The majority of ERP implementations require some level of outside consulting support from a primary implementation service provider. However, there are many critical junctures before and during an ERP project where using the services of an independent consulting firm is the only way to go.
Before we get too far into this topic, let us define the term “independent consulting firm” from the standpoint of this article. “Independent” means the firm is not in any way part of, or associated with, any ERP software vendor or software consulting company where there is a potential for a conflict of interest.
In many cases, not working with an independent consultant can lead to slanted or biased recommendations when consultants make suggestions that are in their own (or their partners’) best interest. I am often amazed at how many organizations fall into the trap of hiring consultants or vendors that are not truly independent (no matter what they tell you).
Following are seven major areas where independent consultants should be utilized:
1. Business Needs Assessment – Do you really need a new ERP system? Make no mistake; there are many reasons to use ERP, but within most organizations, business issues are much more fundamental than software, and the first goal should be to fix the business.
In order to set the right direction for business improvement, consider performing a business needs assessment, which is different from an information needs assessment. The former term is more appropriate, since information implies only a “systems” assessment, and the analysis should be much more
A business needs assessment is a high-level analysis of business goals, objectives and key issues associated with organizational structures, current processes, systems, culture or anything else that inhibits success.
When hiring consultants to assist in this endeavor, make sure they are from an independent business consulting firm capable of uncovering the real problems. The firm should have a variety of consultants that understand business strategy, processes and technology, and the only thing they should have to sell you is their business expertise and advice.
2. Senior Management Education – When a business decides to implement an ERP system, one of the keys to success is an educated management team. This education should start before making a large financial commitment to an ERP project. Educational topics include:
1) What is ERP?
2) What are the potential benefits?
3) What does it take to get there?
4) What are senior management’s responsibilities?
5) What are the success factors?
This type of education has very little to do with software and nothing to do with a particular software package. It should primarily focus on ERP concepts, project management and organizational challenges that should be anticipated during ERP implementation.
It is important to avoid so-called “educators” with hidden agenda to sell software or consulting services associated with a particular software package, or who have any other reason to sugarcoat the real issues that senior management must understand to be successful.
3. ERP Readiness Assessment – An organizational readiness assessment conducted before an ERP implementation can help an organization prepare for the challenges that lie ahead. While not all companies need a readiness assessment, I think of it as an insurance policy or furthering the cause of senior management education. It also includes recommendations specific to your organization.
The reasons for using independent consultants in this area are similar to those mentioned previously – senior management education should have nothing to do with a particular software package. However, there is one more word of caution when considering the services of a large ERP vendor: The consultants may not specialize in ERP readiness assessments and may find it difficult to be independent since they face a lot of pressure just to get their foot in the door.
4. ERP Software Selection – By now, the need for an independent perspective when evaluating and selecting software should be obvious, but surprisingly, many organizations continue to hire firms that provide ERP selection services for a single ERP vendor. Which ERP system do you think they will recommend?
5. Project Management – Once the ERP software is selected, your software consultants will provide project management knowledge specific to the software, but I always recommend that clients assign an internal manager as project manager.
It is true that some organizations need significant help to fulfill their project management responsibilities. When this is the case, organizations should hire a strong, independent consultant to assist them. An independent project manager will act in the best interest of the organization, while the existing software consultants will always have other loyalties.
6. Best Industry Practices -As of last count, there are well over 60 ERP packages out there and all contain best practices, according to the vendor. The problem is many software consultants understand an industry practice only to the extent provided by a particular ERP system. In many cases, this can lead to tunnel vision, forcing your current business processes into the software and failing to realize the full range of potential improvements
An independent business process expert that understands the more holistic aspects of an industry practice can provide help in educating management and redesigning business processes. Many software consulting firms simply do not have this level of operational knowledge or process re-engineering skills.
On the other hand, an independent consultant is inclined to evaluate all elements of the processes, including changes in policies, procedures, performance measurements, responsibilities and even software modifications (when necessary) to support the best way to run the business.
7. Go-live Readiness Assessment – A go-live readiness assessment is a final validation of the project and system just prior to cutover. This analysis may include a review of the implementation steps, new process designs, documentation, system set-up, test results, conversions plans and end-user training plans.
From a practical standpoint, if the project team and ERP consultants did their jobs, there probably is no need for a formal go-live readiness assessment. When in doubt, or as an insurance policy, hire a separate software consulting firm to perform this type of readiness assessment and to provide a second set of eyes to review the work previously completed.
For any type of readiness assessment, it adds little value to bring in consultants from the same software consulting firm already engaged with the project. No software consultant wants to make one of their fellow employees look bad by uncovering all the things they failed to do or did incorrectly.
Working with a software consultant that isn’t independent can put your company at risk when it comes to software selection, project management and many other components of ERP initiatives. Of course, this is not about evil intent since all companies are in business to make money, but the hope is that a consulting business would strive to be unbiased when the success of your company is at stake. Unfortunately, this isn’t always the case.
As a client, you should expect nothing short of the best advice, and in many cases, independent consultants are the only ones capable of offering such advice.
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