Most clients we work with are afraid of potential failure related to their ERP implementations. Many have heard the horror stories of high-profile failures and read the data about high failure rates.
Some are afraid of blowing their budgets and scheduled timeframes. Some fear that the project will shut down operations at go-live. Others are afraid of losing their jobs. And still others fear all of the above and then some.
Regardless of the source of your potential fear related to your ERP project, there are proven and effective ways to mitigate risk and increase your likelihood of success. Running a project and making decisions based on fear almost never turns out well, so it is important that executives and their project teams feel confident that they are addressing the potential pitfalls of their ERP software initiatives.
Below are five ways to mitigate risk in your ERP implementation:
Treat your ERP implementation as a business transformation initiative rather than a technology project. There is a distinct difference between projects that are treated as business initiatives versus technology projects. Those that are treated as technology projects are much more likely to cut corners on the things most critical to success – such as business process reengineering and organizational change management – which increases the likelihood of failure. Business transformation projects, on the other hand, are much more likely to succeed because they focus on the right things (hint: not the software). The complex nature of ERP systems makes it easy to dwell on the technical aspects of the project, so don’t fall into that trap. And don’t be tempted to simply hire a technical VAR or system integrator and think that your project will succeed, because it won’t.
Enlist the support of proven ERP experts. I’m still amazed at how many people in the industry don’t really understand ERP software, either because it’s not their sole focus and/or because they are myopically focused on the functional and technical aspects of one portion of the software. When choosing ERP consultants to help with your initiative, ensure that they are technology-agnostic, well-versed in the entire cycle from selection through implementation, and have hands-on experience implementing multiple ERP systems. Although there are plenty of consultants out there, too many are a primary cause of failure, so be sure to choose wisely.
Ensure continuity from ERP selection through implementation. Swapping resources midstream in an ERP selection and implementation can be very ineffective and disruptive, so ensure that your team remains intact as much as possible from the selection and planning stage all the way through go-live and post-implementation. This goes for your internal resources, as well as your external consultants; to the extent that you can, you will benefit greatly from having continuity throughout your project. Hiring ERP consultants such as those at Panorama that can manage your selection through implementation will help accomplish this important goal.
Approach organizational change management as an insurance policy to hedge against ERP failure. If you were to pick one thing to do right on your ERP project, it should be to focus on organizational change management. More than even choosing the right software or configuring it well, organizational change management will have the biggest single impact on the success – or failure – of your ERP implementation. In fact, in each and every one of the 25+ ERP expert witness engagements we have been a part of, organizational change management (or lack thereof) was front and center in these high-profile failures. Think of it as an insurance policy that will dramatically increase the odds of implementing on time and on budget, minimize the risk of operational disruption and maximize post-implementation benefits. Panorama offers a comprehensive organizational change management methodology to help mitigate against this risk.
Leverage independent oversight and support. Managing expensive technical resources can be challenging at best, so it important to have someone helping manage various activities and tasks that need to be completed to ensure success. Keep in mind that technical resources, VARs and ERP vendors are typically good at installing and configuring software, but they’re not as good at managing overall projects, your internal resources on the project and all the various tasks and dependencies required for a successful project. Panorama’s extensive independent oversight and project recovery services can be very valuable in helping you keep your project on track or save a struggling project.
There is no way to completely eliminate risk in ERP projects. However, the above five tips will ensure that your organization and project is headed down a path of success rather than one riddled with pitfalls and obstacles.
Learn more by downloading our new white paper, The Importance of Independent Verification and Validation.