If you’re pursuing digital transformation, you’re probably not enjoying the process of obtaining budget approval. Executives have a litany of questions, some of which you aren’t prepared to answer. While you can’t anticipate all of their questions, we will help you answer one of executives’ most common questions: “Who needs to be on the project team, and how much time will they need to dedicate to the project?”
Providing a detailed answer will require an understanding of project roles and responsibilities. You’ll have to step into the shoes of a project manager to learn what it takes to build a winning project team.
Project Team Structure
Depending on the size of the organization, project teams can range anywhere from 15 members to just a few. Successful project managers clearly define roles and responsibilities at the beginning of the project to ensure accountability and representation from key business functions.
They develop a project charter to assign responsibilities to both internal and external resources for each phase of the project. The charter defines exactly how decisions are made, issues are resolved and activities are completed. Project team members are assigned responsibilities in accordance with their strengths, experience level and bandwidth.
Project managers don’t delegate all responsibilities to the project team. For example, final sign-off on future state business processes and decisions about the organization’s operational model should be driven by the executive steering committee instead of the project team.
In a perfect world, the project team would be fully dedicated to the project, but that’s not feasible for most organizations. Nonetheless, the executive steering committee helps the project team prioritize work so the project is top priority. Some organizations hire external resources to ensure project team members don’t completely neglect their day-to-day jobs.
Project managers walk a fine line between the use of internal resources and external resources. A lack of external resources can mean limited expertise. On the other hand, a lack of internal resources can mean poor project ownership and a lack of organizational alignment.
Project managers must identify skill sets and personality traits that contribute to digital transformation success. They work with the executive steering committee to select project team members in accordance with project scope, budget and resource requirements. The steering committee has a good understanding of project goals and organizational vision, so their input is valuable when choosing project team members.
Some organizations build their project team based on who they believe to be the smartest or most technically-skilled. While technical expertise and operational knowledge are important, communication skills are also valuable, especially when the project team is tasked with executing an organizational change management plan to engage and train employees.
Professors Kenneth Benne and Paul Sheats published a study, Functional Roles of Group Members, in which they identified key personality traits that contribute to strong teams. Here are five of those personality traits:
The Cheerleader encourages other project team members to participate and recognizes them for their contributions. This role is useful for encouraging engagement on both the project team and throughout the organization.
The Peacemaker helps project team members reach a consensus when compromise is necessary. Peacemakers focus on the success of the organization as a whole. This role is useful when defining and prioritizing business processes.
The Sergeant-at-Arms ensures the project team meets deadlines and expectations while adhering to the organization’s core values. This role can help develop strong project controls and governance and gently remind team members of these guidelines.
The Good-Humor Man relieves the tension and anxiety of digital transformation. The right amount of jest can lighten the mood and reenergize team members.
The Contrarian is a critical thinker and innovator who is not afraid to share his/her opinion. This role can challenge project team members to think about the project from a people and process perspective instead of a technical perspective. The contrarian can also ensure that the project team preserves the organization’s competitive advantage during business process management.
Other Internal Resources
Digital transformation requires more than just a project team. Project managers also assemble an executive steering committee and a team of subject matter experts:
Executive Steering Committee – This group includes executives and members of the board of directors. The steering committee communicates the importance of the project and explains how it supports the organization’s mission and vision. They participate in milestone meetings regarding software recommendations, organizational alignment and organizational change management.
Subject Matter Experts – These are project advocates. Much like the core project team, this group includes representatives from each functional area. Subject matter experts participate in requirements gathering, requirements validation and vendor demonstrations.
Your Project Team
Now that you’ve put yourself in the shoes of a project manager, you can more easily estimate the resource requirements of your own digital transformation. How many and what type of resources will you need? Will you need to backfill resources or hire external team members?
Your project team structure mostly depends on the scope of your project. Some organizations take a bottom-up approach where they begin with technology selection, while others take a top-down approach where they begin with strategy alignment.
In a world that is constantly changing, ERP software has also had to evolve to meet customers’ needs and stay competitive. There have been significant changes over the last five years with some being more of an improvement than others. Here’s a quick look at some top improvements to ERP software since 2013.
1. Giving companies the opportunity to move to the cloud
Without a doubt, one of the biggest improvements to ERP software involves a company’s ability to switch to the cloud. There are several reasons companies have had such a positive response to the cloud. For example, it offers greater security by frequently testing for vulnerabilities and making certain data is securely backed up with a disaster recovery plan in place. The cloud also offers anywhere access to information by partners, staff, and customers and eliminates the need to purchase additional storage/server hardware. As a bonus, the up-front costs tend to be less expensive[1]. In fact, in Panorama’s most recent 2018 ERP Report shows cloud deployments increased to 85%. This was a surprising increase from the previous year which shows more and more companies are taking advantage of this type of ERP software system for their business.
2. Increasing ERP software options for smaller businesses
Over the last five years, more and more small businesses have adopted ERP systems. The reason for this is simple. There have never been more ERP software options. From niche and industry-specific software to software geared specifically to small businesses. Whether on-premise or cloud solutions, small businesses have tons of options to choose from. They even have the ability to customize their solution. This has led to more small and medium-sized businesses to consider implementing ERP software.
3. Shorter integration periods
Vendors have made every effort to shorten integration periods. For example, interfaces are cleaner, faster and more accurate. At the same time, the introduction of simpler applications has not only reduced integration times, but also decreased setup costs and improved effectiveness. Check out the video “How to Develop the Right ERP Strategy for Your Organization” to help with this process.
4. Enhanced security
Security is an increasing concern for both individuals and companies, especially since data breaches have become increasingly sophisticated. This is why ERP vendors have put so much time and effort into offering top-notch data protection with highly advanced permission protocols, encryption and high-quality firewalls.
5. Improving interconnectedness
As SaaS (software as a service) applications and cloud solutions have merged into existing ERP systems, they have given businesses the ability to run operations using a single, end-to-end platform. This has eradicated the need for different systems and greatly enhanced interconnectedness between various departments. This has resulted in instantaneous department communication, quicker response times and operations that are quicker overall. For many companies, this has led to a substantial boost in both production and revenue.
6. Maximizing big data information
In recent years, there has been a huge push to incorporate big data into ERP software. The reason for this is simple. Big data has the potential to be a game changer by improving information density, providing greater predictive analytics to potentially uncover hidden patterns and shortening decision making processes. Plus, it allows companies to effectively track incredibly detailed production data, which has resulted in enhanced processes, productivity and overall quality.
Implementing an ERP system for your business can be a daunting and time-consuming task. However, choosing the right ERP consultant can make the process go a lot smoother and provide you with much needed ongoing support. Here are some of the ways the right “independent” ERP consultant can improve your ERP project.
Experience and Expertise
The experience and expertise in implementing an ERP system is perhaps the biggest way an ERP consultant can help you. Your ERP consultant will know the best practices for implementing your program. They do it every day! They’ll also help you stay on time and on budget. They will also view your project from an outside perspective which can be valuable. It’s important to ensure that the consultant you choose fits your culture and is independent. Truly independent consultants are not software resellers and they do not receive compensation from software companies.
To make the most of your ERP consultant’s expertise, be sure to choose a consultant who has experience implementing ERP software in your specific industry or with other similar businesses. A good consultant will also suggest best practices from outside of your industry that could be of help to your business if incorporated.
Day-to-Day
Every project has unique needs and once the initial plan and strategy is done, the day-to-day details start. Some people need a lot of guidance while some need assistance when problems or questions pop up. An experienced consultant will have shepherded multiple ERP projects while most companies have not. Whatever your specific situation is, let your ERP consultant know your level of experience so he or she knows how to meet your needs. Also let your ERP consultant know how you like to communicate and share the communication plan that’s been drafted for the project.
Project Management
You probably have project managers in your company, but they also have other responsibilities. ERP consultants can manage all facets of the ERP implementation process to ensure a timely and cost-effective result. The ERP consultant will also help your company set/validate realistic goals, budgets and deadlines.
A consultant will understand industry standards and best practices and will help you negotiate your ERP software costs with vendors. Consultants often have established relationships with vendors and can help expedite the process. Consultants also have your best interests in mind. Typically, a consultant can negotiate a lower overall software package price on your behalf.
You may task your consultant with help validating a software that you have chosen or hire them to lead a more comprehensive software selection process. Ultimately, they will help you ask the right questions to ensure you are getting the best product fit for your business.
The Big Picture
Your ERP consultant can also provide you with unbiased opinions about what’s working or not working regarding your business processes. This expert outsider’s perspective can be invaluable throughout your implementation project. Most companies and employees have personal biases, based on their job roles and how things have been done in the past. Business process improvement should also be tackled before the implementation begins.
Your ERP consultant will help you meet your objectives and keep your team on track. It can be easy to lose focus with all the excitement of a new system. But your ERP consultant will keep your decisions in line with the big picture and company goals for the new system.
Your consultant will also help you address any insufficiencies in your business operations (think redundancies) and help ensure that your overall process for doing business is optimized.
Change Management
Implementing an ERP system can mean big changes for your business. These changes can be overwhelming for your team and the rest of your workforce. An ERP consultant can help usher in these changes. Employees are often worried about job loss or having to learn new duties or routines.
An ERP consultant can help with training and provide resources to make sure your workforce is ready and able to make changes to their daily routines. Your consultant can also act as a mediator when differences of opinion will undoubtedly arise. Having someone to help manage the human element of your ERP implementation is important. A common cause of ERP implementation failures is not dedicating enough time, money and resources to ensure that employees understand and are supportive of upcoming system changes.
As you can see, choosing the right ERP consultant can improve many facets of your ERP software selection and implementation process. Finding a truly independent consultant like Panorama Consulting Solutions may be one of your biggest challenges.
ERP failure doesn’t happen overnight. Much like “death by a thousand paper cuts,” they are instead a culmination of a large number of seemingly small decisions and actions.
During our experience with ERP expert witness projects, we see firsthand how some of the biggest failures unfold. When combined with our proficiency for helping clients select and implement ERP software, these experiences provide useful lessons that can help project teams avoid some of the same missteps that doom so many other organizations.
ERP failures can often be traced back to common root causes that fester over time. When identified and remediated quickly, project teams will avoid failure and ensure their initiatives stay on track.
Below are 10 warning signs to watch for during your ERP implementation:
1. Unrealistic implementation project timeline, budget, and resources. In our recent 2018 ERP Report, we found that a majority of projects spend more time, money and resources than expected. This is often because expectations were unrealistic to begin with, which leads to a number of poor decisions later on. It’s important to add a dose of reality to any sales proposal or implementation plan that you might receive from an ERP vendor or reseller.
2. Lack of involvement from your executive team. It’s important that your executive team be involved in key decisions surrounding your project. Most understand the need for executives to approve budgets and project resources, but executive involvement needs to go beyond these peripheral functions. They also need to be involved in ongoing decisions surrounding key business decisions, changes to business processes and other strategic considerations.
3. Unclear business processes and requirements. Clear business processes and requirements provide the direction that every project team needs to be successful. Without them, projects are more likely to go over budget, take longer than expected, over-customize the software and fail to meet the organization’s broader strategic intent. It’s important to take the time to complete this step before beginning the ERP implementation process.
4. Not enough time spent on business process reengineering. Most digital transformations and ERP implementations are intended to improve business processes. If you don’t spend enough time redefining your business processes, however, you will instead find yourself “paving the cowpaths,” or automating already inefficient processes rather than making fundamental improvements. Most ERP vendors and consultants gloss over this important point, so be sure to allocate enough time for this in your project plan.
5. Your organizational change management strategy consists solely of end user training. End user training is important, but it is just one component of an effective organizational change management arsenal that you’ll need to overcome resistance to your new system. Your strategy should also include change readiness, change impact assessments, communication plans, benefits realization plans, and a host of other items important to any successful ERP implementation.
6. Too little or too much dependency on outside ERP consultants. Some companies don’t recognize how difficult ERP implementations can be, so they underestimate their need for outside independent help. Others think they can outsource the entire function to ERP consultants. Either extreme is risky, so it’s important to find the right balance that leverages outside help, while at the same time ensuring your organization has dedicated ownership of the project.
7. Ill-defined project governance and controls. Projects fail without the right project governance and controls. There should be clearly defined approval processes for changes to project scope, customization requests, and other things that can undermine a project’s chances for success. Be sure to define (and assign) these and other critical governance processes as part of your project charter.
8. No business case or benefits realization plan. You can’t achieve what you don’t measure, so it’s important to have a business case and plan for how you intend to achieve the expected business benefits of the project. Your business case should be more than a tool to simply justify the investment in new ERP software; it should also be a tool to manage and optimize potential business benefits during and after implementation.
9. The project is managed like an IT project. Your project may be doomed from the start if it’s managed and treated like any other IT project. The more successful projects are those that are treated as important strategic business transformation initiatives, which permeate the decisions that are made and results that are achieved.
10. You don’t have a contingency budget. Most projects don’t go exactly as planned, so it’s important to not paint oneself into a corner. Be sure to allow for wiggle room when things don’t go as expected. Setting aside a contingency budget of at least 15% to 20%, is an important way to ensure that you have the budget and resources required to adapt to evolving project twists and turns.
While these 10 things can’t guarantee success, they can ensure that you avoid some of the common pitfalls that many organizations succumb to.
As you consider the potential shift to an ERP system, it’s important to identify which style of digital transformation is most aligned with your business strategies and goals. One of the most important questions you should consider in your planning is whether or not you are looking for standardization or flexibility in your operations. There are certainly pros and cons to both approaches.
1. Pros and Cons of Standardization
Standardization is a great option if you are looking to create a system that delivers quality goods or services with a solid degree of predictability. Standardization allows for consolidation of business practices and adds a great deal of stability to your operations. Standardization also allows you to implement foundational processes with consistency and dependability.
You may find a few issues with standardization as well. Sometimes, standardization makes it difficult to keep up with changing trends. While your standardization allows your business a great amount of stability in the here and now, it may not leave room for future forecasting. As your business grows, your standardized processes could hold you back if you’re not careful.
In terms of implementation, standardization will require a greater amount of management up front in both the business process and in implementing organizational change You’ll also need to plan for a large scale employee training program.
2. Pros and Cons of Flexibility
Flexibility in your digital transformation will allow you to better meet the unique and often customizable demands of your clients. Flexibility can be great for rapidly growing companies that need to be able to adjust operations processes quickly. Smaller companies also benefit from flexibility, as they often face unique challenges because of their size. A flexible system might also provide compatibility for upgrading software in the future.
On the downside of flexibility, your system can become too loose. This might make it more difficult to enact standard business processes across the board. It also might not push employees who are resisting your digital transformation to make necessary operational changes. Too much customization in your software can also be a negative, as this affects usability.
A flexible ERP system will require a large amount of project governance. There also needs to be aggressive controls in place throughout the implementation and customization process.
3. How to Decide
As you can see there are valid reasons to consider a standardized or flexible approach to your ERP system. Often, you can choose a software program and implementation plan for your business that lends itself more to one side of the spectrum or the other. Consider what aspects of your digital transformation are most important to your company brand and growth strategy.
The best thing is to decide what the goals of your ERP system implementation are and look at how more standardization or flexibility will support you in achieving theses goals.
Most ERP implementations take longer than planned, cost more than expected and don’t effectively mitigate risks. It’s perplexing why this happens so frequently. What can be done to avoid falling into the same trap of so many implementation teams?
According to Panorama’s 2018 ERP Report outlining the results of hundreds of recent ERP software initiatives, 64% of organizations spent more money than they budgeted and 79% took more time than expected. Perhaps even more surprisingly, over half of respondents indicated they experienced some sort of material operational disruption after go-live – for example, unable to ship product or close the books at period end.
The good news is, although ERP implementations are difficult, some organizations crack the code on how to overcome the challenges. We’ve practiced and studied implementations for over a decade and success isn’t due to luck. Project success is initiated at the onset, correlating to a deliberate and strategic approach, which effectively navigates the many pitfalls and risks. Based on this year’s research and Panorama’s experience, here are the top five drivers pointing to successful implementations:
1. Clear alignment with overall business strategy
Misalignment between a project and an organization’s overall strategy is one of the most common – and most difficult to overcome – challenges of an implementation. For example, we recently worked with a company that was driving an overarching business transformation focused on leveraging technology to surpass its competitors. Their main goal was to improve the customer experience. However, their ERP implementation was more focused on using technology to automate and streamline back office functions, rather than customer-centric improvements. This misalignment resulted in confusion, higher project costs and diluted results failing to live up to executive and customer expectations.
Recommendation: utilize independent ERP software experts to help translate your corporate strategy into an aligned implementation strategy and plan.
2. Realistic expectations during implementation planning
We’ve found many ERP implementations are (unfortunately) doomed from the start. Often, it’s because their project teams had unrealistic expectations from day one. When expectations aren’t aligned with reality, bad decisions with rippling effects can result. For example, if you commit to your management team to complete your project with an unrealistic timeframe and/or budget, you are more likely to cut critical project activities such as organizational change management and business process improvement. This will ironically accelerate your risk of time and cost overruns, among other challenges.
Recommendation: rather than taking your ERP vendor’s proposal at face value, be sure to rely on independent third parties to validate and supplement your implementation strategy and plan.
3. Laser focus on people, organizational change management and workforce transition
According to our 2018 ERP Report, organizational and people issues are the number one reason most ERP implementations take more time and money than expected. The key is to not become overwhelmed by this issue but find ways to overcome the people issues and build stakeholders. While doing so you’ll also need to deliver more business benefits, ROI and value than expected. These best-in-class implementations and project teams understand that erring on the side of investing heavily in organizational change management will result in a lower cost and risk implementation.
Recommendation: invest as heavily in your organizational change management activities as you would in your software and technical project activities. It will cost you less time, money and risk in the long term.
4. Effective business process management and process improvement
One of the biggest (and most common) mistakes is to defer to your chosen ERP software to determine how your business processes will look in the future. Today’s ERP systems are far too robust and flexible, meaning you need to define your business processes before your implementation. The last thing you want, is your expensive functional and technical consultants, billing their time while your team decides how it wants its business processes to look going forward.
Recommendation: define your future state business processes and improvements before you begin your technical software implementation.
5. Strong project management, governance and controls
Poor project management and controls can wreak havoc on any implementation:
Make sure your project charter clearly defines your governance controls and structure
Clear roles and responsibilities must be in place for your project manager, executive steering committee and other key internal and third-party project roles
Governance must align with the unique needs and dynamics of your organization
The framework of your governance must be comprehensive yet dynamic, as well as specific and repeatable
Since ERP implementations can be complex business transformations (rather than just technology initiatives) it’s important to have the right people, controls and governance in place prior to beginning your implementation.
Recommendation: clearly define your project team, governance and controls as part of your project charter. Consider hiring independent, third-party experts that manage these sorts of implementations for a living.
While this blog is intended to alert you to (or reinforce) key drivers of successful implementations, I’ve only scratched the surface of this topic. I didn’t write much about risk management, issue identification, communication or transparent reporting to name a few others. Effective project governance provides direction and hopefully decision-making protocols. It does not replace the need for effective leaders who can hone in on managing accountability, management resolution and validating metrics.
When you are considering ERP software to integrate and streamline your business’s finances, HR, and other processes, SAP is an option that you will frequently come across. For well over a decade, SAP has been the ERP system of choice for all types of industries. This trend is expected to continue in the coming years [1].
This raises two important questions. What sets SAP apart from other ERP systems currently available? Why is it one of the most widely used ERP systems in the world [2]? To answer these questions, here’s a brief look at how SAP compares to other ERP software.
1. SAP can fit any size business, from the smallest company to a Fortune 500 company
Unlike some other ERP systems that are geared for use by companies of a specific size, this is not the case with SAP. Instead, they offer a diverse line of ERP platforms that are known for being incredibly consistent. They offer an all-in-one solution with a straightforward implementation process. Additionally, transitions are easy as a company grows and expands.
SAP also offers multiple cloud solutions and it integrates straight out-of-the-box with complementary services, such as Google and PayPal. This is uncommon in the world of ERP systems. All of these are things, as well as the fact that SAP offers plenty of flexibility for growth, are things that small businesses can greatly benefit from. At the same, SAP offers the functions and capabilities needed by the world’s largest companies. In fact, almost 80% of Fortune 500 companies use SAP, including Johnson & Johnson, Pfizer, and Phillip Morris [3].
2. It is also ideal for any business
As mentioned above, SAP works with all types of industries, which isn’t always the case with ERP systems. Businesses that are implementing a new ERP may not know exactly which functions and modules they need. SAP has a wide selection for a custom fit without having to pay for customization. Businesses also benefit from SAP’s integration. When changes are made to one module, other modules are immediately updated.
3. It does not offer unnecessary functionality
All ERP systems require training and time for your staff to learn how to use it. The simpler the system, the shorter the learning curve will be. Some ERP systems, such as Oracle, to offer too many functions for most businesses. Many of them are unnecessary which makes training more difficult and complicated. While SAP offers all the functions a business needs, it keeps them streamlined so the users does not become confused.
4. When compared to other ERP systems, SAP offers the quickest financial payback and shorter implementation time
SAP is the second most expensive ERP system to implement (Oracle is first). However, it does provide the quickest financial payback (around nine months) when compared to other ERP systems [4]. For businesses using SAP, this results in faster financial benefits. At the same time, SAP has established a significantly shorter implementation period than its counterparts, which also facilitates quicker success.
5. SAP usually requires less customization than other ERP systems
When compared to its competition, SAP has a reputation for its impressive out-of-the-box functionality. This results in minimal, if any, need for customization, which can slow down the implementation period. However, it is worth noting that SAP does provide plenty of customizable solutions that will suit all types of business if needed.
Currently, SAP rates very high when compared to other ERP systems. Of course, other vendors, including Oracle and Infor, are continually looking to make upgrades and changes. SAP will have have to work hard to stay ahead of the competition, or they could be surpassed in the future.
One of the keys to a smooth ERP implementation are the people you involve to make it happen. Your business may have chosen a great software, but if the people involved in the process aren’t ready to change, your ERP implementation will not be successful. To ensure your ERP implementation succeeds, some of the “key players” you’ll want to involve are listed below:
1. Executive Engagement
Let’s start at the top. Every successful implementation project needs an engaged executive team. They must be ready and willing to take on the responsibility of ushering in wide-scale changes within the company. They not only need to kickoff the project, they must also remain active participants.
To get more granular, it’s important to have an executive sponsor for your ERP implementation. This team member will be the point person at the executive level and is typically a member of the executive team as well.
This person will serve as an active leader, heavily involved in the implementation process, giving guidance when difficult decision points arise. This person not only lends their voice to the project, they also actively support everyone involved in the implementation process. The executive sponsor will lead your company by displaying unwavering commitment to the success of implementing your ERP system.
2. IT Team
To help ensure the success of your ERP implementation, your IT team needs to be empowered to take charge and help as necessary. Your IT team will be essential, not just in implementation, also in maintaining your ERP system.
As project coordinators, it is important to make sure your IT team is in the loop throughout the process. Communication and coordination are key. Beyond this, the ERP implementation process should be a collaborative endeavor, where your IT team is heavily involved.
If your IT team is lacking in the skills or knowledge necessary to handle this responsibility, consider training opportunities to bring them up to speed.
3. Company Change Agents
Change is hard. When implementing a new ERP system, your business can expect to see a lot of change. This is why having “change agents,” or team members across the business, who buy into your ERP implementation strategies and goals is also vital to your success.
Change agents can be any part of the project management team. The most important change agent is the project manager leading the ERP implementation process. This point person should be an experienced project manager, capable of leading the project management team and able to be accountable and transparent.
Change agents are also the team members responsible for communicating goals and ERP project status results to the larger organization. These change agents are energetic about sharing the goals of your new ERP system within the company. They also realize how the business will benefit from this new system. Change agents create hype and excitement. They can also help diffuse rumors or negative perceptions since they are commonly accessible and willing to answer questions.
4. Training
Other change agents are the team members responsible for training. They often take on the role of the “super user.” For your ERP implementation to be successful, employees must not only buy into the change, they must also know how to make the most of the new system. In this regard, training opportunities are paramount. Super users might host workshops or provide personalized instruction and assistance to make sure employees are ready and able to operate the new system. While super users don’t replace formal training, they make it comfortable for coworkers to ask questions in an unthreatening way.
5. ERP Consultant
An independent ERP Consultant can often be a smart addition to your team. They probably do implementation assistance for a living and their experience is valuable. They can be another go-to resource to help you every step of the way. A consultant will often see trends or risks before other members of the team, since they are not caught up in day-to-day activities.
Often, teams with previous experience implementing an ERP project, may have a false sense of security. The world of ERP software is dynamic and ever changing. An ERP consultant can help navigate both software and people issues. Panorama’s consultants have a background in both business and tech and have the extensive training needed to make your digital transformation a success.
Remember, people are the key to a successful ERP implementation!
ERP failures may be more common than you think, but they don’t simply happen without warning. They also don’t happen overnight. Instead, failures and other ERP implementation project challenges tend to build over time. Seemingly small risks become bigger, while a subset of risks may mutate into exponentially more complex challenges over time. If not properly identified, managed, reduced or eliminated these risks will reach a tipping point – wreaking havoc on the project, or worse, causing a full-blown failure.
To the trained eye, many risks are recognizable from the start. The key is to know what to look for and how to navigate the challenges. I like to call this iterative process, “actionable strategies for risk mitigation.” Risks come in many forms, if you’re too close to your project (immersed in detail) or don’t have a deep specialization in digital transformations the road ahead may be bumpy.
Below are five key takeaways about assessing risk on your ERP implementation project:
1. Seek out unbiased, independent third-party resources, to conduct a formalized risk assessment throughout your implementation
A crucial mindset is to accept risk exists and put forth a concerted effort and plan to control it. An objective, third-party assessment of your implementation is a best practice. It’s key to involve someone who isn’t clouded by, or too close to the day-to-day details to recognize risks and warning signs. One way to do to this is to bring on a resource that isn’t part of the project team. Someone whose area of expertise includes risk assessment experience with several similar projects throughout their career.
These assessments should be done regularly throughout your implementation to identify probability of occurrence, consequence severity and impact. Unlike most of your team members, an external partner can also dedicate time and methodology to this important effort (think identify, manage, eliminate or proactively avoid or reduced risks). You can learn more about Panorama’s independent oversight service offerings here.
2. Look at potential ERP implementation risks from all possible angles
Project risks come in different shapes, sizes and variations so it’s important to assess your project using many different “lenses.” Risk factors can span a spectrum relating to people, process and technology. Identifying and recognizing risk earlier on is preferable to reacting to risk factors as they pop up. For example, Panorama uses a project assessment framework, evaluating from 12 key areas including data, organizational change management, business processes, project management and a host of other areas. Whatever evaluation framework you decide to use, it’s important it provides a comprehensive and structured analysis of your project in a time sensitive manner.
3. Assess project risk using the most common root causes of ERP failure
Those of us who have been involved with enough ERP implementations recognize there are commonalties across projects (pitfalls, cost impacts, failure points) in these initiatives. Rather than recreating the wheel or shooting from the hip, it’s useful to start by evaluating project risks relative to what other similar projects experience. This helps ensure you have a “checklist” of sorts to help identify and focus on specific project risks and threats. With this said, you’re also working in a constantly changing environment. The ability to monitor and adjust is key, as well as understanding how the project’s risk profile may change.
4. Prioritize risks and identify risk mitigation plans
When done correctly, most project assessments identify more risks than can reasonably be addressed with limited resources and team members. Additionally, not all risks require a mitigation strategy. Therefore, prioritization is important since it enables your team to focus on addressing the things posing the most immediate and/or greatest risk to your project. An objective view of your project and plenty of experience will ensure the most pressing issues are being addressed first. For these highest priority risks, you will want to create and execute a risk mitigation plan backed by a contingency plan.
5. Recognize early warning signs of ERP implementation risk
It’s important not to underestimate the complexity of an ERP implementation. It’s also not an exaggeration to say there’s a direct correlation between successful implementations and early risk identification. Experience and research shows most ERP failures marinate over time. A string of small, seemingly insignificant mistakes can morph into sometimes unstoppable failure points when unattended. Like the “canary in the coal mine,” it’s important to recognize the value of early warning signs. Read this blog to learn some of the common warning signs of ERP implementation risk.
The takeaways mentioned above highlight the importance of dedicated independent risk oversight, which can sometimes get buried in the excitement and momentum of an implementation project. It’s a complex subject and I’ve only touched on it. Realistically assessing risks, recognizing recurring risks and understanding the opportunities made possible by risk are other important considerations. Don’t tackle these challenges alone.
Over years of being an ERP expert witness, I’ve had the opportunity to examine, analyze and testify in court on all types of implementation failures.
I’ve been an expert witness for SAP implementations, Oracle projects,Microsoft Dynamics transformations and a host of other solutions as well. In addition to these expert witness engagements, we’ve also helped countless companies recover their failed implementations before they reach the lawsuit stage.
Having a front row seat to ERP disasters provides a unique understanding of what makes projects fail. More importantly, it helps us better understand what it takes to succeed in an ERP implementation. Rather than focusing on the negative failure points, it is often more constructive to look at the things that you should be doing to be successful.
Below are five best practices from our expert witness experience that will help you be more successful in your digital transformations:
Begin with realistic expectations
Many failed projects were caused by unattainable timelines and/or budgets, while our most successful clients begin with realistic expectations and adjusted them (as needed) during the project. ERP software vendors may not have (nor are they necessarily incentivized to attain) a realistic view of all the resources, tasks, budgetary line items and internal requirements to make your project successful. It’s important to create a realistic implementation plan, timeline, resource allocations and budget based on your company’s needs. This is an area that independent ERP consultants can help with.
Define and document your business processes and requirements as early as you can
Even though you may not yet have approval to move forward with your entire ERP project, it is important to define and document your business processes in as much detail as you can as early in the project as possible. If you’re able to do so during your evaluation phase, it will only help ensure you have a more complete picture of your evaluation criteria, while allowing you to begin implementing process improvements before the new system is implemented. At the very least, you should document in detail “future state” business processes before your functional and technical resources begin configuring software.
Invest heavily in organizational change management, training and communications
Each project failure I’ve been consulted on failed to effectively manage and prioritize organizational change management. This is no coincidence. Successful project teams realize that there is no such thing as over-investing in people, communication and training. The technical components are probably the least likely reasons for failure. An effective organizational change strategy should include organizational readiness assessments, change impact analyses, benefits realization and a host of other best practices. (Click here to download a white paper on organizational change management best practices).
Don’t hesitate to postpone go-live until your organization is ready
Successful projects don’t treat a go-live date as a “Hail Mary” pass at the end of an American football game. Instead, they are measured, deliberate, and focused on mitigating risk. Even with a realistic implementation strategy early on, you may still find yourself faced with a crucial decision: go-live before I’m ready, or do I delay until the organization is fully prepared? The only way to get to the right answer is to conduct an independent and agnostic go-live readiness assessment to determine the pros, cons, and risks of your pending go-live date. Too often the pressures of a predetermined go-live date or budget may cloud your judgment.
Remember this is your company and your project
At the end of the day, you own the result. It’s not your software vendor’s or your system integrator’s responsibility. It’s also not realistic to completely outsource your project to an outside party without the appropriate oversight, input and accountability. Yes, you should be able to rely on outside experts, but don’t be afraid to pivot if things aren’t going as planned.
An independent ERP consultant can be invaluable in offering up suggestions and/or concerns to keep you on the right path. An “outside” opinion can also be an effective support mechanism for your team, who has been working long and hard. They may benefit from complementary insights that can affect the end project result in a positive way.
Business must constantly plan for the future. In the world of ERPs, the future is now. For over 25 years companies have implemented and benefited from traditional ERP solutions. Your favorite t-shirt might be 25 years old but it is highly unlikely your employing decades-old technology.
An ERP is an integral part of your business. Why doesn’t it update as often as our computers, cell phones, tablets and TVs? The simple answer is cost and time. A traditional ERP is big, rigid and expensive…really expensive. Naturally, you are not going to abandon your current traditional ERP tomorrow but it would be beneficial to explore transitioning to a Postmodern ERP.
The Primary Difference
A traditional ERP is a single large platform that covers every aspect of a company. A postmodern ERP has a core ERP that covers the most important business functions but unique parts of your business are covered by specialized software applications.
A traditional ERP could be compared to buying a new car. The dealer will let you pick the color, leather or cloth interior and a few other options. However, your choices are limited to what he has on the lot or the manufacturer has in production.
Now imagine you could design your own car. Sports car styling and power with the efficiency of a hybrid and the highest safety ratings. Then a few years later you decide an SUV is more practical so the dealer simply swaps everything over to a new body style. That is a postmodern ERP. A core ERP with almost unlimited flexibility.
For example, with postmodern, the core ERP may be responsible for financials, procurement, and managing orders, while unique solutions may be used for quality management or retail. Then a few years down the road your retail operation expands to include a web presence or international sales. You quickly and easily change that part of the ERP.
Flexibility
As is evident, a postmodern ERP is much more flexible and agile than its traditional counterpart. This is partially due to its ability to integrate unique solutions as needed. Additionally, software can be changed and/or upgraded much more quickly. Being flexible is crucial in a business world that is always changing, particularly if your business is growing quickly.
Vendors and Strategies
With postmodern ERP software, you will most likely have to manage multiple vendor strategies. On the surface it would appear to be a more complicated option than traditional ERP software, where you deal with a single vendor. However, before selecting any ERP it is wise to employ an ERP consultant. A reputable ERP Consulting firm like Panorama Consulting Solutions can manage it for you. This makes postmodern ERPs no more complicated than a traditional ERP.
Customization
Utilizing postmodern ERP software allows for a level of customization that is simply not available with traditional ERP software. You are not locked into trying to make an off-the-shelf solution work or forced to spend large amounts of money on small custom changes. You have the opportunity to create software and hardware solutions that are precisely suited to the needs of your business and its ever-changing requirements. You gain a competitive edge over your competition and greater profit margin.
The Use of Your Business’s IT Resources
The IT department is probably spending a good bit of time maintaining your traditional ERP. However, when it comes to postmodern ERP, the system is often based on site and in the cloud. This lightens the load on your IT department. Now they can focus on more on differentiation and innovation.
Continuous Deployment of Upgrades
Postmodern ERP software allows for the continuous deployment of upgrades without the need for any additional work on your part. Upgrades made to traditional ERP software systems often require great expense in software and/or hardware. A postmodern ERP can often be upgrade only where needed. By combining on-premise and cloud-based software often upgrades occur continuously and seamlessly without large capital expenses. The benefit is constant improved performance and the growth of your business.
As ERP becomes one of the older software applications in the business landscape, ERP vendors are constantly evolving to meet the needs of customers and stay competitive in an ever-changing industry. Here are 3 of the biggest changes to ERP in the last 5 years.
1. ERP Software Customization
More companies are choosing to customize their ERP software options than ever before. ERP customization has long been a risk that companies have shied away from. But this is certainly changing. In fact, according to the 2005 ERP Business Report, a whopping 93% of companies chose to customize their ERP to varying degrees.
It seems more and more companies are coming to terms with the fact that ERP systems need some kind of customization in order to meet unique business needs. In response to this recognized need, ERP companies are working to create an environment where customization is less risky and more accepted. It’s important to note that this increase in customization might also contribute to a rise in the failure rate of ERP implantation as well.
2. ERP and SaaS
SaaS applications stored on cloud-based servers have seen a major rise in popularity in the last 5 years. ERP companies are finally starting to recognize the need to shift to SaaS applications to some degree. On-premises ERP tools require storage on company servers, which can make up-front hardware costs and continued maintenance a pricey endeavor.
Many ERP companies are launching SaaS products for new customers looking to implement, as well as migration paths for current customers to move to cloud-based ERP. Some ERP companies even offer mixed models that allow for SaaS-based modules to be added to already existing ERP systems.This can be a major cost saver and is allowing more small-to-mid-size businesses the ability to implement ERP systems of their own. It seems cloud-based ERP is here to stay for the foreseeable future.
These SaaS options also mean a greater need for technical expertise in implementing and maintaining ERP systems. This is great news for IT professionals. Still, it’s important for companies to consider their ERP implementation as a full-scale business transformation, not just an IT decision.
3. Internet Connectivity
ERP systems are also having to adapt to an increase of data availability due to more devices and products becoming connected to the internet. This is great news for businesses looking to have more oversight into things like supply chain, appliance performance, and shipping partners. While there may not be a great deal of accessibility in this area yet, it’s certainly on the horizon.
The last 5 years in the ERP industry have been exciting and full of changes. The industry is in a constant state of flux as new technologies collide and understanding this is essential to a successful ERP implementation. One thing that remains unchanged, however, is the importance of hiring the most qualified ERP consultant you can find.
Most organizations don’t implement new ERP software for the technology. Instead, they are implementing to improve their business capabilities and competencies. However, most organizations don’t think enough about how they will build these internal competencies to be successful in the long term.Instead, they focus on technical aspects of their ERP transformations. An ERP Center of Excellence is the best way to build these internal capabilities. But, what exactly is a center of excellence and how can you build one as part of your longer-term ERP strategies?
Here are five things to keep in mind as you build your internal center of excellence:
1. Define the scope of your center of excellence
Every ERP center of excellence has different purposes, depending on the needs of the organization. Some are focused on extending the usage of software, while others might focus on continuously improving business processes. Still others might focus on ensuring master data is effectively managed. Whatever the purpose of your center of excellence, it is important you clearly define its scope and purpose as a starting point.
2. Define the roles and responsibilities required for your center of excellence
Just as you’ll want to define the scope, you’ll also want to define the roles, responsibilities and skills required to develop your internal center of excellence. These roles and skills will typically constitute a combination of functional, technical, software, support and business needs, along with short-term and longer-term needs. This requires a broad and cross-functional team understanding the software well, as well as the internal goals and objectives of the organization.
3. Focus on long-term, strategic needs – not just short-term support needs
Some see a center of excellence simply as a glorified IT help desk or support mechanism. The best centers, however, are those that don’t just focus on short-term support needs, but those focusing on more strategic needs as well. In particular, centers of excellence are especially effective when they look for ways to better support long-term strategic and operational objectives, such as better aligned business processes and benefits realization.
4. Use your center of excellence as a way to extend the lifecycle of your ERP software
Many organizations are forced to prematurely choose new ERP software due to misalignment between their operational needs and software capabilities. In many cases, simple upgrades or better use of their software can extend the useful lives of their ERP systems (think: advanced software modules and capabilities such as advanced planning or predictive analytics). A primary goal of your center of excellence should be to extend the lifecycle of and improve the alignment with your ERP software. After all, you’re probably not interested in doing another implementation sooner than you need to.
5. Don’t wait until after go-live to build your center of excellence
Since centers of excellence make organizations more self-sufficient and less reliant on external consultants, you should ideally start building one before your implementation is even completed. This will allow you to take better ownership of the software and the business benefits afforded by that technology, as well as to build those internal competencies sooner. This will enable you to accelerate the ERP implementation and post-implementation business benefits as well.
But don’t fear, if you’ve already completed a portion of your ERP initiative, it’s never too late to begin building these internal competencies. In addition, the perspective of an independent consultant will add value to you project in relation to building your center of excellence.
Almost every aspect of the healthcare industry is continuously evolving. ERP software, which plays a pivotal role in everything from ensuring the security of patient data to identifying possible illness patterns, is one area that is expected to see substantial changes in the upcoming year. To give you an idea of what to expect in 2018, here are 5 ERP software trends to watch in the healthcare industry.
1. There will be a significant focus on increased security
By October 2017, there had been 272 security breaches in the healthcare sector for the year [1]. Due to these breaches, hackers were able to obtain the personal information of more than 1 million patients from all types of medical facilities, including hospitals, outpatient surgical clinics, and imaging centers. This is why it should come as no surprise that ERP software vendors will be taking every step possible to improve security. Currently, some providers are considering the use of digital and encryption keys, as well as fingerprint, eye, and even voice scanning to be proactive instead of reactive. Also, blockchain technology is being developed, allowing medical records to be stored in encrypted blocks. This data would be unchangeable and only available to someone with the correct access key.
2. There will be a push to develop telemedicine features further
Today, many patients do not necessarily want to visit their doctor in person. Instead, they are willing to have their consultation completed on their computer or mobile device. While some ERP systems have been adapted to allow for telemedicine, such as by enabling clinicians to access information from other locations, this is indeed another area that ERP system developers will focus on overhauling. Telemedicine is one of healthcare’s fastest growing sectors and ERP software will have to keep up.
3. The predictive power of ERP software will be used to help reduce healthcare costs
ERP software can include predictive analysis capabilities, which is used to identify patient readmissions, allowing the healthcare provider to implement measures to prevent this from happening. This is important because the costs of hospital readmissions have risen so high that the Medicare Hospital Readmission Reduction Program was created in 2012 to withhold reimbursements for hospitals with excessive readmissions. For Fiscal Year 2018, $564 million in payments will be held, meaning hospitals will not recoup the money they were expecting [3]. You can expect hospitals to take full advantage of ERP software to identify and limit their readmissions. At the same, ERP system vendors will work to make this as thorough as possible.
4. ERP software will be utilized more in research and prevention
ERP software can be used to collect all types of data, giving researchers the ability to identify information that once would have taken months or even years to obtain. For example, it makes it easier for them to track disease outbreaks among specific locations and demographics, as well as make a plan to stop it. You can expect to see healthcare providers to take full advantage of the data available at their fingertips to create a safer health environment.
5. Healthcare centers and providers will have to renew and upgrade their ERP software to keep up with the times
In today’s world, ERP software is offering so many benefits that healthcare centers just can’t afford to lag behind the others. Those that are using legacy software will have no choice but to look at and invest in new ERP software options.Need help in your ERP software selection?Contact the World Leaders of ERP Consultants, Panorama Consulting.
Every ERP software implementation is difficult, riddled with pitfalls, risks, and common mistakes. Most fall into the various traps of an ERP implementation, but few effectively navigate those traps once they’ve fallen in.
But, that doesn’t mean that you can’t get your project back on track if and when you encounter those risks.
First, it helps to understand why projects fail. The reasons are numerous, but some of the more common reasons are things such as:
Lack of executive buy-in
Poor project management and controls
Unrealistic expectations early in the project
Too much focus on the technical aspects of the implementation
Choosing the wrong software for your organization
Too much customization of the software
Failure to regularly identify and mitigate implementation risks along the way
While there is no way to avoid these risks altogether, there are ways to address and mitigate them along the way. Here are three ways to get your implementation back on track:
1. Perform an Assessment of Your Current Project
Effective project recovery begins with an objective understanding of where the project is and trying to pinpoint where the project went off track. The best way to do this is to perform an implementation project assessment. This should be an objective view of the people, process, and technology components of our project, along with an assessment of the project from several more detailed “project lenses” that are important to an implementation.
For example, these are just a few of the common areas worth assessing in your project:
In addition to these and other areas of importance, any implementation should be objectively assessed to identify the problem areas and opportunities for improvement.
2. Look for Common Warning Signs
As part of the assessment identified in step #1, it is important to look for common warning signs that portend a potential failure – or, at the very least, problems that could lead to failure later on.
In a recent blog, we identified thirteen warning signs we commonly see in troubled ERP software implementations. Some of the early indicators of trouble include things like: not enough iterations of conference room pilots, no organizational change activities beyond training, and not addressing the non-technical aspects of your implementation. These and other warning signs need to be identified as part of your implementation project assessment. Caught early enough, these indicators can be remediated before they turn into bigger risks.
3. Develop A Project Recovery Plan
Once you’ve identified the warning signs during your project assessment, it’s time to define how you’re going to remediate those risks. This could through either a formal project recovery plan, and/or updates to your implementation plan and strategy.
The recovery plan should cover the people, process, and technology aspects of your implementation. And remember to not try boiling the ocean. Even just addressing the low-hanging fruit rather than trying to improve everything at once can have a material impact on your project and help get it back on track.
Don’t be discouraged by warning signs or difficulties you may be facing. Through assessment, analysis, and experience, you’ll be able to get your project back on track. For more info, watch our on demand webinar Confessions of an ERP Expert Witness,which highlights some of these warning signs in more detail.
For anyone who has attempted to run a race of any length (5k, 10k, half marathon or full) you know the importance of finding your pace and keeping consistent with stride and breathing.Not many people in the world can run an entire race starting at full speed and keep it going the whole distance.Athletes who sprint and those who run distances, often train very differently and their skillsets are not the same.The boxer who runs hill sprints in preparation of a fight is probably not also training for a marathon- the skills are different.However, sprints may be more exciting to watch because the results are very quick and the race is over “right now.”
1. “Right Now“ Mentality: A Downfall for Digital Transformation
This “right now” mentality bleeds over into our professional lives too as we get antsy for promotions to come and projects to finish.Yet, trying to finish quickly just for the sake of finishing quickly often leads to budget oversights, tasks being poorly completed, if they are done at all, and an overall shoddy project all because you want to reach that finish line quicker.
2. Digital Transformation is a Full Marathon
Take Digital Transformation for example, a big phrase with a potentially monumental outcome.By nature, Digital Transformation is often referred to as “complex,” “profound,” or “impactful.”These words are not often associated with quick and easy processes.Digital Transformation, when done correctly, is an overall change in an organization which leverages all technologies to create a huge impact in day to day operations and overall outcomes.Digital Transformation is no doubt a full marathon and not a sprint.
3. Training for Your Digital Transformation
Just like training for a marathon, Digital Transformation must be properly planned for and mapped out first.Often times, it pays to hire professionals who can help with this Digital Transformation planning, because they are familiar with the process.After all, if training for a marathon you wouldn’t ask advice from someone who doesn’t run.For example, many of our ERP consultants have backgrounds in both tech and business and can not only help with implementation but also establishing process.
4. Follow Your Process
From the initial map out plan, this regiment must be followed closely.After all, when training for a marathon you may map out your diet and if you stray from that your training will be impacted.If there are certain milestones or tasks along the way during your digital transformation, make sure those are being followed.
5. Keep Going!
Of course, it is normal to feel a little fatigue during the process (both marathon training and Digital Transformation) but it is important that you don’t quit or take a long break.It may not seem like it, but the finish line is closer with every step you take.
Overall, don’t expect digital transformation to be a quick or easy process and it doesn’t benefit you to speed it along either.Some things just take time and training which are often the secret ingredients to a great outcome. Learn more by downloading our white paper Ten Tips for a Successful ERP Implementation.
Implementing an enterprise resource planning (ERP) system doesn’t stop at purchasing one. While it’s good to be excited about rolling it out to your employees, it’s a big project that requires careful planning and preparation. No matter what little modifications you include in the implementation, the odds are still stacked against you, if you recklessly enter the project.
Avoid the following pitfalls in ERP implementation:
1. Incompatible Technology
Most ERP implementations fail due to the reluctance of companies to let go of old work processes that are not compatible with current technology. The false assumption that all ERP software is a good fit for the organization practically drives the sentiment. But, as with all business applications, there are best practices to follow for a successful deployment.
Mitigation: The success of most IT modernization projects lies in setting realistic, detailed, and specific goals. Define what processes you want to include in your system, what problems will it solve and what financial benefits will the organization and its stakeholders get from the project. Keep in mind that ERP implementations are always risky, so having a clear direction is the key to success.
2. Weak API Integration
Developers design ERP software to centralize, integrate, and process information and systems involved in the business to facilitate a streamlined exchange and workflow. Companies need to carefully implement Integration of additional data. All these require a robust application programming interface (API) that would dictate how different business components would interact. Failure to do so will most likely cause the implementation to fail.
In some cases, restricted information sharing or “information silos,” where separate applications are used for different business process, may also lead to failed projects.
Mitigation: Most implementations are bound to fail at the onset. But there’s no reason to stop at the first failed attempt. When it comes to modernizing and automating business processes to the greatest extent, your business need to make sweeping changes at the back-end via APIs.
3. Over-customization
Customizing an ERP software is a make or break situation. It adds risk, time, and cost to the project, not to mention the technical challenges that may arise and derail the initial timeframe of the project. In fact, even organizations with unlimited resources and a strong IT department find this task extremely difficult, in that they decide not to make any customizations at all.
Mitigation: In cases where some degree of customization is really necessary, see to it that you have the resources and tools to commit to and tightly manage even the smallest customizations. Start out small with implementation and customize gradually when the dust has settled, and the system has been rigorously tested and used for the recommended period.
4. Inadequate End User Training
The prime reason companies invest in ERP systems is to have a centralized space to manage its core business processes, including product and production planning, marketing and sales, inventory management, retail, shipping, payment, finance, and down to human resources and even accounting. But more than being a tool, it should make the lives of its end users easier and their work more efficient.
Mitigation: Training those involved on your ERP project, both internal and external, is a great step. Working closely with a reputable independent ERP consultancy firm, such as Panorama Consulting Solutions, will also help guide the team in the right direction and provide a wealth of resources to facilitate a successful implementation. Provide sufficient training to its end users, as well, before the rollout.
Planning ahead prevents the enormously difficult and costly task of recovering from a failed program. No matter the scope of the project, implement it in phases and at a pace that management, ERP teams, and end users can handle and tightly manage.
Enterprise resource planning (ERP) project management is a full-time job that requires dedicated resources. Although it’s not as simple as it seems, it’s one of the keys to the success of software implementation.
For this reason, business owners, Chief Information Officers (CIOs), and project managers need to understand the significance of effective ERP project management. They must also understand the factors that make up an effective project plan.
Effective Project Management Should Mean Consistency of Direction
Project management is a principal factor in any ERP initiative. It keeps track of the time, budget, and scope of any project. Furthermore, it aims to get and keep everybody on the same page, ensuring that everyone is marching in the same direction.
Having said that, a good project manager holds the team and its clients together, guiding them throughout the various ups and downs of any project. This is especially important in terms of ERP, which strikes a balance between technology and human resources (think organizational change).
Effective ERP project management is crucial to the success of a project. Some of the elements of effective ERP project management include:
Alignment of strategic goals. Business and project goals must align and support each other.
Clear objectives. The team has a clear guide to tackle tasks, effectively boosting their focus.
Realistic project planning. The team sets proper expectations based on accurate data.
Quality control. Project managers ensure the quality or applicability of project deliverables.
Risk management. Project managers get ahead of issues and find solutions as soon as possible.
Continuous supervision. To monitor, react and adjust as necessary.
Typically a charter that provides guidelines and structure.
Communication. Over-communicate using different methods and to all levels of the organization. This should also include regular positive and constructive feedback to team members.
Effective ERP project management also serves as a guiding force for the team. It stands as a vision and motivation for the team, encouraging them to do their best and drive favorable results.
Project Managers Need to Build a Comprehensive Plan
Project management is only effective when it involves a comprehensive plan. As such, a good project manager must spearhead a sound strategy, that is approved by many levels of the organization.
First, the plan must have targeted realistic dates that give a substantial overview of the project goals and how and when they will be achieved.
Second, it must have a set of objectives that will serve as the driving force of the project—this includes an understanding the organizational mission and business goals.
Third, the plan must define the scope of the project, letting the team and its clients know how many resources are necessary for the project. It should also spike out all the factors that can affect timely implementation. This should include contingencies for adjusting the timing of certain deliverables, if things begin to go sideways.
Fourth, the project plan must clearly define resource assignments, work division, and check points to ensure that every person involved is doing their job. Together with this, the project manager must give an overview of the different project stages to serve as the team’s guide.
Finally, a comprehensive project plan must have an established budget. The project manager must have financial oversight to make sure that the costs are accurate, realistic and that contingencies are anticipated if needed.
Strong Project Managers Believe in Success, and Aren’t Afraid to Ask for Help
We have discussed the importance of a strong project manager. The inclusion of independent consultants such as Panorama bring businesses one step closer to success by reviewing, validating and enhancing ERP project plans. They go over project plans meticulously, pointing out aspects that may need adjustment, and help formulate midcourse corrections as they are needed. For example, non-technical business factors, such as organizational change management, sometimes get overlooked or not sequenced properly. Putting your best foot forward typically means being collaborative, and open to the fact that even the best formed plans are a work in progress.
Your implementation partner assures you that everything’s going great, but you have an uneasy feeling about how the project is progressing – is it paranoia or intuition?
If you’re talking about an ERP project, it’s probably intuition. You shouldn’t ignore any indication that something is awry with your system integrator, project manager or internal team. Be on the lookout for the following red flags: budget overruns, schedule overruns, delayed deliverables, cancelled meetings, unexplained absences and staffing shortages without proper backfill.
Individually, these missteps aren’t necessarily cause for concern, but taken together, they should trigger uneasiness – if not sheer panic. You are on the brink of ERP failure, and it’s time to hire a third-party for project recovery services.
The Rest of Us
For the rest us, we just need to take steps to avoid ERP failure. A large contributor to failure is the cutting of important project deliverables due to time or money constraints. Your project plan should include organizational change management, business process reengineering and adequate budgeting and resource allocation.
A common challenge with resource allocation is the “and factor.” Sometimes, employees will be assigned to the ERP implementation but still be expected to fulfill their regular job duties. Schedule overruns can occur when employees prioritize their day job over the project – this is to be expected. The key is to avoid this sticky situation altogether, and hire outside resources.
More Tips for Avoiding Failure
Even if your project is progressing beautifully, it doesn’t hurt to look beneath the surface. At the very least, this is a good form of risk mitigation. You should ask yourself the following questions:
Is our system integrator fulfilling their contract? Do we need a new integrator or can the relationship be restored?
Did we select the right ERP software or do we need a different system to meet our needs?
Do our employees feel prepared for the transition? How can we make them feel more prepared?
Of course, this is just a starting point. Many organizations find it easier to hire a third-party to conduct an independent assessment of their project and deliverables. This service is called independent verification and validation.
Your Intuition
So, listen to your intuition, address red flags and mitigate risks. This is the formula for digital transformation success.
It is also a good formula for avoiding our Expert Witness team – as much as Richard would love to play golf with you, and as much as Bill would love treat you to some authentic Chinese food, they both would rather see your project succeed!
Like a lot of organizations – we try to stay quiet on our political choices. Not every person is going to agree with your points of view, so it’s best practice to keep your views to yourself. However, it is hard to stay in the middle with such a polarized political environment. So….who did your ERPproject manager vote for? Stay tuned because the answer may shock you. The candidate your project manager (PM) voted for was…project governance.
Not the answer you were expecting, right? So, why? Well, a project governance document addresses key statements and processes that support the objectives of project sponsors, decision-makers and stakeholders. Good governance documents don’t just spring from a specific party or even from a burning bush – they are the results of careful thought and well-reasoned logic. Your project team, led by the PM, invested a lot of time into developing it. It will thrill them to no end if you ask them a few questions about it.
The vital running mate of project governance is a chap we call the project charter. The project charter takes into account information developed during the executive-level strategy sessions and contains:
A validated project vision
A validated list of objectives that support the vision
A list of the expected business benefits that the project will bring
A clear depiction of what constitutes success for the project
A high-level scoping statement, timeline and budget
A high-level list of project variables
A high-level list of assumptions and anticipated risks
A responsibilities matrix
The plan to ensure and maintain alignment between executives, stakeholders and the project team
A list of standing project meeting schedules, agendas and reports
Change procedures that address how changes to budget, scope and time are treated
Like most running mates, the project charter should be taken very seriously. Simply put, the project charter’s job is to ensure that the project stays on track and completes within time, scope and budget.
So, who does Panorama endorse? We endorse a well-reasoned, balanced and strong project governance document. The project charter is the perfect running mate for governance and makes up an unbeatable ticket, unless you are not concerned with achievable timelines, reasonable scope and thoughtful and realistic cost estimates.
