Managing an ERP implementation is no walk in the park. ERP failure is a very possible threat. If you think it can’t happen to your organization, think again. According to our 2018 research, 28% of organizations claim that their ERP implementations failed. With global ERP implementations, the risks are even greater. Global organizations face challenges such as language barriers, time zone differences, differing regulations and cultural differences.
As a result, global organizations have unique considerations when crafting an IT strategy and ERP project plan. Here are six tips to help you prepare for a successful global ERP implementation:
Focus on Business Process Reengineering
Before selecting ERP software, it is important to determine whether your organization needs to redesign any of its business processes to maximize operational efficiency on a global scale. Business process reengineering is especially challenging for global organizations because a process that works for one branch of the organization may not work for another. For example, taxation structures vary from country to country. While one country may tax profits equally, another country may employ a progressive tax rate on profits. Furthermore, accounting methods may vary from one country to the next, making standardization difficult.
Addressing these country-to-country differences requires organizations to confer with stakeholders at every location. During these sessions, you should not only determine what processes should be improved, but you also should consider what processes should be standardized versus localized. Only after the future state is documented across all locations, should you submit your business requirements to ERP vendors.
Poor business process reengineering is one of the most significant differentiators between global ERP success and failure. Our consultants take a proactive approach to process improvement, which allows our clients to achieve increased efficiency and integration across locations.
The Beginner’s Guide to Digital Transformation
What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?
Determine an Effective Rollout Strategy
Implementing an ERP system one location at a time can make operational disruptions more manageable. Issues can be addressed in smaller batches and thus be avoided in consecutive phases. An alternative to this phased approach is the “big bang” approach, where an organization goes live with all modules and locations at once. We don’t recommend this approach for large, global organizations.
What’s wrong with the “big bang” approach? Consider this case study: In 1999, Hershey rolled out its ERP system using a “big bang” approach. The company ignored suggestions to implement over a period of 48 months, insisting they could do it in 30 months. Unfortunately, they were implementing three new ERP systems, which multiplied their likelihood of failure. Ultimately, errors in the ERP implementation caused them to miss over $100 million in orders. Today, the Hershey case serves as an example of global ERP failure.
Research ERP Vendors
Carefully selecting ERP software generally saves time and money in the long term. However, in the short term, it can consume plenty of time and resources, especially when looking for an ERP system that can address global needs.
One aspect of ERP selection where global organizations should be especially diligent is checking references. Has the vendor has worked with global organizations in the same industry as yours? Additionally, it is important to ensure the vendor’s ERP software supports global variables, such as currency and regulatory differences.
Prepare Your Employees for the ERP Implementation
Resistance to change is a natural reaction for most employees. At Panorama, we develop organizational change management plans to reduce this change resistance. As a result, our clients experience higher adoption rates and maximize their business benefits.
One of the factors that affects user adoption within global organizations is process standardization. For example, employees at certain locations may find it difficult to accept new standards of product nomenclature or new credit management policies.
In our experience, global ERP implementations require an intense focus on change management. This means conducting focus groups to understand employees’ pain points and using creative tactics to engage employees throughout the project. Change management also involves the development of a communications plan to build employee awareness, desire, knowledge and ability regarding organizational changes.
Allocate the Right Resources
Many executives view an ERP implementation as secondary to running their business. As a result, they allocate minimal resources to the project, and these resources usually don’t have an influential role within the organization.
Allocating influential team members to the project ensures that new technology and processes align with the corporate strategy. These individuals are more capable of providing the input that ERP consultants need to build a digital strategy and implementation plan.
Establish KPIs to Gauge ERP Success
Often, organizations get hung up on fancy new software features while losing sight of actual performance. So, how will you quantify success or failure?
With global ERP implementations, it’s important to develop standardized performance metrics while consulting with department heads to determine individual performance metrics pertaining to each branch. These metrics should be well-defined and quantifiable.
Ultimately, determine what metrics move your company forward and begin tracking them after implementing your new ERP system to gauge ERP success or ERP failure.
Global ERP Implementations are Difficult, but You’re Not Alone
Rolling out a new ERP system on a global scale involves many unique considerations. Should you standardize your processes, or keep them unique to each location? Does every location have adequate internet connectivity to support the software? Does your preferred ERP system support multiple languages and currencies?
Without answers to these questions, your organization might be heading towards ERP failure. However, our ERP consultants can analyze every aspect of your business to position you for a successful ERP implementation on a global scale.