One of our recent blog posts outlined The Seven Deadliest Sins of ERP Implementations. A related poll question asked which of the seven variables were the biggest challenge for ERP implementations, and the results are interesting.
To recap, there are seven critical challenges that can disrupt an ERP implementation if not addressed appropriately:
- Program management
- Business process and workflow definition and improvement
- Organizational change management and communications
- Business and technical integration
- Globalization and localization
- Independent oversight of technical resources
- ERP benefits realization
Unlike data captured in our 2010 ERP Report and other research we’ve conducted in the past, inadequate focus on benefits realization scored low in our online poll, with only 9% of respondents citing that as the biggest challenge. On the other hand, insufficiently defining business processes and workflows was the biggest challenge, according to 39% of respondents. Poor program management and not enough focus on organizational change management both followed close behind, with each gathering 26% of the votes.
The fact that business process and workflows are such a potential land mine for ERP implementations is not surprising for a number of reasons. There are six main reasons why this presents such a challenge for organizations:
- Unrealistic expectations. We find that many of our clients expect that implementing a new enterprise solution will simply transform their business overnight, without carefully defining and engineering “to-be” business processes and workflows. This unrealistic expectation helps explain why, according to our 2010 ERP Report, most ERP projects take longer than expected.
- Vendors often oversell and oversimplify. Many vendors oversell and oversimplify their software’s use of industry best-practices and streamlined business processes. While their software will inevitably improve business processes, they still need to be defined in the context of the implementing company’s operations and business policies and procedures.
- There are often complex processes outside of the ERP system. Business processes may entail activities to be completed in the ERP system, but chances are, there are also processes that touch other systems or manual processes. These non-ERP processes need to be incorporated into the overall workflows in order for employees to better understand them.
- Most ERP systems are very flexible. Most modern ERP solutions are extremely robust and flexible, so even a simple business process such as creating a sales order is likely to have multiple variations. It cases like this and hundreds of other business processes, it is not enough to say that you are going to simply adopt the software’s processes; even those workflows need to be defined, which takes time and resources.
- Business processes are a source of competitive advantage. While some business processes, such as general ledger or financial reporting, are not sources of competitive advantage, other core functional areas are likely to differentiate your organization from competitors. For this reason, it is not always advisable to simply adopt vanilla functionality that can be easily replicated by others in your industry.
- Employees need well-defined processes. Processes and workflows need to be clearly defined so employees can be adequately trained. Software developers and implementers have very different process definition needs than employees, who will ultimately be responsible for performing the tasks. Organizational change management, communications, and training activities are effective only with well-defined business processes.
ERP software is not implemented by simply plugging it in and assuming business processes and workflows will fall into place. Instead, organizations need to carefully define and re-engineer their processes. By keeping the above points in mind, your organization will be less likely to overlook a key, but often overlooked, component of an effective ERP implementation.
What do you think? Take the poll or review the full results from other readers.