“Playing safe is risky.” That is one of my favorite quotes from business author and guru Seth Godin. While it may sound like an oxymoron, it makes sense when you think through terms of being innovative in your workspace.
Earlier this week, I was part of a panel discussion in front of a few hundred CFOs. The discussion was focused on how to best select and implement ERP systems from a CFO perspective. Interacting with this large group of financial and risk managers helped me view enterprise software implementation risk in a new light.
CIOs and IT Directors are concerned with risk, but are typically more focused on the risk of finding the right software and ensuring that they don’t screw up the implementation. CFOs and other executives also worry about these same things, but they also view risk through a different lens.
Here are five ways to mitigate risk on your ERP implementation:
- Recognize that ERP implementations are risky. If ERP system implementations were easy, more companies would be successful with them. ERP vendors may tell you that implementing their ERP software “isn’t so risky,” but the reality is that you are completely gutting and transforming your business. While that may sound terrifying, our 2016 ERP Report teaches us that ERP projects are fraught with risk.
- Focus on long-term and short-term risks. To many executives, risk entails two things: making sure the implementation is done on-time and on-budget. However, the bigger risks are longer-term in nature. Lost business benefits, lower productivity and broken business processes can cost a company many times more in the long-term than the cost of a budget overrun. The best way to mitigate these larger, longer term risks? Incorporate an effective benefits realization and organizational change management plan as part of your implementation (read more about this here).
- Acknowledge and mitigate internal and external biases. Internal team members likely have biases that must be neutralized. Even more damaging is the biases of your external ERP consultants, most of whom are financially incentivized to steer you in one direction or another. In addition to the monetary misalignment with your interests, you’ll also want to watch for consultants who are myopically focused on the technical aspects of the implementation rather than the more important organizational change and business process reengineering work streams that will affect your project’s level of risk more than anything. When choosing a selection or implementation consultant, make sure to leverage the help of independent experts who have your best interests in mind.
- Steer clear of the “do it yourself” approach. Taking the implementation into your own hands is one of the riskiest things you can do. Just as you probably wouldn’t attempt open heart surgery on yourself, you are going to be better off leveraging professionals who are experts at these types of business transformation initiatives. And look for consultants that address all the major components of a successful ERP implementation: organizational change, training, business process management, project management and both the technical and functional depth in your chosen software, to name a few.
- When in doubt, leverage independent oversight of your implementation project. If you already have a technical consultancy in place or are headed down the do-it-yourself path, it can’t hurt to leverage independent oversight of your ERP initiative. Independent ERP experts with your best interests in mind can help keep the project on track, point out blind spots and help you avoid common pitfalls along the way. Just as you most likely have insurance for various parts of your business, think of independent oversight as an insurance policy to ensure your project is successful – and less risky.