While this year has been full of mixed news, with economic weakness, business volatility, and ERP failures and lawsuits taking more than their share of headlines, there is much to look forward to in the New Year. IT and finance executives in the C-suite are becoming smarter, more strategic, more flexible, and more adept with dealing with uncertainty, and we should expect no less from our ERP implementations.
With the holidays upon us and thoughts of how to spend new budgets in the New Year, we thought it might be helpful to share some of the “gifts” that every CIO and CFO should ask for before jumping in to a ERP software initiative in 2012 and beyond. For that discerning executive in your life, here are 12 gift ideas that are likely to trump any “world’s best boss” coffee mug or Christmas sweater:
1. The right ERP software for your business. It may seem like an easy process on the surface, but evaluating and selecting the right ERP software for your organization is a complex and challenging task. Many of our competitors provide “cheap” alternatives to software selection via automated checklists and over-simplified views of your business, but navigating through the many good options in the marketplace to find the right software for your organization requires a hands-on understanding of your business, true technology independence (both in theory and in fact), and recognition as the world’s leading experts in ERP software.
2. A competent project manager. While the “do it yourself” option may sound appealing at first, and you certainly will always want an internal project manager to manage the many internal activities that need to happen during an implementation, external project management support can be a perfect way to augment the internal competencies of your project management team. More importantly, external experts that manage ERP implementations every day will help you implement faster, less expensively, and more effectively than you would have otherwise.
3. A shiny new project plan. There is a reason that a majority of ERP implementations take longer than expected: the project plans were never realistic to begin with. Most project plans we see created by organizations and their ERP vendors or system integrators are woefully inadequate, missing or inadequately addressing key critical success factors, such as time for data conversion, conference room pilots, organizational change management, business process and workflow design, and user acceptance. In order for your implementation to get off on the right foot, you might consider benchmarking your plan against best-in-class and technology-agnostic implementation plans, which will highlight gaps in the business, people, and organizational aspects that are so crucial to any successful implementation.
4. More money for your ERP budget. Research presented in our 2011 ERP Report shows that a majority of ERP implementations go over budget, primarily because companies either mismanage their projects, or, even more commonly, under-estimate their budgets to begin with. Your direct ERP vendor, software license, and system integrator costs will actually be a minority of your total cost of ownership, so you should budget accordingly. A good rule of thumb to see if your budget is in the right ballpark or not is that your software license costs are likely to be just approximately 20-25% of your total implementation cost. In other words, take your license costs and multiply by four or five to arrive at your ballpark implementation figure. Anything less is too little and will require you to cut corners later on.
5. Well defined and re-engineered business processes. I can’t think of anything that saves more time and money in an ERP implementation than well-defined and documented business processes. Without this component, the software vendor or system integrator will show up with their checklists or transactional-based workflows, expect answers on how to configure the software, and spin their wheels (and billable hours) helping you make decisions on how you want to run your business. Since most ERP software is very flexible, the concept of software “best practices” is a farce, and business process re-engineering takes time, you need to have a clear vision for how you would like your operational model will look before you begin implementing your selected software.
6. More organizational change management. Whether your project succeeds or fails will be largely dependent on how you manage the organizational and “people” aspects of your enterprise software deployment. Basic generic vendor training materials won’t cut it, so you’ll need an approach that is more tailored to your business, including process-based training, organizational impact assessments, targeted employee communications, and clearly defined roles and responsibilities in the new business and systems environment. Our organizational readiness assessments help clients clearly see the areas of resistance and organizational risk that need to be addressed as part of an effective organizational change management plan.
7. More resources. Organizations are notorious for implementing (or trying to implement) with inadequate internal and external resources. No matter how talented your internal team is, chances are that they are not experienced enough to implement without outside help that can bring expertise and business methodologies to help your team implement faster and more inexpensively than they would otherwise. In addition, most executives could use more ERP staffing support to help them assemble a world-class team with the right balance of internal and external resources.
8. A Better educated team. Unrealistic expectations and lack of experience are two of the hardest things to change with a client that is about to embark on what is likely to be their biggest business transformation project in at least the last decade or two. For example, is your team armed with the knowledge that most implementation teams over-customize their software and do they know what to do to keep that from happening with their project? Do they know how to keep the project on track and identify warning signs along the way? Clients often ask us to conduct an on-site ERP Boot Camp as a way to educate and arm their teams for battle heading into their ERP initiatives. You can even start educating your team now by visiting our ERP resource center to view our on-demand ERP webinars, listen to ERP podcasts, or read our extensive ERP research and white papers, all free of charge.
9. Tangible business benefits and ROI. Your executive team is not going to be happy with your implementation unless it delivers tangible business benefits that they can see, feel, and touch on their profit and loss statements. We all know that simply implementing the software is not going to deliver business benefits, so you’ll need to go one step further by establishing a benefits realization framework that translates some of the expected business benefits into measurable metrics that can be used throughout the organization. In addition, this benefits realization plan will call for a post-implementation audit to help optimize results after go-live.
10. An ERP project that never ends. This may look like a typo or sound like a cruel White Elephant gift for that executive that has been a little too difficult to work for over the last year, but it is in fact one of the best things you can do for your organization in the long-term. A key problem with ERP projects is that they are treated like sprints to a go-live finish line, when they should instead be treated like a marathon of continuous improvements and adjustments to account for business and technology changes over time. In fact, we find that most organizations that come to us for help finding a new software solution to replace their old ones could have extended their ERP lifespans by 50% or more if they would have simply kept the software and business operations better aligned over time.
11. A resounding ERP success. Unfortunately, most executives go into ERP implementations with the low expectation of simply not failing or not bringing the organization to its knees. This is hardly the best-case result one should expect after making a risky, multi-million dollar investment in the business. The good news is that we have proven with our clients that ERP implementations can be resounding successes that do more than avoid failure – they offer relatively smooth go-lives, more efficient business processes that deliver tangible business results, and an organization that is well-aligned with the new business processes and software. The question should be not whether or not you will be successful in your ERP initiative, but how successful will you be?
12. An independent advisor to help along the way. All of the above Christmas and New Year gifts are very realistic and available to your executive team with the guidance and support from an outside consulting and services firm that does this type of thing for a living every day. We are well-known as the world’s leading independent thought leaders in the ERP industry not just because we talk a good talk and are quoted by hundreds of journalists and bloggers as such, but because we have hands-on experience making our clients successful, whether it’s helping them select the right software, implement their chosen software, or get more out of their existing ERP investments.
Panorama Consulting is happy to help you provide any one or more of these gifts to your CIO or CFO. Learn more about our ERP consulting services as you plan for your ERP project in the new year. And don’t forget to visit our ERP resource center to educate you and your team with the knowledge required to make your ERP implementation successful.
Here’s wishing you all a Happy Holidays and even Happier New Year. Best of luck in 2012!