Ask many CIOs today and they will have varying opinions on the strategic impact of an Enterprise Resource Planning (ERP) system, yet they would nearly all agree that an implementation of this core system takes an abundance of time, money, and resources. If you’re not planning ahead and doing your due diligence, the execution of the project could be at risk, including unplanned overruns on money, and quickly exhaust the resources available.
In this six-part series, we explore what to do and not to do throughout each phase of an ERP implementation. The phases we define in this series are drawn from the 30+ years of experience co-author Jeff Young learned as he successfully implemented two ERP systems in his career.
The six phases include:
- Phase 1: Preparation
- Phase 2: The Search and Selection
- Phase 3: Contract Review and Tips
- Phase 4: Team Formulation and Implementation
- Phase 5: Managing Change
- Phase 6: Leveraging Your ERP
- An ERP implementation requires significant financial and human resource commitment – understanding the organization’s budget for the project is critical.
- Selecting an executive sponsor to support this initiative is a key to success.
- The project must be seen as a top priority to the organization and communicated as such from senior executives.
- The better you prepare, the more successful the implementation and outcome.
- Gather inventory and requirements: It’s important to work with both your IT team and your business partners to get an inventory of the following:
- Current systems
- Flow of information
- Integrations and current integration platform
- Inputs and outputs
- Mandatory business requirements met by the system, such as:
- Enterprise Data Interchange (EDI)
- Specific output documents
- Governmental mandates
- Trading partner requirements
- Country specific requirements
- Write the RFQ: This is essential to helping select the right partner for your business. Assemble a cross functional team to gather requirements and to put together your RFQ document to be distributed to potential solution providers.
- Establish vision of next-gen systems: The requirements gathered in #1 are important, but you do not want to invest in building something too similar to your current system. Use the requirements to ensure compliance to standard and accepted practices, but also use this opportunity to step outside the box and envision what a new core system can do to help retool the future business. Often, this process is only done every 15-20 years – take the time to do it right.
- Create a matrix for scorekeeping: What’s crucial for your organization? You must answer this question in the planning phase. Creating a matrix will ensure vendor proposals match the requirements you and your business partners have outlined.
- Select an executive sponsor: If the business is not fully behind this initiative, it will fail. Selecting an executive sponsor who sits outside of the IT organization and is well respected across departments can boost support and adoption of the new system.
- Don’t under-communicate: Do not under sell this process to the management team. Everyone must be onboard and informed up front of the risks and difficulties a large system implementation can have on the core business. Don’t assume you have support, communicate vision and get commitments across the organization.
- Don’t be afraid of new architecture: Don’t let your hardware and network in place drive your decision. Select your solution and then see where that takes you on hosting options. The functionality far outweighs the type and location of the processing power.
- Don’t exclude anyone in the search: Don’t ignore any solution providers based on their preconceived reputation. Some vendors are known to be ‘too expensive’ or ‘too complicated’ but give them your RFQ and give them a chance – they may surprise you.
- A narrow scope can lead to more spend: Don’t leave out any functional area or geographic area of your company, because you feel they are not in scope. Anticipate that the new system will support all facets of the business. It’s better to be prepared upfront then be caught down the road without the funds to execute.
- Don’t be unprepared: Business leaders are looking to you throughout the process for an understanding of the new business environment. Don’t take the responsibility lightly. Always be prepared to answer questions about value, ROI, and resources.
The ‘preparation phase’ of an ERP Implementation sets the stage for success. We’ve all heard CIO war stories about overspend or resource burn out when managing a project of this magnitude. Your due diligence and planning will have a direct impact on outcomes and value delivered from this project.
Creating a good requirements matrix, formulating a well-structured RFQ, and building a solid cross functional team will ensure successful contract negotiations, financial and resource planning, as well as a strong strategy and achievable timeline.
It is vital that your company selects the most suitable solution. This partner should identify accurate estimates on the project duration, scope, and expected results. This preparation will help reduce risks, identify expected costs, and communicate critical information to top management and the board.