While an increased focus on process improvement typically necessitates an increased focus on change management, our newly released 2021 ERP Report revealed that organizations are not necessarily more likely to invest in change management when they increase their investment in process improvement.
Based on these findings, one recommendation we’d like to make for your 2021 project is that you should take the time to understand the impact of process change on employees. This can be difficult to do if you don’t hire ERP consultants and instead do an in-house implementation of ERP.
So, ultimately, our recommendation is to work with a third-party expert because as the saying goes, “You don’t know what you don’t know.”
The 2021 ERP Report
This report summarizes our independent research into organizations' selection and implementation decisions and their project results.
Continue reading for an overview of our 2021 ERP Report and a deep dive into data highlighting the dangers of in-house ERP projects.
A Brief History of ERP
Enterprise resource planning (ERP) didn’t come around until the 1990s, but its foundation came about in the 1960s. Back then, it was known as inventory management and control.
In the 1960s, a greater focus on factory output began. To help increase production, computing solutions were created. During this time, software developers focused on creating applications to handle inventory management.
By the 1990s, these solutions evolved to handle all aspects of business, including accounting, human resources, customer relationship management and more.
We now find ourselves in 2021 – a time where ERP software is not simply a means to automate processes but to create digital business models. This is known as digital business transformation.
According to our report, almost half of companies (47%) describe their project as a digital business transformation as opposed to an ERP implementation. While respondents were only given these two choices, we have found that most companies actually fall somewhere along the spectrum between a basic ERP implementation and a digital business transformation.
Regardless of the type of project you’re pursuing, it’s important to seek third-party guidance.
4 Signs You Should Avoid an In-house Implementation of ERP
If any of these statements are true of your company, consider hiring outside experts to help you achieve your project goals:
1. Your Business Lacks ERP Experience
Most companies lack the expertise and experience to handle an ERP project. As a result, they face a huge learning curve.
They don’t know how to differentiate between the hundreds of ERP systems on the market. They also don’t know about all the people and process activities essential for ERP success, such as business process management.
ERP consultants with business process management expertise can help you map your processes, improve inefficiencies and identify your highest priority ERP requirements. Fortunately, 94% of companies in our report focused on business process management as part of their ERP project, which is 8% increase over last year.
2. Your Company Lacks Change Management Expertise
One of the most difficult aspects of ERP projects is gaining employee buy-in. Change management consultants are valuable in this respect because they can help you understand the impacts of change for each employee group. Then, they can use this information to help you develop a targeted communication plan.
Our report found that of those that sought change management guidance from a consultant, only 33% found the organizational change aspects of their project difficult or very difficult. Compare this to the 67% of organizations overall that found organizational change difficult.
However, there has been a 18% year-over-year decrease in companies seeking change management guidance from consultants.
3. You’re too Close to the Project
An open mind and an outside perspective are essential if you want a system that can support the business you are today as well as the business you want to become. If you only use an internal team for your ERP project, you won’t get an outside perspective based on broad experience and best practices.
ERP consultants have lessons learned from numerous ERP projects across a variety of industries. As a result, they make no assumptions about the way your business should run. In other words, they are not attached to the idea of doing things a particular way just because it’s the way things have always been done.
It’s important to hire a consultant to help you understand the “why” beyond each of your processes. This ensures that you submit the right requirements to ERP vendors, and ultimately, feel satisfied with your ERP software.
Unfortunately, almost a quarter of organizations in our study were dissatisfied with the ERP system they selected or upgraded to. Compared to last year, this was a 13% increase in dissatisfaction.
4. You Have Strategic Misalignment
Your project team may not be aligned around the fact that an ERP project is a business project rather than a technology project. It’s an easy line to blur, as an ERP project does require technical knowledge. However, it also requires a knowledge of business strategy and people management.
An ERP consultant with change management and business process reengineering expertise understands the importance of focusing on people, processes and technology. They can help you align your team around this mindset by emphasizing that real ERP business benefits come from optimized processes and end-user buy-in.
If there’s any doubt that people and processes are just as (if not more) important than technology during an ERP project, then take a look at these findings from our report:
DIY Works for House Projects, not ERP Projects
While focusing on organizational change management and seeking related guidance can mitigate the difficulty of organizational change, fewer organizations focused on the change management activities included in our study and fewer sought change management guidance from a consulting firm.
Without expert guidance, it is difficult for an organization to know what change management activities are necessary for its unique situation. An objective, third-party is essential because organizations have a tendency is to minimize project costs and cut corners, especially if they are smaller organizations that have been heavily impacted by the recent economic uncertainty.
Despite the general aversion toward change management, it is encouraging to see that organizations in our study are using the downturn as an opportunity to invest in future growth by increasing their focus on business process management. We believe their boldness will be rewarded once they invest just a little more in organizational change management.
Please download our 2021 ERP Report to learn more. In the meantime, you can request a free consultation below to learn about Panorama’s comprehensive suite of service offerings. Our trusted and unbiased ERP consultants understand both the technical and business aspects of ERP projects.