If I listen to the hype from some ERP vendors, ERP implementations are a cakewalk. According to these sales messages, pre-configured industry solutions, data conversion tools, and generic training materials allow a company to have their ERP software up and running in no time.
If ERP implementations are so easy, then why does our independent research show that most implementations take much more time and money than expected?
It all comes down to two things: expectations and your definition of implementation. If you have unrealistic expectations or narrowly define an implementation as a technical installation of software, then chances are you are going to be disappointed with the end result.
If, on the other hand, you have realistic expectations about the kind of time and money required to make the project successful, then you are more likely to finish your ERP project on time and on budget. Part of realistic expectations involves defining the implementation in terms of what it will take for your business to adopt the software, beyond simply implementing the software. Software installation and configuration can theoretically be done in a weekend – all the other stuff is the hard part.
So what things that are typically overlooked to cause delays in ERP implementations? Here are the five most common, based on our client experience:
- Business process and workflow definition. An ERP system isn’t a hodgepodge of random transactions. Instead, it should enable a clearly defined and effective end-to-end business process flow. Your software vendor will typically provide software that is configured to complete the transactions, but it’s someone’s job to define the comprehensive business processes in the context of your business.
- Business and Software Testing. The ERP software may work perfectly, but that won’t matter if your business processes and integration to other systems isn’t thoroughly tested. An iterative series of conference room pilots is instrumental in ensuring you’ve worked out all the kinks prior to go-live.
- Organizational change management, training, and communications. A big red flag in any software vendor’s sales message is when you hear that organizational change management needs are minimal because of the software’s canned training materials. No two businesses are alike and no two departments within a company are alike, so each company and workgroup needs to have training materials and content that is somewhat tailored. In addition, an effective implementation plan will include a host of organizational change management activities, including employee communications, process and organizational gap analysis, and a benefits realization plan.
- Data. This one can be a killer. It’s rare that your legacy data is going to fit neatly – or even semi-neatly – into the new software data structure. Chances are that item numbering conventions are inconsistent, chart of account structures need to be revisited, or customer data needs to be cleaned up. This is a lengthy process with an end result that needs to be thoroughly tested, so it is imperative that this project activity start sooner than later.
- Reporting. Although it’s a key part of to running a business, reporting is often viewed as an afterthought during an ERP implementation. After all, how hard can it be when your chosen ERP software has thousands of canned reports? Harder than you think, because you still need to map your needs to the new reports and define how you’re going to use them. In addition, most companies require some custom report development to get what they really need, but they often times scramble to finish this activity at the end of the project. We advise our clients to address this area very early in the implementation since it can be done in parallel with other early project activities before things get too hectic.
If these items are not included in your plan with adequate time and resources, then you are setting yourself up to be an unfortunate statistic in our ERP benchmarks. On the other hand, addressing these items will make your ERP software initiative more successful.
How does your implementation compare to best practices? Look at our ERP implementation checklist to see if you have included critical activities in your ERP implementation plan.