We recently hosted a webinar reviewing our 2019 ERP Report. In this webinar, Chris Devault, Panorama’s Manager of Software Selection, and Vanessa Davison, our Managing Partner, share advice based on their client experience and findings from the report. You can watch the webinar below or read the transcript below that:

Webinar Transcript (edited)

This is one of the most comprehensive reports we’ve ever done. There’s just no way we can address this whole report and the content within the hour time frame.

That said, let’s dive into the independent research we’ve done based on our benchmark survey. We’re going to provide you an overview of some of the trends we’ve seen, not only from our survey results but also from what we see while working with clients.

A Wide Range of Industries

Respondent companies represent industries like manufacturing, IT and professional services.

Some ERP consultants are very industry-specific. In contrast, Panorama focuses on a wide variety of industries, which gives clients exposure to a wider range of ERP vendors and allows us to glean best practices across industries.

For example, we have some public sector clients that operate like a business – The City of Pembroke Pines made it very clear to us that they don’t operate like a public sector entity but more like a business.

Contents

1. ERP Selection Tips

2. Organizational Change and Business Process Management Tips

3. ERP Implementation Tips

4. Webinar Questions and Answers

ERP Selection Tips

1. Understand Why

It’s important for companies to understand why they are going through ERP selection. One good reason to do an ERP project is to leverage technology as a competitive advantage within your industry. This is a better reason than, “Our support is ending on our current product, and we need to switch.”

Once you understand your reasons for implementing ERP, you need executive sponsorship around these reasons, and you need buy-in all the way down to end users.

2. Document Requirements

It’s important to do requirements gathering upfront as opposed to doing it after you’ve selected an ERP vendor. At that point, you’re on the vendor’s dime, and you’re rushing to define your business requirements.

From our project recovery experience, we have found a common theme is companies waiting too long to begin requirements gathering. It’s painful work, but it ensures you implement successfully. In fact, one of our clients’ CFOs told us that spending money upfront decreases expenses during implementation.

3. Prioritize Functional Areas

Your choice of ERP software will depend on what functional areas you prioritize. Maybe you want to focus on financial management and operational management since you’re aiming to optimize your supply chain and manufacturing processes. Or you might focus on financial management and omni-channel since you’re trying to improve the customer experience within with an e-commerce platform.

Depending on your focus and the size of your company, ERP vendors have a different mix of solutions – some stand alone, some fully-integrated. Do you just want a workforce management solution, or do you want human capital management, as well? Do you want your system to include payroll, or do you want to continue to outsource it?

If your organization is prioritizing the customer experience, you’ll need a system that handles marketing and customer relationship management. Some of these systems also handle configure-price-quote.

When you’re talking about meeting customer expectations, you probably need an e-commerce platform that integrates with a core ERP system. This allows you to integrate customer data, dynamic pricing information and other real-time data with your supply chain. The retiring of Baby Boomers and the increase of the Millennial workforce is a major reason why a lot of companies are integrating e-commerce.

Some of our clients want a permanent solution, while other clients know their business is going to change and want a solution that lasts five to ten years. This decision also can influence what functional areas you prioritize.

4. Understand the Software Tiers

• We define Tier I as systems suited for companies with $750 million or more in annual revenue. Tier I vendors target enterprise-level companies with multiple entities and complex operations.
• Upper Tier II vendors still serve companies with multiple industries and business units, but these companies are slightly smaller.
• Lower Tier II vendors play well with small- to mid-sized businesses that typically serve one industry with a single entity.
• Tier III vendors include point solutions suited for startup companies.

5. Align Your People, Processes and Technology

Another important aspect of selection and implementation is strategic alignment. A clearly defined digital strategy is essential. It’s important to have a strategic roadmap with KPIs to ensure executives and middle management are aligned around the same expectations.

People and processes also must align with the defined strategy to ensure a successful project. Successful ERP projects are those that focus on improving operating processes and helping employees develop digital competencies. All too often, companies think that technology leads the project, and that’s not necessarily the case.

Organizational Change and Business Process Management Tips

1. Focus on the Customer Experience

We typically use a top-down approach to business process management, called value chain mapping. This allows companies to see processes across functional areas and business units to eliminate redundancies, improve the customer experience and generate ROI.

Amazon is a perfect example of improving the customer experience. Unfortunately, not every organization has as much to spend on technology as Amazon, but you can certainly look at them as a model.

2. Standardize Some of Your Processes

Our clients often struggle with determining what processes to standardize and which to differentiate. All too often, companies evaluate ERP solutions based on their current state, which typically is a handful of workarounds and limitations. In cases like this, companies should consider standardizing some of their processes based on best practices.

3. Define KPIs

From an operational standpoint, it’s critical to define project goals because you need some sort of success measurement, not only during implementation, but after you’ve gone live.

4. Move Beyond a Communications Plan

The way we look at change management is we meld the traditional approaches with modern times in order to enable the digital worker. A lot of traditional change management is about communicating with employees from across the organization throughout the project.

If we go to the next slide, you’ll see what our respondents did as it relates to organizational change management activities. You’ll see that communication plans are at the top.

Integrating people and processes is challenging and requires more than a communication plan. So, in addition to helping companies develop a communication plan, we help them conduct focus groups and business readiness assessments.

ERP implementations and business transformation initiatives fundamentally change an organization’s key processes and operations. As such, companies should develop a full change management plan that views change from different perspectives such as culture, structure, workflows, processes and digital awareness.

We had a client whose executives initially said, “We don’t meet change management. Please don’t mention change management activities.” Four years later, they’re behind in their implementation, so they decide to focus on change management.

ERP Implementation Tips

1. Avoid Budget Overruns

Why did respondents’ projects have budget overruns? Some of the main contributing factors relate to a lack of planning upfront – scope expansion, underestimated consulting fees and unanticipated organizational issues. Project managers and team members need to account for all of these things before ERP evaluation.

We can’t tell you how important it is to get the proper requirements gathered as you’re documenting your current state and future state. Many companies don’t have the proper requirements, and they can’t tell the story well enough to the vendor to have the vendor properly design the system.

2. Avoid Timeline Overruns

Why did respondents go over their original timeline? The timeframe was the unrealistic, and that really goes back to not properly gathering requirements. Also, respondents experienced data issues, scope expansion and organizational change management issues.

Both timeline overruns and budget overruns can be considered an ERP implementation failure.

3. Focus on Benefits Realization

Many companies think they need all this advanced functionality in order to receive benefits. However, in our experience, as companies are implementing basic out-of-the-box functionality in phase one, they are receiving all sorts of benefits. Because of the new technology, users are figuring out how to leverage information and data differently.

An example of basic functionality that delivers benefits is workflow automation. The ability to automate processes, such as a purchase order approval, makes your organization more efficient.

After a year or two of basic functionality, our clients then start to pick and choose where they want to implement advanced functionality. That’s when they’re going to realize benefits tenfold of what they’ve already seen.

4. Focus on Change Management

The key lesson learned from these project results is to focus on change management. This is because . . .  

• Employee adoption determines the success of the ERP project. In many of our software expert witness cases, we’ve noticed that this was a key ERP failure
• If team members are not engaged in the project, they find ways to work around the system. You don’t want to invest in technology, take the time to implement it and then have users do workarounds.

5. Determine Your Ideal Implementation Approach

Many companies in our study are choosing a phased approach by module. Another popular approach is the big bang approach. Companies with multiple locations that use this approach typically don’t go live with all locations at once but choose one or two locations with similar functionality. Many of these companies implement basic functionality all at once, which accounts for most, but not all of the ERP system.

There’s not one right approach. What we do with our clients is determine the best strategy based on unique factors, like culture and ERP project team dynamics.

6. Use ERP Consultants

The report indicated that most companies do use ERP consultants for ERP projects. Working with a consultant is like having a fresh pair of eyes since the consultant is a third party.

ERP consultants can walk into companies and ask, “Why is it being done this way?” Companies will often answer, “It’s just the way it’s always been done to work around certain people or give certain people certain positions.”

Many respondents did not use consultants for process and change management, which is interesting because in my career as a CEO, that’s what we usually used consultants for. In my experience, consultants were useful because they taught us “how to fish,” and left us with deliverables and documents that could enhance our team’s performance in the future.

7. Define ERP Success

How should you define success? That’s a very interesting question because there’s many different perspectives, and every organization is going to define success differently.

For executives, success if often about creating value for the customer, remaining competitive and achieving ROI. When you think about achieving ROI, you could achieve it from a financial perspective, but you can also achieve it via innovation and employee retention. Technology is just an enabler to all this.

From an end-user perspective, success might look like the ability to do your job more efficiently. Once people are trained on the systems, they realize the importance of data and the upstream and downstream effects.

For example, it’s very important for the sales team to capture the right amount of data around pricing. The proper input of this data has a ripple effect throughout the organization. If end users take the extra minute to populate more data fields, then other parts of the organization, like operations or finance, will benefit.

Webinar Questions and Answers

Once you choose a vendor, how long can you negotiate on pricing?

ERP Contract Negotiation is a service we provide to our clients. You can certainly take the time that you need to negotiate.

I always say that you really need to understand what software you’re purchasing. You want to make sure you’re getting a fair market price for that software and that functionality. Then, you need to line that up with your statement of work.

There are certainly negotiations that could be done around pricing and terms of service, but what our negotiation processes really flesh out is a complete understanding of the statement of work and how each of those functional areas are going to be implemented.

What amount of training is expected per employee?

One of the things that we help establish that differentiates us from the vendors is a training strategy. Many vendors have great training methods – they have videos, recordings and documentation, but these may not be specific to your application. For example, if you have some customizations or some user-defined fields, vendors’ training materials are not going to cover that.

We conduct assessments to understand the change readiness of the organization. These assessments tell us how much training is needed per employee. This could be anywhere from ten hours per employee to a full month’s worth of training. It depends on the culture and the aptitude of employees.

User training is not just training on the system. You also need training on the unique workflow of each employee.

Do you have experience working with nonprofit companies?

We actually have a lot of experience working with various nonprofit companies. If you want more information, feel free to give us a call. Public sector is absolutely one of our key strengths.

What does success look like at the different levels of an organization?

A business owner may say, “We implemented the system and went live in nine months as we anticipated.” However, an end user may say, “We went live in nine months, but I didn’t get all the functionality that I was promised during the sales cycle.”

Do ERP vendors handle product disassembly?

Most companies are building things, so most of ERP software solutions are not necessarily geared for disassembly. There’s all sorts of nuances that come into play. For example, when you’re disassembling and refurbishing an engine, you need to be able to schedule and forecast on what parts are going to be good, what parts need to be refurbished, what parts need to be scrapped and where else these parts can be used.

While it’s difficult for ERP systems to handle reverse billing materials because of the complexity, there’s certainly a handful of vendors that handle it out-of-the-box or with extended solutions.

What would success look like for somebody in finance and somebody in purchasing?

I would say somebody in finance wants access to real-time data. He wants to be able to look across the organization at what orders are coming in, what’s shipping out and so forth.

For a purchasing manager, success is about establishing best practices and automating business processes to make more optimal purchases. Some companies carry a high value of inventory, but they can achieve cost savings by reducing this inventory.

Some of our distribution customers carry a little bit more inventory because they want the ability to service their customers as a one-stop-shop. For example, when a national emergency arises, and their customers are asking for more than usual, that’s when they see the benefit of carrying a little bit more inventory.

Do you offer formal training for implementation teams that are about to embark on an ERP project?

The answer is yes, we do have formal training. If you go to our website, it’s called ERP University, and we can customize it for you. We can train you on anything from change management to process management to what to expect during an ERP implementation project.

Conclusion

Panorama’s ERP consultants can help your company set realistic expectations for its upcoming ERP project. You can gain insights from the benchmarks in our 2019 ERP Report, or you can contact us for a free consultation.

Since 2008, Panorama’s ERP consultants have been monitoring the ERP industry for trends relevant to organizations’ ERP projects. Our analysis has been vendor-neutral and thought-provoking, providing organizations with realistic expectations for their ERP implementations.

The 2019 ERP Report delves even deeper into the data to analyze what these trends mean for organizations now and in the future. The findings from this year’s report point to one important concept: ERP projects are most successful when focused on integrating people, processes and technology.

This concept has proven true in our ERP consulting experience, and it also is supported by several findings from our report:

1. Many respondent organizations found the technical aspects of their implementation easier than the process and organizational change aspects.

Organizational changes are difficult because people naturally resist change. Employees may refuse to learn new processes, or they may speak negatively about the ERP project amongst coworkers.

The most difficult part of organizational change management (OCM) is identifying and eliminating the barriers preventing employees from using new ERP software. This involves extensive communication and training aimed at developing new organizational digital competencies. We recommend developing an organizational change management plan before you begin ERP selection.

Don’t let technology challenges distract from people and process challenges. Focus on all three components of ERP success, while paying close attention to people and processes, in particular.

2. The most common ERP selection scenario among respondents is an ERP upgrade.

How is this relevant to the “people, process, technology” paradigm? Well, an ERP upgrade usually is not as technically-demanding as a full ERP implementation. By upgrading your current ERP system instead of completely replacing it, you can dedicate more focus to people and processes.

As outlined in the report, most organizations are focusing on change management, and most are improving key business processes. This indicates that organizations understand the importance of people and processes, and the reason they’re pursuing ERP upgrades may be that it allows them to more easily dedicate an intense focus to these success factors.

With a more dedicated focus on change management and business process management (BPM), guided by an ERP consultant, these organizations likely would have achieved the business benefits they expected and avoided budget and timeline overruns.

While an ERP upgrade is not the best choice for every organization, it’s an option that every organization should at least consider. While weighing different options, you have the opportunity to define organizational goals and determine what software functionality you need to achieve these goals. Oftentimes, organizations find that the newer version of their current software provides all the functionality they need to acheive their organizational goals.

When organizations are focused on bells and whistles offered by other ERP systems and ERP vendors, this often foreshadows a very technology-focused ERP project. While evaluating other systems and vendors is wise, you should ensure your business needs are what’s actually driving the evaluation.

3. Almost all organizations improved their business processes as part of their ERP implementations.

This likely indicates that many organizations understand the importance of aligning new technology with future-state business processes.

In our experience technology delivers the most benefits when it supports efficient processes. When organizations do not optimize their processes, or they select technology that can’t support optimized processes, their new ERP software cannot enable business transformation.

4. The most popular implementation approach among respondents is implementing ERP in phases.

When implementing ERP software, large global organizations often face more organizational change management challenges than smaller organizations. Implementing ERP in phases gives large organizations more time to address any lingering people and processes issues experienced by individual business units or locations. If they went live with all business units and locations simultaneously, they would need to address all of the people and process issues at once. They might not have enough time to dedicate the level of focus necessary.

This consideration may be one reason so many organizations in our study are using a phased implementation approach.

While change management and business process management are typically addressed before implementation, there are always lingering issues – or new issues – that emerge once the system goes live. Some of the people and process issues we’ve seen in organizations post go-live include residual resistance to change and the need to reinforce process and system training.

One of our recent clients began their phased implementation with the business unit that was the most enthusiastic about the ERP implementation. This energized the rest of the organization and facilitated project buy-in.

5. Less than half of organizations used ERP consultants for either OCM or BPM services, and by no coincidence, few organizations realized expected business benefits.

For example, only 19% of the organizations that expected to realize benefits related to growth and competitive advantage actually realized these benefits.

We have found that a lack of benefits realization is often related to inadequate change management and business process management. While most organizations in our study improved their business processes, many of them likely followed an ineffective methodology – or no methodology at all – since they didn’t seek the guidance of ERP consultants.

The BPM methodology we use engages stakeholders from across the organization, which encourages collaboration and enables cross-functional efficiency. We ensure organizations focus on business process reengineering before ERP selection so they can select technology that aligns with their future state business design.

People, Process, Technology

While many organizations in our study appear to at least have a basic understanding of the importance of integrating people, processes and technology, they do not seem to have a full understanding of what it really entails. Organizations can increase their understanding of ERP success by working with an ERP consultant, like Panorama, to build a holistic project plan. We ensure your project plan includes all essential activities at the right stages throughout your project. To learn more about ERP success, download Panorama’s 2019 ERP Report.

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.

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.

Like the nervous system, ERP software delivers critical data from a variety of sources to a centralized hub where the information is analyzed. No one thinks twice about the nervous system when it’s working properly, but if it begins to break down, it has our full attention. Similarly, when an ERP implementation goes awry, it captures our attention, as it can negatively impact the organization’s supply chain and other critical business functions.  

Many large organizations have struggled with implementing ERP software. Think Waste Management’s failed implementation of an SAP ERP system and Nike’s disaster with i2’s “software glitch.” While these high-profile ERP failures should serve as lessons learned, organizations don’t always take advantage of the insights.

To ensure you are aware of the potential pitfalls of implementing your ERP solution, we’ve outlined five mistakes to avoid:

Mistake #1: Buying an unnecessary system

Organizations often find themselves dissatisfied with their current financial, supply chain management or human resources management systems and decide that a completely new ERP solution is the answer to their dissatisfaction. While a new system is warranted in many cases, there are instances where a refinement of the existing system might be what’s really needed.

We’re all familiar with the notion that sometimes our eyes are too big for our stomach. The same can be applied to the decision to implement a new ERP system. Falling in love with live demos, sales pitches and the perceived successes of other organizations can lead you to the conclusion that a new system is the answer to all your problems.

Prior to implementing a new system, we recommend establishing a task force to determine whether a new system is necessary. It may also be worth engaging an independent consulting firm, like Panorama Consulting Solutions, to give you an unbiased opinion as to whether a new system is the best choice for your organization’s needs.

Mistake #2: Misunderstanding success

Companies that have decided to move forward with an ERP implementation often get mesmerized by software features. This can occur when the project team doesn’t properly identify the organization’s core needs. In addition, project scope may not be well-defined and financial requirements may be unclear.

When planning for implementation, your organization should have clearly-defined objectives. Also, you should define key performance indicators as well as a project budget and timeline. This will ensure there is consensus around what success looks like.

Mistake #3: Inadequate planning

Just because an ERP project plan has been created doesn’t mean it will be effective. Many an ERP implementation has run aground because of insufficient planning. The person responsible for the planning was ill equipped to handle that responsibility. Bad planning often involves overly-optimistic timelines as well as a lack of business process reengineering and organizational change management.

When preparing for an ERP implementation, your organization should incorporate high-level strategic planning as well as meticulous planning at the detailed level. All phases of planning should consider every impacted department and every employee group. In addition, you should develop a contingency plan in anticipation of potential problems.

Mistake #4: Inadequate resources

Assigning critical staff to your ERP project without careful planning can be a recipe for disaster. Positions can be difficult to adequately backfill, meaning resources may only have part-time involvement in the project. The result is a lack of focus and commitment leading to inadequate data migration and an inability to maintain deadlines.

Proper allocation of resources is vital, and your organization must understand the internal commitment necessary to ensure success. Building a strong project team will reduce your chance of ERP failure.

Mistake #5: Over-customization

The growing reliance on extensive ERP systems and the rising number of third-party modules has led to increased software customization. Customization can create extremely complex systems and extend your project scope. This is not to say all customization should be avoided, but it’s not realistic to view an ERP system as a solution that meets all needs in every situation.

Your organization must build strong project governance to ensure customization does not get out of control. Relying on capable project managers will help control scope creep and reduce the chance of cost overruns.

Avoiding ERP Failure

Investing in ERP implementation planning and ensuring organizational alignment will help you avoid ERP failure. Panorama’s ERP consultants can help you develop an implementation plan that accounts for all critical project activities and mitigates common project risks.

Software implementations carry significant risks, including budget and duration overruns and implementation failures. Often, these risks can be mitigated with proper planning at the beginning of the project. Instead of making decisions based on fear, you should feel confident you’re addressing the potential pitfalls of ERP projects.

Here are six ways to mitigate risk before beginning the software implementation process:

Understand Your Business Strategy Objectives

Clarifying your business strategy requires collaboration among all stakeholders. During these discussions, define what customer success looks like and determine what’s working and what’s not. Most importantly, clearly articulate your objectives – do you want to create new business models or generate new revenue using ERP software?

These discussions will help you achieve organizational alignment. Ultimately, executives and middle management should be aligned around what changes are needed to improve your organization’s competitive advantage.

With organizational alignment, you can reduce the risk of selecting the wrong software system. When you know your long term goals, you know what technology your organization needs.

Set Realistic Expectations

ERP failure is often caused by unrealistic timelines and budgets. Understanding what benchmarks are realistic for your industry and company size will help you set realistic expectations. While you may need to adjust expectations throughout the project, starting with a realistic estimate will make these adjustments less surprising to executives.

ERP vendors may not have a realistic view of the resources and internal requirements necessary for a successful software implementation. It’s up to you to create a realistic software implementation plan based on your organization’s unique situation. This is an area where independent ERP consultants can be helpful.

Prepare Employees for Organizational Change

It is human nature to resist change. Change resistance causes implementation delays, quality problems and reduced productivity. If employees don’t adapt to change, your digital strategy will not lead to lasting business transformation.

Obtaining buy-in from executives first is a good way to obtain buy-in from team members and employees. If executives are excited for change, this attitude will be contagious. You can obtain buy-in from all stakeholders by communicating the nature of upcoming changes and the reason for change. Communication should be guided by a change management plan, which is informed by readiness assessments and user acceptance testing.

If your employees aren’t using new software day to day, you will have to postpone go live until they accept change. However, if you obtain buy-in early, you reduce the risk of project delays. The sooner employees start using software, the sooner you’ll realize business benefits.

Optimize Your Business Processes

An ERP implementation is a good opportunity to optimize your business processes. While most back-office processes can be optimized based on standard software functionality, some processes should be redesigned independent of software. Processes that provide competitive advantage shouldn’t be constrained by an ERP vendor’s “best practices.”

Optimizing your processes before ERP selection minimizes risk because you’re ensuring you select software that meets your current and future needs. Optimized processes help you develop demo scripts for ERP vendors to ensure they focus on your unique needs. If you were to select an ERP system without knowledge of your future-state processes, the software might require extensive customization.

Why bother with business process reengineering? Employees at most organizations work in silos and have different ways of performing similar processes. This creates duplication of effort and makes it difficult to gather and analyze data. Improving the customer experience via software implementation requires real-time data, so you should break down silos as much as possible.

Plan for Data Migration

With every software implementation, there is the risk that ERP software will not enable the organization’s strategic objectives. To mitigate this risk, reliable and actionable data is essential.

As soon as you select a software application, you should start preparing for data migration. Most legacy data is not ready for new systems. Data is usually spread across multiple sources with various structures and formats.

To account for this complexity, you should document and establish a data strategy. For example, you will need to cleanse data to resolve duplicate data and other common data quality issues. You also should define future nomenclature for items, item descriptions, units of measure, etc.

Successful data migration requires involvement from four key groups: data owners, the functional team, the data migration team and the project team.

Limit Software Customization

Once you start down the path of software customization, it’s difficult to stop. You might receive customization requests even after you’ve made it clear there will be no further changes. After the final round of customization, you should only approve customization requests that truly benefit your competitive advantage.

Strong project governance and project management ensure the implementation team doesn’t over-customize the ERP software. Investing in business process reengineering also is a good strategy for limiting last-minute customization.

Technology-focused Projects are Inherently Risky

There is a distinct difference between technology-focused and business-focused projects. Technology-focused projects neglect activities that align people and processes with new technology. Business-focused projects, on the other hand, focus on change management and business process management. Guess which type of project is less risky.

ERP implementations are frequently run by project managers with little ERP implementation experience. Many of these project managers refuse to contract with ERP consultants. As a result, organizations struggle to differentiate between various ERP vendor proposals. When they do finally implement an ERP system, they struggle to realize the full benefits of digital technology.

Clearly, these project managers could use third-party guidance. However, finding a reliable implementation partner is no easy task. Here are four tips for finding a trusted partner for your ERP implementation:

1. Ensure the ERP Consultant is Technology Agnostic

An independent ERP consultant has no financial ties to a particular ERP vendor or ERP system. The implementation partner is only interested in the client’s digital transformation success.

Preferred partners, on the other hand, are tied to specific vendors. In other words, a preferred partner’s revenue model depends on selling or servicing particular systems. This is typically the case with any VAR or large consulting firm specializing in just a few ERP systems. When it comes to smaller systems, it is the vendors themselves who sell and implement these systems.

While you may want a large ERP system, like SAP or Oracle, you shouldn’t rule out other systems that meet your business requirements. You’ll never know what you’re missing unless you hire an ERP consultant with the freedom to recommend any system.

Another benefit of hiring an independent ERP consultant like Panorama Consulting? These firms typically have a proven vendor negotiation methodology developed from years of experience with hundreds of ERP vendors.

2. Understand the ERP Consultant’s Methodology

When evaluating ERP consulting firms, you should understand their methodologies and where those methodologies come from. Many consulting firms use canned methodologies from various business training organizations. Few consulting firms have taken the time to leverage their learning into their own methodologies.

Your consultant’s methodologies should holistically focus on people, processes and technology. As more organizations pursue digital transformation rather than traditional ERP implementations, the need for a holistic approach is becoming clearer.

You should also consider whether the consultant’s methodology is flexible enough to fit your needs. For example, some organizations need a business process management approach that focuses on improving individual processes. Others need a business process management approach that focuses on streamlining end-to-end processes. Panorama has expertise in both approaches.

The truth is, methodologies should evolve as technology evolves. Organizations now expect more from their technology and want an innovative implementation partner.

3. Ensure the ERP Consultant has a Wide Breadth of Industry Experience

A key part of every request for proposal is the section on “prior industry experience.” You might find the consulting firm has experience with organizations similar to yours. However, consultants that specialize in only one market can be myopic in their focus.

The ideal ERP consulting firm leverages best practices from many industries. Its consultants are operational experts with hands-on experience tackling the same challenges their clients are facing.

4. Determine the Level of Diversity Within the Consulting Team

People with different backgrounds approach problems from different perspectives. This diversity can help you build competitive advantage. ERP project managers know this and staff their teams with employees from different departments while ensuring they have different skill sets. Why haven’t ERP consulting firms followed suit?

Many consultants bring the same team of resources to each pitch and presentation, regardless of cultural fit. Everyone on the team has worked in the same handful of companies and views the world through the same eyes. Where are the differing opinions and skills necessary to transform your organization? Where is the global understanding needed to improve your competitive advantage?

The top ERP consultants use diverse project resources who collaborate face-to-face to help each organization achieve its strategic vision.

Who Will You Hire?

For those who have never evaluated ERP consultants, the sheer amount of information can quickly prove overwhelming. These tips should help you understand what factors to consider when interviewing and hiring an implementation partner.

Will you hire the consulting firm that uses a predictable methodology and recommends a predictable ERP vendor? Or will you hire the consulting firm that thinks outside the box?

Panorama’s team thinks outside the box. We are technology-agnostic and adapt our approach to your unique needs. Schedule a free consultation to learn more about our flexible and integrated approach.

 

What would you do if your ERP implementation went over-budget? What if it caused an operational disruption? You would have to react quickly and deduce the reasons for failure. Once you get your project back on track, you’d have to make up for lost time.

This scenario is probably making your stomach churn. No one wants to waste time and money. That’s why many organizations take a proactive approach to risk mitigation. They develop a risk management plan before selecting ERP software. They also assess their project plan to ensure it has the right activities and right level of detail, and they perform continual assessments throughout their project.

Why Assess Your ERP Implementation?

• You’ll have a comprehensive view of your project activities, performance and risks​.
• You can detect errors early and proactively prevent errors.
• You’ll minimize implementation risk and cost.

How to Assess Your ERP Implementation

Conduct Stage Gate Reviews

Stage gate reviews ensure the quality and completeness of your project plan. At the end of each implementation stage, the executive team and project team should determine if every deliverable for that stage is complete before moving on to the next stage.

This is also the time to assess the quality of work. Are you addressing business aspects, such as change management, or are you just focusing on technical aspects? What methodology and templates are you using? As you identify risks, you can include them to your risk management plan.

Stage gate reviews can reduce your likelihood of needing project recovery services, which is a last resort for many organizations. Even organizations pursuing digital transformation can inadvertently skip key project activities and find themselves in need of project recovery.

Assess Your Project Management and Governance

Effective project management can mitigate many project risks. A good project manager knows who’s in charge of managing the project budget and timeline and has a good understanding of the roles and responsibilities of project team members. If this doesn’t sound like your project, it’s not too late to develop strong project governance. Panorama’s ERP consultants provide project auditing services that help organizations stay on-budget and realize expected business benefits. 

Focus on Organizational Change Management

When assessing your project plan, you might notice it’s a little heavy on technical activities and little light on people-related activities. Do you have a plan for identifying and mitigating change resistance? Do you understand the impact of change on each department and individual employees?

Your project plan should include change management activities that promote two-way communication and drive awareness of project goals. Communication works best when it’s informed by employees’ needs and concerns. By investigating the reasons for change resistance and determining the skillsets employees lack, you can develop a change management plan that addresses the entire organization – at the department and individual level.

Focus on Business Process Reengineering

Your project plan may be lacking a focus on business processes. If so, business process reengineering may be a good addition to your project plan. Business process reengineering ensures a new ERP system has the functionality to support your organization’s goals. Involving subject matter experts helps you determine business requirements and identify opportunities for process improvement.

For every process you improve or redesign, change management becomes more essential, so be sure your project plan considers the interdependency between business process reengineering and organizational change management. For example, you’ll need to document the change impacts of each redesigned process.

Assess Your Data Migration Plan

Organizations that develop a data strategy prior to implementing ERP software are more successful with data migration. The process is still arduous, but it doesn’t cause operational disruption. These organizations spend time defining the scope of data conversion and assessing data cleanliness.

A best practice for data migration is setting milestones and conducting multiple conference room pilots. Aim to have 25% of your data converted and cleansed for the first conference room pilot, 50-75% for the second and 100% for the third.

Assess Your Level of Customization

Software customization is costly, so it’s important to plan for it early in the project to avoid going over budget. While assessing your project governance around customization, you may find a lack of project controls.

Good project governance for customization includes predefined customization limits and a formal approval process for change orders. Executives should have the final say when it comes to additional customization. They will decide if it’s worth the extra cost by investigating the reasons behind the change order – did it originate from employees’ resistance to process changes or is it aligned with the organization’s digital strategy and competitive advantage?

What if You Identify Major Risks?

While assessing your ERP implementation, you may find holes in your project plan. It’s not uncommon for organizations to skip organizational change and business process management in order to accelerate their implementation. Even organizations pursuing digital transformation tend to overlook certain change management activities.

Fortunately, revising a project plan isn’t difficult if the project is still in its early phases. Most executives will not object to more project controls around customization. Some may object to organizational change management, but developing a business case can help you show the value of change readiness.

New digital technologies, like AI an IoT, are augmenting the business intelligence provided by ERP software. While this business intelligence helps organizations improve the customer experience, it also presents new data security challenges. With great business intelligence comes great responsibility.

Better customer intelligence is generally beneficial to both the organization and the customer, but sometimes, it can be a burden. For example, a data breach can cost your organization millions in legal fees and lost business. You may also lose customers if they feel their privacy is threatened, not by a security breach, but by how you choose to use their personal data. Mitigating these risks requires an understanding of potential security threats and applicable compliance issues, such as HIPPA and GDPR.

How can you be proactive in identifying risks while still supporting revenue-generating initiatives across your organization? Here are four tips for enabling an innovative, but vigilant, ERP implementation team:

Evaluate your organization’s culture.

A customer-centric culture promotes data security because it encourages employees to listen to customers’ data privacy concerns and share them with executives. Let’s say you’ve implemented a new CRM system, and several customers are expressing privacy concerns. Your ERP implementation team should be the liaison between customer service reps and executives to establish a data management process and define security standards.

It’s important to develop a change management strategy that promotes a culture where data security is the responsibility of everyone in the organization. ERP software integrates data across the organization, so several departments likely have access to customer data. Improved data access is essential to digital transformation, so restricting data access isn’t the answer – better security is.

Understand the role of the chief information security officer (CISO).

Your CISO can enable your digital strategy by leading cultural changes, such as encouraging open communication and prioritizing education. In terms of education, CISOs should regularly host cyber security trainings and provide educational materials in a variety of formats multiple times per year. Cyber security training is also an essential pre-implementation activity.

Open communication is especially important between the CISO and other executives. By scheduling regular meetings with privacy and legal teams, CISOs can build strong relationships across the organization. A foundation of trust makes it easier for CISOs to prove the value of data security by presenting credible data and suggesting possible next steps. This proactive approach is enabled by predictive analytics – CISOs should use business intelligence to protect business intelligence.

Develop strong governance processes.

Your CISO needs complete visibility into the organization’s supply chain and ERP selection process, so they can evaluate new technology from a data security perspective. By developing a vendor management program, CISOs can keep tabs on various ERP vendors and their associated security risks. Predictive analytics is useful here as well. It enables CISOs to quickly detect when an implemented system violates the organization’s security profile. Even the top ERP systems in your industry may have vulnerabilities.

Strong governance processes also help ensure legal compliance, especially with the International Organization for Standardization’s (ISO’s) IT security management standards. A security solution, like HyTrust, can serve as a compliance litmus test.

Be especially wary of IoT security.

The internet of things (IoT) plays a major role in ERP implementations for many organizations. Industry analysts predict that IoT and ERP will become an increasingly popular combination. IoT improves data insights and operational efficiency, so it’s not hard to see why organizations are drawn to it. If you’re considering integrating IoT with your ERP system, there are several security concerns of which to be aware.

IoT devices are vulnerable to cyber attacks because they communicate with other internet-connected devices, making them prime targets for hackers who want access to multiple data sources. IoT devices aren’t only a convenient target, but they’re an easy target – most organizations aren’t prepared for an attack and don’t have adequate protections in place. They don’t realize that a device managed by a third party may not have the same level of security as technology hosted on-premise.

A lack of due diligence on the part of the IoT provider is another reason hackers target IoT. Hackers know that many IoT providers haven’t taken the time to enhance their security as they were too eager to get their devices to market before competitors.

How can a CISO protect customer data stored and/or collected by an IoT device? One option is implementing an IoT device management platform, such as Amazon Web Services. These platforms enable you to install crucial software updates on all your IoT devices. Your ERP project team can also protect data by designing optimized business processes that reduce errors.

Convincing Your Boss to Invest in ERP Data Security

It’s not easy to prove the ROI of cyber security. Justifying the investment, requires an understanding of the threat landscape, attack probability and potential losses. With this information, you or your CISO can convince executives that ongoing cyber security is necessary to support the organization’s goals.

The implementation of a new ERP system is a great opportunity to discuss cyber security with executives. New technology brings new security threats which need to be addressed if you want to realize value from business intelligence and customer data. Consider hiring an ERP consultant to help you develop a cyber security business case.

You want to begin an ERP implementation, but executives aren’t fully on board. How can you gain the support of your leadership team?

Ultimately, every project comes down to one thing: the potential ROI. Here are eight tips for developing a business case to convince executives to invest in new technology:

1. Relate the problem to the bottom line

Perhaps you’re hoping ERP software will help employees keep up with increasing workloads. Maybe you’re having a hard time accessing real-time data. Regardless of your reasoning, the best way to pitch your strategy is to relate it to your organization’s bottom line.

Are your employees spending too much time on mundane, repetitive processes? Present that information in terms of lost productivity and labor costs. Are you continually missing deadlines? Calculate the penalties you’ve had to pay as a result. Sound financial reasoning sets your recommendation off on the right foot.

2. Show multiple opportunities for improvement

One purchase, numerous benefits – what’s not to love? Most enterprise technologies touch multiple areas of an organization. This makes them a valuable investment. To strengthen your value proposition, emphasize each of the ways an ERP system could transform your organization.

3. Demonstrate long-term usability

Executives aren’t just worried about today’s results – they must think about tomorrow’s goals as well. In the long-term, outdated technologies can become hard to use and expensive to maintain. Modern ERP systems, on the other hand, are more user-friendly and seamlessly integrate with technologies you might adopt in the future. Look for ERP vendors that have a demonstrated history of support, system updates and long-term ROI.

4. Build credibility through case studies and reports

Corporate decision-makers need data to rationalize an investment. Most ERP systems – especially large systems like SAP and Oracle – can provide extensive resources to help you build your business case. For example, a success story from another company in your industry can be convincing to executives.

5. Anticipate failure

Executives are held responsible when an ERP implementation fails. As a result, they often err on the side of caution when it comes to expensive technology investments. When you approach the executive team, don’t just present the reasons why you should adopt the new technology. Think through the potential reasons why you shouldn’t, and come prepared with answers to objections such as:

• Our IT team doesn’t have the time to spend on implementation.
• Our legacy systems are too old to work with a new ERP system.
• Our processes are too complex for an out-of-the-box product.
• Our data won’t be secure.

6. Set a realistic timeframe

Implementing an ERP system doesn’t happen overnight. While executives may want immediate results, it’s better to give them realistic expectations. You should account for production testing, user training and data migration. Map out each milestone and consider building in extra days for unexpected roadblocks.

7. Offer to monitor, report and analyze

Meet with executives to develop specific goals and key performance indicators (KPIs). Offer to provide regular status updates to make the results more visible. This demonstrates that you’re aligned with their priorities.

8. Liaise between executives and end-users

Once executives are on board, you should continue to communicate with them regarding end-user needs. Nobody will have more insight into what’s necessary in an ERP system than the people who currently own your business processes. You can communicate their pain points up the chain of command, ensuring the technology you select meets your business needs.

Final Thoughts

Don’t be afraid to advocate for the technology you need to remain productive and competitive.

“Organizations don’t prosper,” notes Harvard Business Review, “unless managers in the middle ranks . . . identify and promote the need for change.”

Executives don’t always see the day-to-day issues that impede productivity, but they do have the responsibility to listen to and solve their organization’s challenges. Presented with sound reasoning, a business case for an ERP implementation can convince executives to invest in technology that enables transformation.

Written By: Faith Kubicki, Content Marketing Manager for IntelliChief. 

Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral. If you are interested in guest blogging opportunities, click to read more about our submission guidelines.

An ERP implementation can be daunting for any organization, but it is especially challenging on a global scale. Global organizations typically want to standardize business processes across international operations, but they also need the flexibility to serve diverse customers, employees, economies and regulatory bodies.

The decision to globalize or localize isn’t black and white. Every organization has different operational, organizational, cultural, regulatory and financial considerations. Let’s discuss some of the pros and cons of standardization and differentiation. We’ll also provide tips on how to balance globalization with localization.

Benefits of Global Standardization

International organizations, particularly those that acquire other companies, often have non-standardized business processes. Standardization allows these organization to scale for growth by consolidating business processes. Consistent processes drive operational efficiency and enable global visibility into operations. Financial reporting, for example, is faster and easier when processes are standardized.

While standardization can require a large investment in business process reengineering, you’ll ensure that all processes at all locations are designed to bring you competitive advantage. Global organizations lean toward standardization when they want to deliver quality goods or services with a high degree of predictability.

Benefits of Localization

Localization reduces change resistance because you’re adapting to the unique needs and requirements of different locations. Instead of changing local business processes to align with processes at your headquarters, localization allows you to retain the unique processes suited for each location. Certain locations may need flexibility to manage data and transactions in local languages and currencies. Some countries have intricate requirements when it comes to taxes, currencies and regulatory reporting. Differentiating your processes based on location ensures you stay compliant and avoid penalties.

Balancing Globalization With Localization

If you want the best of both worlds, you should be strategic about which processes you standardize and which you differentiate. Some processes should always be standardized. These include processes such as back-office functions that enable a shared services strategy. Other processes, such as regulatory and reporting processes, should typically be localized. While you may want to localize customer-facing processes, you should probably globalize processes that don’t add as much value.

A balance between globalization and localization becomes even more important when you consider organizational change management. The need for organizational change management at global locations typically increases the more you standardize your processes. While standardization may save money in the long term, you’ll need to invest in extensive organizational change management in the short term. This means more than end-user training. It also involves communicating change impacts and project status updates.

How Much Organizational Change Management?

The most challenging aspect of a global digital transformation might be aligning corporate culture around a singular goal. You must account for cultural differences and language differences.

Executive support is especially important during global ERP projects as local entities may be extremely resistant to globalized processes. People can’t embrace what they don’t understand, so you must communicate the reasons for transformation and how it will benefit employees and the organization as a whole.

Organizational readiness assessments are also critical to global projects. You can assess risk by analyzing your organizational attributes as well as the characteristics of proposed changes.

How Much Software Customization?

Does globalizing your business processes reduce the amount of ERP software customization you’ll need? Sometimes, but not always.

While you may be standardizing your processes based on a global standard, you’re not necessarily standardizing your processes based on software functionality. However, there is typically an overlap between globalized processes and processes that are standardized based on software functionality, as they both mostly involve non-value add processes. It’s probably safe to say that more globalization usually equals less customization (but more organizational change management).

Another strategy for reducing customization is to allow flexibility in each location’s choice of software and ERP vendor. This can make globalization more difficult than usual but not impossible.

Defining a Support Structure

While you’re determining which of your processes should be globalized versus localized, you should consider whether your support structure will be globalized, localized or customized. Many companies choose to centralize ERP support and help desk functions, while others choose to offer decentralized support to cater to diverse locations. The sooner you define a support structure, the sooner end-users will adopt new processes. This is true for both on-premise and cloud ERP implementations.

Defining a Master Data Strategy

Master data is an important but overlooked aspect of the global vs. local conundrum. Not only do you need to cleanse and migrate master data, but you need to define how it will be managed going forward. For example, will local offices have the flexibility to manage their own local chart of accounts, or will changes require centralized and global governance? The same should be decided for other types of master data, including customer, supplier and inventory master records.

Final Piece of Advice

This may be your first global ERP implementation, but it’s not ours. Our ERP consultants understand the challenges of both globalization and localization. We can help you find the right balance based your organization’s unique objectives.

Equifax, Yahoo, Uber. 2017 was the year where no data seemed safe. How secure is your ERP?

There have been improvements in cyber security in recent years, but ERP systems are still highly vulnerable to attacks. In fact, 89% of experts in the field of cybersecurity anticipate increased attacks against ERP systems in the future [1]. Of that number, 33% expect to see a significant increase in attacks. It is easy to see why it is so important for businesses of every size to invest in cybersecurity as part of their ERP.

Why Are ERPs Vulnerable?

Attackers are intent on taking the quickest and easiest route to the most valuable data. They are well aware that ERP systems are likely to have this data and can have multiple weak points of entry. It is not unusual to find companies that have no plan in place to safeguard their confidential data.

There are additional reasons why ERPs are a favorite target of attackers. One is businesses are not aware of their risk because they tend to put off regular cyber security audits. The result is potential problem areas aren’t identified. Thus no security measures are taken to fix the problem and prevent an incident. This is particularly true for cloud-based ERPs that are often accessed by multiple users over different platforms. You should be especially aware if you are using an outdated or legacy ERP. They often simply can’t stand up to new-age security threats.

Don’t Assume Your Small Business is Safe

It is a common misconception that hackers are only interested in attacking ERP systems of large corporations. The truth is that over 70% of cyber attacks are made against businesses that employ less than 100 people [2]. One reason for this is because small businesses often rely solely on the ERP vendor to provide cybersecurity.

Tips for Investing in Cyber Security as Part of Your ERP

Keep Your Software Up-to-Date

Software updates are usually done to fix any weak spots or bugs the developer has identified. If you are not automatically updating your ERP software, you are increasing your system’s vulnerability.

Promptly Apply Vendor Security Patches

Routinely updating your anti-malware and antivirus software equally important. This will ensure security patches are implemented as soon as they are provided. When patches are not applied, vulnerable areas serve as an entry point for hackers.

Require Encryption When Telecommuting

If you have employees that telecommute, encryption can help protect your data.

Opt for a Private Cloud

Private clouds are a bit more expensive, but they tend to have more stringent safety measures and fewer points of entry for hackers. Plus, private clouds are usually easier to monitor, making it easier to identify and deflect possible attacks.

Finally be certain that your employees know the importance of cybersecurity. If you have not already educated employees on what they can do to mitigate risk, do so immediately. The top two causes of cybersecurity breaches are negligent employees and inadequate passwords [3].

Require they create strong passwords that are long and use multiple characters. Encourage employees to change their passwords regularly. Employees should never use the same password for multiple accounts.

ERP vendors can provide ongoing maintenance and support but your organization’s best bet for fighting cybercrime is hiring an independent ERP consultant who recognizes the importance of contingency planning and developing a solid IT strategy.

To Learn More About Minimizing Risk in Your ERP Implementation, Download Our 2018 ERP Report

[1] https://www.prnewswire.com/news-releases/cybersecurity-experts-anticipate-growing-number-of-attacks-against-erp-systems-300466061.html

[2] https://www.secureerpinc.com/2017/05/02/new-bill-may-help-small-businesses-with-cybersecurity-guidance/

[3] https://www.techrepublic.com/article/report-negligent-employees-are-no-1-cause-of-cybersecurity-breaches-at-smbs/

My last blog covered 10 things that contribute to ERP failure or success. After reading this list, you may wonder what you can be doing differently to ensure your ERP implementation is successful.

Most poor decisions made during a project don’t become evident until later – often after it’s too late – so it’s important to recognize some of the risks and common pitfalls that less experienced practitioners often fall prey to. With a solid understanding of these risks, you’ll be able make more effective decisions that are more likely to lead to success and are less likely to undermine your ERP initiative.

Below are five decisions that may be jeopardizing your ERP implementation without you even knowing it:

1. Lack of Focus on Organizational Change Management

Sometimes no decision can result in a poor decision, as is often the case with organizational change management. Executives and project teams don’t always recognize the need or importance for change management. Worse yet, some decide not to invest the time and resources required to ensure that this critical success factor is properly addressed. If you’re not actively focusing your team and resources on organizational change and its impacts, then your decision is actively undermining your chances for success.

2. Deferring to ERP Software to Develop Your Future State Business Processes

While detailed transactional workflows will largely be dependent on the software being implemented, it is a mistake not to define your desired business processes and workflows to some degree. If you think about your business processes in the context of how they should operate regardless of technology, it will give you a clear direction on how your new software should be configured and implemented. Most modern ERP systems are far too flexible to assume they will provide a “silver bullet” in defining your future state processes.

3. Relying too Much or too Little on Outside ERP Consultants

Some executives and IT heads assume they can handle these sorts of ERP and digital transformations themselves. Others assume they can completely outsource the initiative to outside ERP consultants. Either extreme is ill-advised, so it’s important to find the right balance. You need to leverage outside help along the way, but you also need to ensure that your team owns the project and its results. This is the only way to ensure a sustainable solution that doesn’t require consultants for the long term.

4. Failing to Implement Formalized Project Governance and Controls

ERP project governance and controls are at least as important as the project manager you put in place – if not more so. These controls ensure that the project team stays focused. There will be requests that increase scope (think customization requests) so the management of time and cost must be deliberate ensuring the project stays on track for the long haul. This should be included as part of your charter during the early stages of your transformation.

5. Sticking to Hard and Fast Budgetary and Project Timeline Expectations

To use a common saying, “executives are often guilty of stepping over dollars to pick up pennies.” In other words, they focus too much on containing short-term implementation costs, even if the end result is higher long-term costs after implementation. This risk is further complicated by the fact most budget and time estimates are unrealistic or arbitrary to begin with, so adhering to them can be extremely risky.

Making good decisions also requires a strong diverse project team with skill sets that complement each other. Forming a winning team takes thought and commitment. I once worked alongside a project team that recruited team members by specifying that they only wanted internal members that would be “desperately missed” by their departments. Their goal was to form an “A” team. This initiative had project team charter and had planned for backfilling. You have often heard me say that ERP initiatives should not belong only to the IT department.

In this blog we’ve talked about some of the decisions and details that will be crucial to the result of your project. While executive oversight is imperative, adding the outside perspective of an independent consultant is a best practice to help alleviate risk while adding knowledge.

As one of the oldest and top enterprise software companies, Oracle has developed an extensive portfolio of business software applications. Therefore, it should be no surprise that it is one of the most widely used and researched ERPs. Whether you are familiar with Oracle ERP Software or just beginning to consider what they have to offer, this will help you see how they compare with other ERP providers.

1. Oracle has opted to take a different approach to growth

Most ERP providers work to add features via in-house software development. Oracle has chosen primarily to acquire top software companies and incorporate their products into existing Oracle software. Over the past few years, Oracle has made multiple billion-dollar transactions. For example, in 2016 they purchased NetSuite for $9.3 billion. In 2017 they purchased Aconex, one of the world’s top construction management platforms, for $1.2 billion [1]. Thanks to these strategic acquisitions, Oracle has managed to appeal to a wide variety of niches, giving them the opportunity to gain new customers.

2. Oracle was late to the cloud, making this an area where they are looking to catch up

While other ERPs started transitioning to the cloud early on, Oracle lagged way behind. Oracle’s focus on pushing a traditional on-premise ERP system has cost them significantly. In 2017, Oracle’s cloud revenue was listed at $5.6 billion, while Amazon’s cloud revenue was $17.5 billion and IBM’s was $17.0 billion. Oracle continues to try to make up for their late entry [2].

3. Oracle has a slightly longer implementation period

According to data made available through Clash of the Titans 2017, Oracle’s implementation period averages 24.5 months. This is about one month longer than Microsoft Dynamics at 23.6 months [3]. SAP is 23.1 months, while Infor’s implementation period is a much shorter 15.3 months. There are several possible reasons, including an initial project scope expansion, resource constraints or technical issues. Another reason might be training issues. Oracle’s software has the reputation of being less user-friendly than other ERPs.

4. Oracle is designed to fit almost any organization

Partially due to their history of making huge acquisitions of software developers in every possible niche, Oracle has managed to develop ERP applications for almost every industry. Regardless of company size or existing business challenges, Oracle can usually provide a solution. Oracle is used by professional service providers, healthcare companies, local and state governments, nonprofit agencies, and public and private schools. Other ERPs are designed only for specific niches or companies of a certain size.

5. Oracle is Known for Top-of-the-Line Security

Oracle has developed a reputation for being serious about security. However, they are not resting on their laurels. Currently, Oracle is in process of acquiring Zenedge in an effort to give their firewall security an even greater boost [4]. Zenedge’s Distributed Denial of Services (DDoS) mitigation and Web Application Firewall (WAF) are used by thousands of companies all over the world to ensure their system is protected from a potentially malicious attack. This protection will now extend to all Oracle Apps.

[1] https://www.investopedia.com/articles/insights/081816/top-8-companies-owned-oracle-orcl.asp

[2] https://www.forbes.com/sites/bobevans1/2018/02/05/why-microsoft-is-ruling-the-cloud-ibm-is-matching-amazon-and-google-is-15-billion-behind/#207025ae1dc1

[3] https://www.panorama-consulting.com/comparison-between-sap-oracle-and-microsoft-dynamics/

[4] https://www.pymnts.com/news/partnerships-acquisitions/2018/oracle-boosts-firewall-security-with-zenedge-acquisition/

Today we published our brand new 2018 ERP Software Report, which summarizes the results from nearly 300 recent ERP implementations across the globe. While the data tells a similar story to years past, it also contains a few surprises.

First, it’s important to understand where we gathered the data. The average company in our sample generates $439 million USD in annual revenue, with a majority of organizations based in North America. Organizations in the study were in industries of all types, ranging from manufacturers, retail and distribution companies, construction firms, and a range of other industry verticals.

We summarized and analyzed this broad data set to arrive at some conclusions regarding trends in the industry, challenges companies face when implementing new ERP software, and lessons learned. This is the twelfth consecutive year that we have conducted the annual study.

Some results aren’t surprising to those of us that have been in the industry for a while. Others were a big surprise to the Panorama team and I.

Here are five surprising takeaways from this year’s ERP Software Report:

1. Cloud ERP Software Adoption May Have Finally Reached a Tipping Point

We saw a very large increase in cloud ERP software adoption this year compared to past years, with this year’s mix of SaaS and cloud deployments increasing to 85%, compared to 15% on-premise deployments. While this number may not be striking on the surface, it is a big difference from last year’s data, which showed less than 50% of organizations were deploying cloud and SaaS solutions.

The fact that the leading ERP vendors are pushing SAP S4/HANA, Oracle Cloud, and Microsoft Dynamics 365 cloud solutions so aggressively may finally be paying off for them. So, which is more surprising: the fact that cloud and SaaS adoption has reached 85%, or the fact that last year’s number was so low?

2. The Grand Illusion of Lower ERP Implementation Costs

Past years have shown that the average total ERP implementation costs anywhere from 4% to 5% of a company’s annual revenue. This number includes a project’s all-in costs, including software licenses, implementation costs, hardware upgrades, organizational change management, training, backfilling internal resources, and any other costs associated with the transformation.

This year, that number decreased to 3.6% of annual revenue. While this may sound positive on the surface, it actually reveals a flaw in our data: since most deployments are cloud solutions (see point #1 above), initial costs are naturally going to be lower. However, our implementation cost data only captures the initial implementation costs – not the ongoing costs. In most cases, cloud deployment costs less money up front, but can increase longer-term outlays due to higher annual subscription costs. It is important to take this data with a grain of salt.

3. ERP Implementations are Taking Longer and Resulting in more Operational Disruption

Despite lower up-front costs, ERP implementation durations are increasing. While the total average duration increased a relatively innocuous 16.9 to 17.4 months, those that took longer than expected increased from 59% to 79%. Again, this can be largely attributed to the increase in cloud deployments, which creates a false sense of implementation speed and ease and results in unrealistic expectations along the way.

Operational disruptions saw a similar increase. Those that experienced a material disruption following go-live – such as being unable to ship product or close the books – increased from 56% to 66% last year. This isn’t comforting to most executives and points to some of the lingering deficiencies in the abilities of most ERP consultants’ and vendors’ ability to manage implementations well.

4. Despite Relatively High Satisfaction with ERP Software Vendors, Overall ERP Implementation Satisfaction Levels Plummeted to 42%

Customer satisfaction with their chosen and implemented ERP software increased to 68% this year. However, satisfaction with their overall implementations plummeted from 81% to 42%, which suggests that more companies are either struggling with their deployments and/or managing to unrealistic expectations surrounding those initiatives. Thought leadership such as Ten Tips to a Successful ERP Implementation, provide guidance on how to manage your digital transformation to success.

5. Organizational Change Management Still Reigns as the Biggest Challenge to a Successful ERP Implementation

For the second straight year, organizational change management was atop the list of top reasons why projects took longer or cost more money than expected. Ironically, many organizations think they will actually save time and money by cutting this important corner, but our research tells a different story. You are more likely to find that you have underinvested in managing organizational change, and those that do find that they implement faster, less expensively, and with a higher ROI than those that don’t.

These five “surprises” may or may not be surprises to you. They also just barely scratch the surface of the many lessons and takeaways outlined in this 40-page report, so I encourage you to download the complete 2018 ERP Report to learn more, click on the button below.

Download our 2018 ERP Report