The other day, I was speaking with a CIO at one of our US-based ERP implementation clients. As we were discussing the project, he shared that his biggest fear and concern is that he and his company would not realize the potential benefits of the new system.
Most executives we speak with, on the other hand, are less concerned about return on investment (ROI) and more concerned about making sure their projects don’t turn into train wrecks – which is one reason my conversation with him was so refreshing. According to our 2014 ERP Report, most ERP implementations fail because they cost more than expected and/or take more time than expected, but the bigger concern should be that most projects also fail to deliver the expected business benefits.
ERP implementation failures are commonly discussed in the media and feared by corporate executives. However, the more “silent killer” of ERP systems is the fact that they don’t deliver expected business benefits. After all, companies spend millions of dollars on their ERP initiatives, so it’s not asking too much to expect that they fully take advantage of the potential functionality of the software they implement.
So what’s a CIO, CFO or project manager to do? Here are a few things to consider if you’re truly focused on driving ROI for your ERP implementation:
1. Set the bar high for your ERP implementation. It’s okay to shoot for the stars. Rather than operating out of fear – whether it be fear of the project failing or fear of losing your job – try aiming for something even higher, such as delivering a set of business processes and related ERP functionality that will take your business to the next level. This mentality can and should affect every aspect of the project, such as where you focus your time and resources, how to bridge the gap between new technology and your employees, and other critical mindsets that will ultimately make your project more successful.
2. Focus on people and processes, not technology. Don’t get caught up in the technological aspects of the implementation like a typical CIO or project manager would. Sure, ERP vendors invest billions of dollars per year in R&D to make the cool bells and whistles even cooler, but at the end of the day, the success (or failure) of your project won’t have anything to do with these technical features. Instead, it will come down to how well you handle business process reengineering and organizational change management – hands down the two most important critical success factors for any ERP implementation.
3. Don’t underestimate the cost, time and effort required for your ERP implementation. While it is important not to become too myopically focused on implementation time and duration, it’s also important to remember that you will never achieve your expected business benefits and ROI if you don’t make it through your ERP project alive. When developing your project plan, don’t take your ERP vendors’ proposed project plans and estimated costs at face value. Instead, benchmark to other organizations, get someone – other than the vendor – to estimate your project’s time and cost, and develop a plan and budget that makes sense for your organization. Setting realistic expectations early is the first step toward a ROI-driven and successful ERP implementation.
4. Understand where the finish line really is. Just as marathon runners know that they are in for a 26-mile haul versus a 400-meter sprint, successful ERP implementers know where the finish line really is. As the below graphic illustrates, most organizations go into their ERP implementations with the expectation that they are going to implement everything that their new ERP systems have to offer. However, due to inadequate and misestimated time, budget and resources, most organizations end up quitting the race early and never realizing that expected functionality.
5. Focus on the long-term alignment between your business and your new ERP system. To take point #4 one step further, successful organizations don’t ever really “end” their ERP implementations. Instead, they focus on ensuring that as their businesses evolve over time, their ERP systems are keeping up along the way. The organizations that don’t institute this depth of focus end up experiencing misalignment between their business operations and technology – ultimately leading to a premature need to replace their systems down the road. One of the ways we help our clients create this actionable philosophy within their organizations is to implement an ERP center of excellence that focuses on continuously improving and keeping their ERP systems aligned over time.
While success and full benefits realization is never guaranteed, the above five tips will help ensure that you are one of the few organizations that does more than just implement new ERP software. You will be one of the few that actually deliver on-time and on-budget, while realizing the business benefits and return on investment that you’ve expected all along.
Learn more by downloading our white paper, Where’s the ROI?