Accelerating ERP implementations have been an elusive goal of ERP vendors, implementation partners, and customers. For five years I worked for the #2 business software developer focusing on accelerating implementations. During those five years I chased the dream and learned many lessons along the way. Follow are some of the key lessons I would like to share with you.
It’s interesting the note that these accelerators are technology-focused. Not to say that the above tools/templates are not important, however, there are more important factors that can have a greater impact on accelerating ERP implementations. Let’s explore a few key non-technology factors.
It’s a known fact that the customer needs to provide the right resources (Business, IT) with deep knowledge and experience with the existing business solution. What I see lacking is guidance to customers regarding what they need to do to prepare for a rapid implementation. If the implementation partner and ERP software vendor is serious about accelerating implementations then they will provide customers with a preparation checklist that enables the ERP implementation partner to “hit the ground running” with the customer.
At a minimum the customer should perform the following:
- Take all required software training before the implementation partner arrives. This activity will enable the customer to effectively and clearly communicate with the Implementation Partner.
- Document your existing business processes. For effective collaboration with the ERP implementation partner the customer needs to educate the implementation partner on their current business solution. A picture is worth a thousand words and accelerates knowledge transfer!
ERP Implementation Partner
Consultants that are successful at accelerating implementations are an elite group. These individuals are business solution experts that are both functional and technical. They have the ability to help the customer make both software and business decisions. At a minimum the consultant should understand how the ERP software supports an entire business process (Order to Cash), not just a specific business function (Expense Reporting).
The ability to make decisions quickly is one of the most overlooked aspects of accelerating implementations. Decisions move implementations forward. Following are the recommended methods you can use to speed up decisions:
Conduct prototyping during the sales cycle to define core requirements, validate software results, and eliminate options. The more questions you can answer during the sales cycle the faster the implementation can move.
Need to have a clearly defined scope. This includes (a) what’s in scope, (b) what’s out of scope, (c) and who is doing what. Just as important to scope definition is to define constraints and assumptions.
For ERP implementations I recommend generating scope statements with the following sections:
- Packaged ERP software features in scope (product scope). This also includes restrictions on software features in scope (example: only five customer types will be included in the rapid implementation).
- Packaged ERP software features out of scope (product scope)
- ERP implementation activities and party responsible (project scope)
A clearly defined scope allows the project team to focus on the activities that have a direct impact on the project objective(s) while filtering out “out of scope” work.
A rapid implementation approach requires full-time dedication from business owners. Business owners will be the key decision-makers and must be empowered to make decisions within hours, not days or weeks.
Methodology and Approach
I have observed two areas that slow down ERP implementations: customizations and evolving business requirements. From my experience my approach has been to minimize these areas by the following:
- Only implement the software functionality that supports the business activity the customer performs today. New business activities typically result in evolving requirements because the customer has no detailed experiences or agreed-upon expectations.
- Take a solutions-driven approach to gathering requirements. Using a traditional requirements-driven approach will result in identifying more gaps (both value and non-value-add).
Not every project or customer is a candidate for a rapid ERP implementation. Implementation partners and software providers should conduct an assessment to determine the fit for a rapid implementation. One thing you can bet on is that there is no such thing as a STANDARD rapid implementation. Each instance is unique and requires an experienced implementation partner that understands rapid implementations.
Blog entry written by Brett Beaubouef, Senior ERP Selection Consultant at Panorama Consulting Group.
A few weeks back, we highlighted some of the lessons shared by one of our clients that had recently engaged in an ERP selection and implementation process. In the podcast interview, this particular client shared several lessons learned from the selection process.
In this same podcast interview, this same client shared additional lessons learned from the company’s ERP implementation process. As it turns out, evaluating and selecting the right ERP software solution was only half the battle; the other half of the battle was effectively implementing the selected software.
Below are some of the highlights and lessons shared in the interview:
- Focus on organizational change management. At first, the client didn’t realize how important organizational change management would be to the ERP implementation. However, it quickly became clear that this would be a critical success factor for the project. We helped the client deploy a comprehensive organizational change plan, beginning with identifying gaps between processes in the old legacy systems relative to the ones in the new ERP system. These process and organizational changes were communicated repeatedly to employees, culminating in a conference room pilot and end-user training process to help end-users become comfortable with the software. The client also found it effective to clearly communicate to employees that there was no turning back to the old system and way of running the business.
- Ensure effective project controls and manage scope. One of the challenges of the implementation was managing the scope of the project. Because the company had a custom legacy system with an organizational mindset that requested functionality could be developed on the fly, it was very tempting to give in to the desires of end-users to change the software rather than leverage out-of-the-box functionality. It took a great amount of discipline to ensure that the company leveraged best practices from the software while at the same time changing the software where applicable to accommodate the company’s competitive advantages.
- Focus on business processes and workflows. Not only were business processes in the new system clearly defined and documented, but employees repeatedly simulated the system against these business processes until they got it right. End users and employees were involved early in the ERP selection and implementation process to clearly define, test, and train on the business processes and workflows of the new system.
- Go-live is not the finish line. The company decided early on that they were not simply going to implement the software and call it a day; instead, they viewed their ERP initiative as a continuous improvement initiative. Once the software was implemented, they constantly measured benefits and made improvements to the system and associated processes. Some of the key business benefits realized by the client include streamlined business processes, more consistent standards, easier employee training on the new system, and better customer service.
- Independent ERP consultants are crucial to the success of the ERP implementation. The company found that involving outside ERP experts was instrumental in making the ERP initiative successful. In this case, ERP consultants from Panorama Consulting Group provided the expertise. This allowed the company to leverage outside expertise, manage the ERP vendor, and ultimately reduce overall project costs while increasing business benefits. In addition, this outside help enabled the company to embark on the ERP selection and implementation initiative without disrupting day-to-day operations.
These are just handful of lessons shared in this informative interview with a client who recently completed an effective ERP implementation. Click on the audio player below to listen to the full interview with the client.
So when you implement an ERP system, what do you expect from it? To improve your business performance? To make your employees’ jobs easier? During our research, we have found that, besides business or process improvements, some companies implement ERP at the request of their customers or in hopes of cutting redundant labor costs. However, as is the case with many tings in life, things don’t always go as planned.
An ERP implementation is accompanied by enormous risks to the organization. Risks can vary based on different phases of the ERP life cycle. It is important to be fully aware that an ERP system doesn’t simply mean an IT project.
Many times, when the ERP project is over, you find:
- You didn’t get what you expected from the ERP system
- Employees resisted the new system
- There were no operational improvements
- There were no significant costs saving
- The new ERP system doesn’t align with your business processes.
I can go on and on about a variety of risks which might impact your business, but I think you get the idea with the sample listing.
Besides the risks associated with an ERP implementation, you might also wonder whether your ERP scope meets your current needs? Do you need to switch to a different deployment or a different system so as to lower your operating costs? No doubt at some point you realize that you need a system and process audit on your existing ERP software package.
By participating in Panorama’s 2010 ERP Benchmark Survey, you will have the opportunity to be selected for a complimentary, two-week Enterprise Systems & Processes Audit Program. We will provide a full review of your current ERP system’s deliverables and processes, summarize lessons learned, and advise you on how to make continuous project improvements.
Just spend 10 minutes to take the survey and you may very possibly get help to improve your enterprise system!
Blog entry written by Haoyan Sun, Research Analyst at Panorama Consulting Group.
Ever Thought You Might Need Another Mother?
When you select a ERP consulting company to manage your ERP implementation, they should essentially become the mother to your enterprise software.
Like mom, they are your allies. They represent you, stand by you, become the peacekeeper and support all your company’s idiosyncrasies. The management team supports your needs and helps with developing best practices.
Like mom, they are your teacher. The experience they have gained defines your education, guiding you along the path to a successful and smooth ERP implementation. They guide your decision making, train you to look to the future, and to make better decisions. They help you learn to read, write, document, and form decisions that support success.
Like mom, they are the go between. Conflict resolution between team members, between ERP software and processes, between conundrums and solutions, between nice to haves and absolute requirements, between spending your money wisely and over-spending, are the daily activities they provide throughout your project.
Like mom, your ERP project team is the “soccer mom”. They drive your ERP project forward; they pick your company up and deliver you to success. They attend your meetings, arrange for conferences, pat you on the back when you do well, and remind you to “pick it up” when your focus wanes. They monitor your homework and push you when you fall behind. They form the conduit between your users, steering committees and software developers.
And like mom, they are there when you need them. The management team is dedicated to you, dedicated to your project, intent on providing you with the tools that insure success.
Moms, don’t you love ‘em?
Blog entry written by Jeanne Hedman, an ERP Consultant at Panorama Consulting Group.
An ERP implementation is the implementation of a business solution. In order to be effective there must be alignment between business and their IT partners (internal IT organization, implementation partners, etc.). Collaboration is a key enabler for alignment. However, being in the same meetings or having the latest collaborative technology does not ensure collaboration. It must first begin with have a common understanding between the parties. Consider the following illustration:
First, we need to understand that business, IT, and the implementation partner are coming from different perspectives. All parties have strengths and weaknesses. Business best understands their existing business model and the underlying success drivers. The implementation partner understands the ERP software package and has multiple years of ERP implementation experience. IT best understands how technology supports the existing business model as well as how best to utilize existing corporate IT technologies. Alignment is generated only when a common understand of the business model, ERP, and technology capabilities is shared by all three parties. When this alignment occurs there is effective communications and faster decision-making. Decisions move implementations forward. Now, let’s spend some time defining activities that we can do to expedite alignment.
Recommended Steps to Develop a Common Understanding for Effective Collaboration
Document Existing Business Processes. It is an area that I see many ERP implementations lack. The typical challenge is hear from business is “Why document my existing business processes if I know they are changing?” Here are my reasons:
- Business users usually do not have a consistent understanding of their business model. Going through the exercise of documenting business process will highlight these differences and drive understanding.
- Documenting the existing business model will enable you to highlight the exact organizational changes that will occur. How can you manage organizational change when you do not have a clear understanding of what’s changing.
- Business process maps can be a key source of information to quickly educate IT and the implementation partner on the existing business process model.
Educate IT and the Implementation Partner on the Existing Business Model. Business should take a formal, iterative process to educate IT and the implementation partner on the existing business model. The entire project team should be involved in this training and should progress from a solution-level overview to a detailed business-role level.
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Complete ERP Training Before the Implementation Partner Arrives. Just as it is important for your implementation partner to understand your business model and your language it is important that you have an understanding of the ERP software and its language. Effective communication is a two party effort. Taking the required ERP training before the arrival of your implementation partner will enable you to more effectively work together.
Have the Implementation Partner Conduct Supplemental ERP Training. Education is an iterative process – you will never learn everything you need to know for support ERP in one class. I always say that the implementation partner completes your ERP training. Implementation partners have hands-on experience with configuration and maintenance of ERP solutions.
Implementation Documentation Should be Business-oriented. Nothing encourages alignment more than being able to think like your end customer. Too often we create project documentation that focuses more on technology than business reasoning and justification. There are times were I am guilty of moving too quickly from what needs to be done to how will it be done with fully understanding why does it need to be done. At the end of the day we build ERP software to drive a business result – not a software result. IT and the implementation partner should partner with business to develop business-oriented project documentation.
Business to IT alignment is a strategic goal that can only be reaching by taking tactical steps to bring Business and IT closer together to generate mutual understanding and trust. Implementing ERP is an opportunity to generate greater alignment by developing a common language for effective collaboration. When alignment is achieved then decision-making is effective resulting in a more successful implementation.
Blog entry written by Brett Beaubouef, Senior ERP Selection Consultant, and adapted from his book titled Maximize Your Investment: 10 Key Strategies for Effective Packaged Software Implementations.
It is common for companies to jump into an SAP project without first conducting the due diligence and planning required to make the project successful. Often times, organizations select an SAP solution simply because of SAP’s longstanding, prestigious reputation and its broad industry focus. However, before the SAP implementation begins, it is necessary for an organization to analyze who they are, what they want to be in the future as well as pinpoint their strengths and weaknesses, core competencies, and areas in need of improvement.
An SAP implementation project can take a very long time, and if not managed properly, can cause the project to consume unnecessary resources. Based on the experiences of Panorama’s ERP consultants, only clear SAP requirements can guide you through the selection process and help with conducting an effective ERP implementation. By the same token, clear requirements cannot be defined until business processes are defined, and to establish the clear business processes, a clear sense of strategic direction is required.
Although a smooth SAP implementation is completely feasible, most projects face numerous challenges. In our white paper, we summarized five major challenges encountered during SAP initiatives based on our annual benchmark studies. This white paper also includes ten tips for a successful SAP implementation.
Click to download the full the white paper titled Ten Tips for a Successful SAP Implementation.
Blog entry written by Haoyan Sun, Research Analyst at Panorama Consulting Group.
We’d love to hear from you if you have been involved in a project that had adequate time to prepare and deliver quality training for your ERP implementation! Unfortunately, for this blogger, this is a consistent source of disappointment. If good ERP training has a direct correlation with prepared and engaged employees (a requirement for maximizing productivity during go live), why does the “Incredible Shrinking Scope of ERP Training” phenomenon happen? What can be done to mitigate the powerful forces that squeeze training into whatever timeframe happens to be available between finalizing the system testing and the go live date?
It’s a simple fact. The ERP system is the priority of the ERP project. However, the humans that use the system must be prepared for the new processes and transactions needed to continue operations without disruption. All too often, the users are on the short end of the deal when an ERP project exceeds any of its deadlines. Trainers and users are required to work faster, longer hours, and prioritize as needed to meet the project deadline. “They’ll just have to get it done in less time.” So what is the common result of this adjustment?
Five Results from the Incredible Shrinking Scope of ERP Training
- Training on an ERP system that doesn’t have expected functionality or transferrable data
- Trainees are not trained in the activities that they actually perform
- Access and profiles are inadequately set up which equals wasted time for trainees
- Employees are trained for activities that do not match their roles or address the expected changes to the organization
- Training course content is inadequate
Trainees are then left with a number of negative perceptions, in addition to inadequate training. Possibly most damaging, is the perception that the organization does not understand the work and processes of the employees. The natural conclusion is that the important decision makers are disconnected and unaware of reality within operations. The last thing any employee needs is a lack of confidence in leadership and direction of their organization. This is especially true during times of major transition. Yet, based on the frequency by which it happens, this is an acceptable outcome.
What can an organization do to avoid allowing the ERP training phase to get squeezed beyond recovery? This list is based on lessons learned, in hopes that some of these steps make it into upcoming ERP implementation plans.
Six Steps to Maintain and Strengthen ERP Training
- Validate your ERP project scope with an independent external source to get an expert assessment of the reality of forecasted time and resource requirements
- Incorporate a strong statement into the project vision which enforces the need for quality ERP training and respects the experience of the project team and end users affected by the ERP implementation
- Recognize the connection between productivity and employee output, and the need to deliver quality training, at the right time, for the right activities
- Understand your Steering Committee, appeal to their objectives, they have the power to make decisions that will make or break your training plan
- Engage the involvement of an influential advocate to present the negative impacts which can occur when training timelines and quality of delivery are at stake
- Acknowledge that designing and delivering an ERP training program that addresses complex business process changes and a new system is a monumental task, and should not be considered “additional duties as assigned” for persons with other full-time obligations
If you have had success obtaining the resources and time needed to deliver a solid training program during your ERP implementation (especially during a tough economy), we would love to hear your story! Was there an existing culture which valued training efforts and the employee experience? Or did a key influencer advocate successfully for avoiding the risks associated with cutting training corners?
Blog entry written by Lena Laakso, Manager of Organizational Change Management at Panorama.
In order for any ERP project to be successful, you first have to define what you mean by “implementation.” If your definition is a technology implementation, then yes, it is relatively easy. However, if by “implementation” you mean true business transformation with full employee adoption, improved business processes and tangible business benefits, then it’s going to require a bit more effort.
When assessing your ERP project plan, it is important to ensure you have included key elements that will make your project successful. Below are seven key items not to overlook during ERP implementation:
- Project management. Managing the installation, configuration and testing of ERP software is the easy part. Managing the business and organizational aspects of the digital transformation is much more difficult. It requires strong project management, governance and controls.
- Business process definition and improvement. On the surface, it may make sense just to adopt the business processes and workflows built into the software and hope for the best. For those of us that have been through dozens of ERP implementations, however, it just isn’t realistic. Today’s ERP systems are so robust, flexible and powerful that processes still need to be defined in detail. Business process improvements within and outside the system as well as employee roles within the system all need to be defined before the system can be fully adopted.
- Organizational change management and communications. For most organizations, an ERP implementation involves massive change. Employees at all levels are impacted significantly, which creates anxiety and resistance to change. A robust change management plan is crucial to gaining employee adoption and business benefits from the system. Organizational change management is much more than software training. It includes targeted communication, business process training, organizational impact assessments and a host of other key activities.
- Business and technical integration. A single ERP system with no integration to other systems or business processes is an urban legend. Every implementation that we see involves some type of integration to systems and business processes outside the system. This integration needs to be managed from a technical and business design and testing perspective. Otherwise, the system will be fragmented and disjointed, which defeats the whole purpose of ERP.
- Globalization and localization. Our larger, multi-national clients often ask us to implement their ERP solutions in a way that will help them standardize business processes across multiple locations and countries. This is a noble goal that might be realistic for 90% of your business, but some level of localization needs to take place. Whether we’re talking local regulatory needs, reporting requirements or shipping and customs processes, some aspects of the global rollout may require localization and can delay a project if these aspects aren’t defined early on.
- Independent oversight of technical resources. One of the top reasons that clients hire us to manage their ERP implementations is to help manage the scope, efforts and costs of functional and technical software consultants. Without clear direction, it is easy to fall into a spiral of unnecessary customization that doesn’t meet key business requirements.
- ERP benefits realization. Too many companies spend millions of dollars but fail to realize expected business benefits. A key reason for this is a lack of a robust ERP benefits realization plan. This is an area that most ERP consultants and ERP vendors fail to address, usually because they don’t know how.
While it may be possible to implement ERP systems quickly when defined in the narrow technical sense, it is more important to focus on the big picture. ERP implementations are usually expensive, but they are even more expensive when they’re not done right the first time. When developing your implement plan, it is important to keep these success factors in mind.
Based on their tolerance for risk, resource availability, and legacy system constraints, companies utilize different approaches during their ERP implementation. To determine the best approach, companies may ask questions like: “Is the ERP project localized or spread across all units?”, “What is the required ERP functionality?”, “What ERP modules will be implemented?”, etc. There are pros and cons for both a phased and big bang approach. Due to this, some organizations will chose to adopt a hybrid approach, which combines the best elements of the various ERP project options.
Take a moment to vote and then check back to review the poll’s overall results. Responses to this poll and other recent polls are available in our resource center.
In our diverse client experience, we find that ERP implementation projects for large, multi-national organizations are much different from those of smaller or less global companies. Although any ERP software project is full of challenges, global rollouts require focus on a number of additional variables.
Below are five things to consider when managing a global ERP implementation:
- Global vs. Localized Business Processes. Companies with global offices, particularly those acquired from another company, often have very non-standardized business processes. A global ERP software implementation provides an opportunity to standardize processes across locations, such as in a global shared services ERP model, but such changes can be difficult. A global ERP implementation needs to find the right balance between standardized vs. localized business processes and system. Often times, these decisions boil down to identifying processes that are crucial to staying close to the customer vs. those that are not adding as much value.
- Big Bang vs. Phased Implementation. Once the system and corresponding business processes have been defined, it is important to define how to rollout to end-users. For example, do you go-live with all functions and geographies at one time? Do you rollout in multiple phases based on region and/or function? Or is it some combination of both? Most of our clients take some sort of a hybrid approach, largely based on their tolerance for risk, resource availability, and legacy system constraints.
- Global vs. Localized ERP Support Structure. The actual ERP implementation is only one step in a longer-term ERP process. Before the first go-live is completed, it is important to define how and where your ERP software is going to be managed going forward. Many companies look to centralize ERP support and help desk functions, while others choose to offer decentralized support to cater to a diverse end-user base. The sooner this support structure is defined and established, the sooner end-users will fully adopt the business software and start realizing the expected business benefits.
- Language and Currency. One of the key business benefits of ERP software for global organizations is the ability to standardize business processes and provide global visibility into operations. However, local requirements often create a competing force to allow for flexibility to manage data and transactions in local languages and currencies. Finding the right balance between standardizing to English and US dollars across the globe vs. allowing multiple languages and currencies is an important decision point.
- Master Data Management. Master data is an important but often overlooked aspect of an effective ERP initiative. Not only does master data need to be cleansed and migrated to the new system, but global companies need to define how it will be managed going forward. For example, will local entities have the flexibility to manage their own local chart of accounts, or will changes require centralized and global governance? The same needs to be decided for other types of master data, including customer, supplier, and inventory master records.
Most of the above decision points are not black or white; instead most require an organization to choose where it plans to fall on a spectrum of options. What is more clear, however, is that companies need to start making decisions related to the above issues sooner rather than later to provide direction and focus to their global ERP implementation.
Learn more about key things to consider in a global ERP implementation by reading Panorama’s presentation on the topic.
Engaging a team of Change Agents for your ERP Implementation project is a critical success factor not to be overlooked. This role will provide support to your project and could provide the additional assurance needed for a successful ERP implementation. Experience has shown me that, without a solid team of Change Agents, the technical implementation team will continuously be faced with conflicting priorities.
A Change Agent is the direct liaison between the technical project team members and the end users. The Change Agent understands the new business process being implemented and understands the impact of that process to the business.
The role needs to be a formal role, well defined, and well recognized in the end user population. Without formal definition the role may be confused or overlooked and will not be able to provide the needed support to the ERP project.
A Change Agents is an experienced employee who is considered at or near “super-user” status of the current system. A change agent is a highly influential employee and is respected by their peers. Change Agents make perfect trainers and will become lead users. Most importantly they are good communicators, progressive thinkers and are focused on continuous improvement.
There is a delicate hand off between technical team members and Change Agents. The technical team is greatly involved in understanding the business requirements, designing new business processes and configuring and testing the system. The Change Agent accepts the newly designed business processes and focuses on socializing the new process, obtaining buy in and eventually training users if required. To often we see chaos just prior to “Go-Live”. Technical team members scrambling to complete testing, approving and possibly even creating training documents, being involved in cutover activities all while being involved in very critical executive reviews of the system. With a team of Change Agents on board, the technical team can stay focused on the technical aspects of the system while the Change Agent introduces, promotes and delivers the new ERP system and processes to the end users and stakeholders.
With a strong team of Change Agents in place the technical team members will never be faced with competing priorities and the end users will be introduced to the new ERP system in a timely and methodical manner.
Blog entry written by Ruth Hagen, an ERP consultant at Panorama Consulting Group.
It’s no secret that the odds are stacked against ERP implementations. As we’ve covered at length in this blog and in our white papers, most projects go over budget, take longer than expected, and/or fail to deliver expected business results. In fact, according to our research, there is a 72% chance that at least one of these outcomes will affect a project and a 34% chance that two or more will do so.
This creates somewhat of a Bermuda Triangle for ERP implementation initiatives. We’ve all heard horror stories about ERP projects that have started the journey toward implementation, only to be lost somewhere along the way. The three forces that contribute to this ERP Bermuda Triangle are:
- High implementation cost and risk
- Long implementation duration
- Low business benefits and return on investment
So how is one able to navigate this ERP software Bermuda Triangle? Below are three tips to navigate each of the ominous forces apparent on any ERP initiative:
- ERP implementation cost and risk. The first step to avoiding the pitfall of high cost and risk is to set realistic expectations. Many organizations fail to adequately budget for critical project activities that will make their ERP implementations successful. While on the surface it may be possible to complete an enterprise software project with limited costs or resources, cutting corners will cost more in the long run. Therefore, it is important to take budgetary estimates provided by ERP software vendors with a grain of salt and make sure that they include “hidden costs,” such as hardware upgrades, training, internal staffing to backfill your project team, and organizational change management.
- ERP implementation duration. An accelerated implementation timeframe may be possible, but it will inherently increase risk. Similarly, an overly optimistic project plan will cause project teams to lose sight of doing more than just going live with the software. For example, any ERP software can be implemented in a very short period, perhaps even days. The question becomes: what do you mean by implementation? If the answer is technically installing the software and perhaps doing some quick configuration, then yes, fast implementations are possible. However, if your definition is business transformation, adoption of the software, and measurable business benefits, then it is important to have realistic expectations for how long this will take.
- Realization of business benefits. The saying goes that if you don’t measure it, you won’t achieve it. The same holds true for ERP initiatives. If you are expecting to see tangible results from your ERP investment, then it is important to not only create a business case to justify the costs, but also to track and manage business benefits going forward. In addition, identifying and implementing business process improvements and executing a robust organizational change management are key contributors to ERP benefits realization.
It’s difficult to make it through an ERP implementation unscathed. However, these tips will help you navigate the ERP Bermuda Triangle and make it through your journey not only alive, but in a way that delivers a high return on investment.
What do you think? Take our poll below and tell us how much business benefit you’re realizing with your current ERP system.
Right now I am working with a client whom we got involved with “late.” By late, I mean that we would like to be about three months ahead of where we are right now. We are in the midst of an ERP implementation and we have the go-live bearing down on us. We have data migration and testing to do. We have training to do. We have a core team that is performing heroically. They are also a pinch point in our progress because they are our sole source for all of the critical path plan tasks; data, processes, testing, and training.
We are working hard to stay clear about what is “the best possible outcome” and what are the priorities to accomplish it. I have also been thinking about the value of getting and staying ahead of the “power curve” when implementing an ERP software solution. Being ahead of the curve is crucial to both the technical ERP implementation and OCM (Organizational Change Management).
Here is the metaphor that I thought of to describe the situation. Running a marathon. If you have never done it, running a marathon is a pretty simple thing to do. You start running and keep running until you have covered the 26.2 miles to get to the finish line. During the race the normal marathoner takes about 26,000 steps. This is roughly the same number of steps in an ERP implementation project.
My definition of a successful marathon is finishing and not wishing you were dead. It takes about 16 weeks to prepare adequately for a marathon, from a solid level of conditioning. During the 16 weeks, the preparation includes various kinds of training runs over different but increasing distances. The training mileage for the 16 weeks will total about 600 miles.
Every marathon is hard. It is just part of the deal. The genius of preparation is that a marathon runner is going to deal with the pain one way or another. It cannot be avoided, only managed. If a runner does not adequately prepare for a marathon, one of two things will happen; the runner will not finish and wish he had prepared better, or the runner will finish and wish he had prepared better. The amount of damage that a marathon can do to a well-prepared body is significant. An unprepared body risks a variety of injuries, including catastrophic ones. There is no substitute for just “doing the work”. Planning the timing of the work makes it much more manageable.
An ERP implementation is pretty much the same. They are all hard. Correctly planned and broken down, they are not hugely complicated. They are long and demanding. A successful ERP implementation is a lot like a successful marathon; finishing with a good time and with a minimum amount of damage. “Doing the work” in the right amounts and at the right times will always pay a company back.
The OCM tasks are particularly designed to protect the users. In the same way that inadequate training ultimately punishes a marathoner, inadequate and/or poorly timed go-live preparation will result in ERP injuries. The injuries will be felt by everyone; the users, the company, customers, suppliers and even shareholders.
Completing an ERP implementation with success is a very gratifying experience. There is so much that goes into it and it impacts so many different groups of people, it is critically important.
There is no athletic achievement I have had that compares with the feeling of crossing the finish line of a marathon. There is so much that goes into it, it becomes important.
We value the things that are the hardest and ERP implementations are hard – which is why doing them right makes all the difference in the world.
It is common for companies to jump into an enterprise resource planning initiative without first conducting the due diligence and planning required to make the ERP implementation project successful. Organizations first need to “get their house in order,” which means to analyze exactly who they are as an organization, what they want to be in the future as well as pinpoint their strengths and weaknesses, core competencies, and areas in need of improvement.
However, ERP software projects are chalked full of challenges. For example, as we’ve pointed out in our 2010 ERP Report:
- 35.5% of ERP implementations take longer than expected
- Only 48.6% of projects are completed on or under budget
- Only 33% of companies realize at least half of the business benefits they expect from their ERP software
The good news is that your ERP implementation doesn’t have to have these same results. There are ten key things than we often advise our clients to do to avoid the above pitfalls.
Learn more by downloading our latest white paper entitled “Ten Tips for a Successful ERP Implementation.”
Enterprise resource planning (ERP software) is one of the most expensive technology initiatives an organization can undertake. While the payback can be large, most companies do not have a clear ERP budget defined or truly grasp the scope of possible business benefits until the ERP implementation is completed and the ERP software is in every day use.
Based on Panorama’s survey statistics, the average annual cost for companies implementing on-premise ERP packages is $6.2 million, and average business benefits realization is 37.2%. So what do these numbers mean to your business? As stated in Panorama Consulting Group’s 2010 ERP report, a well-defined business case is essential to provide a clear perspective on the key benefits that can be realized as a result of a new ERP implementation. Assuming the benefits defined by the business case are 100%; on average, companies can only achieve 37.2% of benefits after implementation. Image your company invests $6.2 million into your ERP project, would you be happy if you only achieve 37.2% of the benefits you expected? I don’t think that is something you want to see after putting forth so much effort on your ERP project.
Clearly, ERP benefits are by no means guaranteed and the return on investment of ERP software will be significantly impacted as a result. Based on our ROI model, you can see how much money you actually lose by achieving only 37.2% of business benefits.
In general, the total cost of an ERP system includes software costs, service costs and annual maintenance fees, which are typically about 20% of the cost of the software licenses. Based on these assumptions, when we consider an average cost of $6.2 million, an average payback period of 2.7 years, and average benefits realization of 37.2%, the model shows that the benefit loss from the ERP implementation is $4.3 million! Additionally, it takes you 2.7 years to recover these costs while it should have been only 10 months!
As noted in the 2010 ERP Vendor Analysis report, realized business benefits are independent from software selection satisfaction. Satisfaction with software selection is usually the result of a smooth evaluation process, while realized implementation benefits are based on the success of various other factors. Selecting a “perfect fit” ERP software package is only a start. Best-in-class enterprise software initiatives should also include comprehensive analytical tools and guidelines for the ERP implementation as well as effective organizational change management activities.
Read more about these and other ERP implementation metrics by reading one of our 2010 ERP reports.
Blog entry written by Haoyan Sun, Research Analyst at Panorama Consulting Group.
Successful ERP implementation and organizational change management projects require a strong focus on business performance improvement. Business Performance Improvement demands that your core business processes be optimized for efficiency and are aligned to company goals. This will ensure maximum visibility and control, while also producing immediate and lasting improvements.
Optimized and Aligned Processes Require:
- Processes aligned to strategic focus and goals
- Ground truth process visibility
- Quantified business value
- Productivity impact driving top-line revenue and cost reduction
- Customer value and service focus
- Deploy technologies that drive your most critical process with automated workflows and integrated data that support increased throughput, consistently high-quality delivery, and timely and effective decision-making.
Enabling Technology Means:
- Designed to identify and improved process capability
- Vendor-neutral and selected on the basis of business value
- Staged for execution in rapid ROI phases
- Focused on customer value and productivity gains via data and workflow integration.
A High-Performance Organization Encompasses:
- A process-based, vertically and horizontally aligned goal system
- Optimized organizational structure and authority relationships
- Fact-and accountability-based performance management
- Clear understanding of company direction and goals
- Design your organization to excel, with coordinated and focused action across functions and levels, and with the leadership, structure and incentives to reliably generate high performance
This criteria set is at the forefront of Panorama’s ERP implementation and organizational change management projects. Our experienced consultants, together with our proven methods and fresh thinking, will utilize this methodology to help organizations meet even the most challenging goals.
We recently co-hosted a webinar with another consulting firm discussing tools organizations can use to accelerate their ERP system selection and implementation process. General examples of accelerators include pre-configured industry solutions, workflow tools, and standard questionnaires that streamline the configuration process. As we opened up the session for questions and answers at the end of the session, I began to sense some skepticism among audience members on whether or not these tools from software vendors can really help speed up an implementation.
This led me to revisit a poll we had posted on our web site several weeks ago. We asked visitors to our site to share their opinion on how accelerators affect the duration of ERP implementations. Unfortunately, the poll results confirmed some of the skepticism I sensed in our webinar on the same topic: only 39% said they think accelerators can dramatically reduce implementation time. Another 59% of respondents said that they only slightly reduce implementation time, have little to no impact, or that there is no such thing as an accelerated implementation (our token response option for the cynics).
So what’s the disconnect between how ERP vendors and consultants sell their acceleration tools vs. people’s actual experience? As we outlined in a previous blog, although accelerators may speed up the software configuration process, configuration only consumes a fraction of the time and resources required in an overall ERP implementation. We estimate that no more than 20% of a project’s duration is related to configuration; the other 80% is related to key project activities such as workflow design, conference room pilots, organizational design, training, and other items.
This isn’t to say that these other project activities can’t be accelerated as well. Consultants with extensive ERP implementation and organizational change management experience may have tools, methodologies, and expertise (think Panorama Consulting Group) to help you implement faster than you might on your own or with a lesser-qualified consulting or software firm. But the ERP system accelerators offered by software vendors typically won’t materially impact the overall implementation.
What do you think? Vote or view results from our ERP system accelerators poll, or learn more about Panorama’s PERFECT Path ERP implementation framework.
Throughout my career on the “other side of the desk” I was always amazed and annoyed when a sales team for the various ERP vendors would depart, with order in hand, only to be followed some time later by their implementation team whose first words would be “tell us about your business”; so much for transition.
While our ERP selection practice isn’t selling ERP software we go to great lengths to ensure that the transition from ERP Selection (PERFECT Fit) to ERP Implementation (PERFECT Path) doesn’t have this gap.
Our ERP selection methodology has several integration points with the resulting ERP implementation. This integration builds the foundation for ramping up the ERP implementation as quickly and seamlessly as possible.
- Functional Requirement Definition – Functional requirements definition is a key deliverable from the selection methodology. In implementation we create a business requirements matrix from them that is used throughout the implementation to ensure that the new ERP system is configured to meet these requirements. This may include integration of bolt-on modules to satisfy these requirements.
- Technical Assessment – During ERP selection the implementation team conducts a technical fit assessment to determine how well the candidate ERP solutions meet the client’s current or planned technical architecture or best practices. We also develop an inventory of our client’s IT skills so we can plan for training or strategic resourcing decisions before the ERP implementation begins.
- Implementation Implications – Also during the ERP selection, the implementation team meets with clients to discuss components that may impact the implementation. We review data migration requirements, interface requirements and potential issues related to implementation approach, i.e., geographic, functional, big bang. We also analyze the implementation plans of candidate ERP vendors to identify gaps in their approach compared to our PMBOK best practice methodology.
- Financial Analysis – From the business case we have a clear perspective on the key benefits our clients expect to realize from their new ERP implementation. These measurements are the basis for our post Go Live audit. The audit reveals if and how the software is being used to derive the real business value.
Click to learn more about Panorama’s ERP services offering.
Does your organization avoid surveys like the plague? This may be easier to change than you think. By understanding the importance of constructing a quality survey, you can use this powerful tool to gather valuable insight to prepare for a smoother ERP system go-live. Don’t overlook the benefit in providing employees the opportunity to express their opinions. We recently had a 98% response rate to a survey, which indicated an overwhelming interest in being heard! Surveys can be a tangible way to demonstrate strong leadership, one that believes in learning and making improvements through establishing a closer partnership with their employees.
- Eliminate the negative word “survey” from your vocabulary – Instead, propose to solicit “targeted feedback” for the purpose of improving your ERP implementation. The words “employee survey” can make even the most progressive management groan.
- Position the survey to come from high profile leadership – Take advantage of the opportunity to convey influential messages from top leadership.
- Understand the organization’s survey history – How have they been used in the past, and what were the resulting perceptions? Was the survey painfully long and cumbersome to complete? Did the results put someone in the hot seat?
- Be realistic about your organization’s ability and willingness to open the doors for suggestion (i.e. criticism) – Along with the negative, there will be the useful and positive. The reluctance to give voice to possible dissenters is one of the main reasons for survey resistance.
- Consider segmenting responses from your major populations – It can be very revealing to analyze the difference in perceptions between types of system users, functional areas, length of service, and level of position within the organization.
Tips For Success
- Define your audience and objectives – This sounds obvious, but you can expect to find a wide range of opinions regarding what will truly be useful in planning. Are you trying to assess satisfaction with current or past projects? Are you trying to identify populations of negativity, so that you can address them specifically? Are you trying to determine whether your employees understand project objectives and are ready to tackle the upcoming challenges?
- Use a web-based survey tool like SurveyMonkey – This will provide ease in completion and result compilation.
- Be concise- Strive for the shortest and most user-friendly survey possible.
- Ask the right questions – Ask questions that will give exact information to support your planning.
- Use open-ended question sparingly – They can provide depth to your summary, but take time to analyze.
- Include a powerful introduction – Prepare an intro that gives context for the questions, sets expectations for completion time, provides a clear level anonymity, explains how the information will be used, and expresses appreciation for candid responses.
- Be prepared to act upon information that indicates opportunity – This may range from completely changing the training plan, to a communication acknowledging why you won’t be addressing a common concern that the survey revealed.
- Include a follow-up – After the window for participation closes, follow up with a thank you message, and provide any summarized results that support a positive message. For example: “The feedback consistently reflected a desire for more communication on when and how training will be provided, and this is being incorporated into the communication plan.”
What To Avoid
- Unnecessarily long surveys – Determine the appropriate amount of detail that will provide useful information for planning purposes. Eliminate questions that don’t produce meaningful data.
- Rating an individual or department team for a past project outcome – It is far more useful and less inflammatory to gage users’ levels of confidence in whether this particular project will be managed well.
- The perception that the information gathered was not used – This happens when respondents are not given any follow up acknowledgement. Even if the feedback is predominantly negative, a communication expressing thanks and intent to evaluate results for future improvement should follow the survey as quickly as possible.
A carefully crafted survey with a quality delivery and follow up plan can yield excellent opportunities to improve your implementation, and promote a collaborative climate. The most difficult part may be convincing your organization to overcome the commonplace “survey-aversion” to tap into one of the best sources of project planning information, your employees.
Blog entry written by Lena Laakso, Manager of Organizational Change Management at Panorama Consulting Group.
At Panorama, we receive a lot of calls from companies who are struggling with their ERP implementations. They need guidance on identifying the root causes of how their project got off track and the right approach to recover their ERP project.
Panorama’s Project Recovery Methodology embodies the best practice components of our PERFECT Path Methodology. The objective of our Project Recovery Methodology is to provide client’s with a road map to restore their ERP implementation to a focused, controlled process that delivers business benefits. Project Recovery consists of a series of ten Discovery activities that will identify strengths and weaknesses of the client’s current ERP implementation approach.
These strengths and weaknesses become the foundation for our recommendation to the client to remediate the implementation or conduct an ERP selection initiative.
A Project Recovery Methodology’s Discovery Activities
1. Benefits Realization Review and Analysis
- Business Case
- Business Requirements
- Current and Future Processes
- Legacy ERP Gaps
2. Software License and Services Agreement Review
3. Project Controls Review
- Project Scope
- Functional Scope
- Customization Requirements
- Interface Requirements
- Data Migration Plan
- Reporting Requirements
- Implementation Plan
- Budget Review
- Change Control Procedures
- Risk Management Plan Review
4. Resource Plan Review
- Roles and Responsibilities
- Core Team
- Backfill Plan
5. Technical Solution Architecture Review
6. Organizational Change Management Plan Review
- Review and assess communication plan
- Review and assess training plan
- Review procedural and training materials
7. Deliverable Matrix
8. Status Report Review
9. Discovery Interviews
For each discovery activity we deliver findings with observations, a strengths and weaknesses analysis and a final recommendation for remediation or ERP selection. A typical recovery project runs for 8 weeks.
If you have a failed ERP implementation or need help keeping your current ERP implementation on track, consider contacting Panorama for assistance.