spending the time to detail and document the way you want to operate in the future. In addition to this initial vision of new and improved business processes, your record keeping must be dynamic and constantly updated. Often times, a new feature is requested weeks or months into a project those requests need to be recorded just as diligently. After the vision of the project is documented and a clear scope for the project is set, you can begin diving into a little more detail. This is where the detailed requirements for the desired processes are translated into Functional Design Documents (FDDs). After you pass these FDDs over to your development team, each change to the base software also needs to be documented how are you supposed to fix a bug if you don't know when it showed up? Code change 4, or 57? By keeping good records of what you have done, and intend to do, precious time will be saved when a problem needs your attention. Finally, as an implementation team, you have to remember that at the end of the project you will pass the torch onto end users. Just because you may remember there is an easy work around for something in the software doesn't mean your users will six months down the line. Having clear documentation will ensure the success of the ERP implementation by providing reference material for the life of the software system. Also, when it comes to ownership of code and bug fixes, an agreed upon, documented methodology will make testing, approval, and elevation of the code simple and easy. Merit Solutions, Inc. 6

7 Clear documentation is often at the back of the team's mind during an implementation. The excitement of new hardware and software being installed and the joy of passing on your own body of knowledge can overshadow your record keeping. Depending on how it's done, however, documentation can make or break a project. In order to successfully adopt any ERP system, your company needs to identify opportunities to streamline processes, reduce waste, and automate paperbased or manual procedures. At the same time, you must manage changing processes with employees, executives, and third party customers / suppliers, ensuring that their day-to-day activities are easier, more efficient, and more productive. At their most basic level, ERP systems are simply an assortment of best practices for where and how to perform different tasks within your company, including finance, manufacturing, quality, retail, etc. But, to receive any value from the software, people must agree with and adopt the tools and best practices provided by the system. Many technically oriented consulting firms struggle when trying to address change management because it is more conceptual and deals with predicting behaviors and responses to change. Without understanding the impacts to the people that make up an organization when introducing change, and putting into practice strategies that will mitigate people s natural resistance to change, it can be difficult to achieve success in any activity that requires change. Partners with weak organizational change management skills have projects that unravel at both ends of the spectrum upper management quickly loses faith in the project and stops being involved and committed, and end users don t understand why their way of working is being changed, so they resist adopting the system altogether. They don t pay attention (or show up) during training. They continue to use outside systems and workarounds. And they encourage others to do the same. Not only does this reduce the value received from your investment into ERP solutions, but it also creates risk and vulnerabilities in terms of inefficient processes, manual entry errors, data omissions, and duplication of effort. Business leaders often don t realize the incredibly negative impact just one poorly motivated employee can have on the adoption of ERP systems, the Merit Solutions, Inc. 7

8 value received from the system, and even the experiences your customers have with you. In order to receive all of the benefits associated with your ERP system, there is a lot of work that needs to be done to make sure every person, inside and outside your company, has extensive knowledge of and belief in the benefits the system and process changes will bring to their role and organization - and the true reasons behind the organization s investment in the project. There s so much to consider when implementing a new ERP system that data migration sometimes gets pushed aside as an afterthought to be dealt with when the implementation gets underway. Big mistake. An organization s ERP system is only as effective as the data that drives it. That s the power of ERP, isn t it? There are several benefits of giving data its fair share of attention when preparing for implementation. By considering data migration ahead of time, organizations can save time and money by discovering data that doesn t really need to be migrated at all. Once the implementation is in full swing, there is no choice but to take everything. Migrating data is an expensive endeavor, so avoid carrying over data unless it is relevant and valid. ERP implementations are a good time to take a step back and look at how the business functions. Similarly, preparing for a migration can be a time to explore whether the current data strategy needs to be improved. This process is a balancing act: a business doesn t want the implementation to become slower while it tries to overhaul a data system that isn t broken, but it s a good practice to leave enough time to address major flaws that are uncovered while preparing for migration. Having decided what data actually needs to be migrated and determining whether the data strategy needs improvement, it s then time to run preliminary migrations in preparation for going live. This is a timeframe that is absolutely crucial. An organization needs time to migrate, test, and resolve issues. It takes time to create a test environment that mimics production. But it s worth the time. Trying to take a shortcut can result in significant downtime Merit Solutions, Inc. 8

9 during go-live migration if unexpected issues arise. The test migrations also inform hardware decisions. When it comes time to go live with a new ERP solution, the system is dead until the organization s data is alive and kicking in the new environment. Migrating the data from the old system to the new is just too important to ignore during the planning stages of ERP adoption. Imagine what would happen if the kickoff meeting for your project arrives and some of the stakeholders don t show up. You move forward with the project, thinking that they ll get caught up. After all, as the project manager, you have deadlines to meet and you need to get started. However, before long you start having problems with lack of communication between stakeholders and vendors. Things are being delivered at the wrong time and without meeting projects specifications - but the communication simply isn t there to fix it. You re constantly scrambling trying to bring everything back on schedule as quickly as possible. What went wrong in this scenario? One problem is that you probably didn t have proper buy-in from all of the stakeholders to make sure that everybody made it to the kickoff meeting. The second problem was a lack of communication between vendors and stakeholders because no communication plan was put in place and shared with all stakeholders at the beginning of the project. Here are 5 steps to improving communication in your ERP project: 1. Create a communication plan Start your project with a communication plan. This plan will tell everyone how (and how often) information will be communicated during the project. You ll establish things like, we ll meet every Friday to discuss the status of the project and review any potential problems. Put simply, having (and following) a proper communication plan makes sure everyone stays informed. Merit Solutions, Inc. 9

10 2. Create and share the meeting objectives The project manager should make sure every meeting has a clearly defined objective. Is the purpose of the meeting a brainstorming session to create new ideas on how to solve the problem? Are the stakeholders trying to make a decision or does everyone just need a project update? By providing meeting objectives, you let stakeholders know which meetings they need to attend. Creating a clearly defined objective allows all participants to adequately prepare for the meeting. This also keeps the project manager from having to waste time and explain the purpose of every meeting at the start. 3. Share information with the appropriate stakeholders After the meeting objectives have been clearly defined, you will have a good idea of which stakeholders need to attend the meeting. If the appropriate stakeholders do not attend, it could cause communication problems and additional meetings may be required. Having the right stakeholders at the beginning of the project will make decision-making easier throughout the entire process. The best way to identify major stakeholders is to break the meeting down into each objective and then determine which stakeholder is responsible for that objective being met. You can also ask existing stakeholders if they know of any other people that should attend. Once you have everyone in a room, you need to create an open dialogue between the participants. Each conversation needs to be closely monitored to make sure it stays on track. It can be useful to implement a round robin approach where everyone around the table is asked to express their views on the topic at hand. 4. Resolve conflicts as they occur Anytime you have a group of people that are passionate about a problem, conflicts become a possibility. By resolving these conflicts quickly, you can help the team to stay on track and make sure that personal agendas don t impede progress. 5. End each meeting with action items At the end of every meeting, make sure that all participants know what their action items are. Each person needs to know exactly what is expected of him or her with clear goals. Each task should be descriptive and include an agreed upon due date. Merit Solutions, Inc. 10

11 Defining and following your communication plan will make sure you are sharing information with the appropriate stakeholders. Using these steps, you can make sure your projects stay on target. Research from Gartner shows ERP implementation failure rates at anywhere between 55 and 75 percent. That may not appear to be too promising for someone who looking to kick off a new ERP project in their organization. Yet while these numbers may be a bit discouraging, if you look at the reasons why so many of these implementation projects fail you can see that most problems can be avoided if the right implementation partner was brought on board from the beginning. Finding the right partner, however, may seem like a task comparable to finding the right ERP vendor. The process can be a bit easier if you know what to look for. Understandably, you want an implementation partner who is an ERP expert. There are many consultants out there who may tout their success with project management and enterprise software implementations, however if they don t have expertise with ERP solutions specifically you may run in to trouble. Other traits that you should look for that may seem a bit more obvious are consultants who are knowledgeable about your specific business processes, organizations who provide excellent ongoing support, and those who have a proven track record with other customers in your industry. These basic elements can only take your project so far. In order to move out of the danger zone for failure, you need to dig a bit deeper into a prospective partner s background before you bring them on board to lead your project. Once you are able to use the more common criteria to narrow down your list of potential implementation consultants it is time to start a more granular search. Now, you need to start looking at how a proposed partner is able to help your business, specifically, implement your ERP project successfully. Among the factors you need to consider are: Merit Solutions, Inc. 11

12 How well do they understand your processes? The goal of a successful ERP solution should be to help make your business processes more efficient. This starts with your consultant having a familiarity with how your business operates. How well do they design, document, and write customizations? The need to customize some element of your solution will almost certainly arise. Aside from helping you make these customizations, your partner should understand the impact they will have on things such as security and interoperability. What is their plan for change management? When an ERP solution is put into place, it is not only the processes and workflows that change. Often times new positions are created and some are eliminated; it is also common to see job descriptions change as a result. Without an effective strategy for change management your project runs the risk of failure. Will they provide training and support? If your users have trouble using your ERP solution, or if they can t get the help they need then your project is doomed. Your consultant should be able to provide your company with effective training and long-term support so that users are comfortable with the product to the point where they begin to serve as internal evangelists. Selecting the right partner to help with your ERP implementation is just as important as choosing the right software vendor. Without skilled professionals by your side, you run the risk of falling into that 55 to 75 percent of failed implementations. However, if you take the time to vet potential partners and ensure that they have the skills mentioned here, you greatly reduce the potential for failure. Over the past three years, we have seen an increase in the number of companies who are becoming challenged by the results of their own success. Years of growth and global expansion through acquisitions and new market opportunities have left these companies with manufacturing, distribution, accounting, customer service, and procurement operations that are being run on disparate legacy business systems and poor business processes. These systems and processes are highly inefficient, expensive to support and Merit Solutions, Inc. 12

13 maintain, and lack visibility into the global business data executives need to make quick, informed decisions. Global ERP projects can be an expensive and time consuming investment into your organization; however, the benefits of improved processes and better decisions far outweigh "standing still" while the competition evolves. How can you tell if your global ERP implementation has been successful? Here are some yardsticks: Global Integration In order to make rapid, effective decisions, business leaders need access to critical data, regardless of where they are and where the data lives. Global ERP solutions must integrate all departments and locations into one system, giving decision-makers accurate, up-to-the minute information about costs, trends, margins, and more. They also need to support multi-language, multicurrency, and multi-compliance requirements - enabling employees to work in their local languages while corporate reporting can be done in another language - all in real-time. Standardized Business Processes In order to benefit from global supply chains, organizations need to standardize business processes across multiple geographies to improve efficiency and reduce operating costs. Global ERP systems need to support standardized processes like intercompany trade, multi-site planning, inventory control, and order management to enable better supply chain collaboration with departments, locations, customers, and partners across the globe. Decentralized Business Processes At the same time, global companies also need to decentralize certain business processes and manage them at a local level. This is especially important when maintaining compliance with local legislation requirements. Decentralized processes in areas like ordering, shipping, invoicing, and accounting can enable companies to improve responsiveness and customer satisfaction. It s Adaptable and Supports Business Growth As organizations expand, the ability to quickly adapt processes and rapidly scale systems and processes to support new users, new locations, and new lines of business is critical to sustaining profitable growth. Flexible ERP systems that keep pace with growing businesses can minimize growing pains Merit Solutions, Inc. 13

14 and enable companies to take advantage of new revenue streams, market opportunities, or operating units. In an effort to sustain growth and profitability, companies are now under an immense amount of pressure to optimize their processes, information systems, and margins. By implementing an integrated, global ERP system, executives are given a comprehensive, real-time view of the entire organization for financial reporting and operational decision making. A global ERP system also allows for consolidated and standardized processes that enable an organization to consistently optimize business functions, such as intercompany trade, multi-site planning, shared services, and book closing. Finally, a global ERP system helps companies to better collaborate across value chains and work more efficiently with other operations, partners, and suppliers. Implementing a new ERP system might be difficult, but as this white paper makes clear, it s a challenge you don t have to face alone. There are many ERP consultants out there, and choosing the right one can make your implementation process go smoothly and successfully. How do you know you ve found the right ERP consultant? As this white paper illustrates, your ERP consultant shouldn t treat the implementation as just an IT project. A new ERP system represents the opportunity to transform an organization s processes. Your consultant must know how to align your employees, technology, and processes in order to create a leaner, more efficient business. With the right partner, your ERP implementation can lead your business into a new era of success and growth. The wrong partner, conversely, can put your firm further behind than before you brought him or her in. Choose wisely, and your ERP implementation can be the stuff of dreams rather than fodder for nightmares. Merit Solutions, Inc. 14

15 Merit Solutions is a global business process consultant and systems integrator with offices in North America and Europe. We are a focused-strategy company with the goal of being the very best at helping clients automate, grow, and transform their business through process mapping and optimization, change management, and innovative IT consulting and development services. Merit Solutions works with clients to understand and triangulate their exact business needs in terms of people, workstreams, and enabling systems. From future state business process mapping to systems analysis, fit-gap process definition and scoping, sourcing, design and deployment, integration with other systems, and on-going support - we provide end-to-end global services that help clients successfully transform their business and build a foundation that continuously flows value to their customers. Our clients are typically medium to large, global enterprises who are challenged by inefficient workstreams that cost money, waste time, and reduce quality; information flows and systems that no longer support the goals of the company; and lack of visibility into business data which impedes effective decision making. Related resources to this white paper include: Reducing Risk to Enable Successful ERP Implementations Enterprise Transformation Best Practices Ineffective Change Management and ERP Implementations Information on Merit Solutions or other publications can be found on South Naperville Road, Suite 200 Wheaton, IL Merit Solutions, Inc