ERP readiness isn’t a term that CIOs, CFOs or project managers typically think about. It is more common for executives and project team members to have concerns about budget, how fast they can get to go live and how not to screw up the ERP implementation along the way.
Organizations that take the time to plan and ensure they are “ready” for their new ERP software before go-live – even though no organization is ever 100% ready – are much better positioned for success. Just as importantly, ERP readiness helps mitigate some of the most common ERP implementation risks, such as budgetary overruns, misalignment with business needs and operational disruptions at go-live.
Since no organization will ever be completely ready for go-live, how can we assess the level of readiness for your organization? It’s not usually quick and easy to measure. We typically facilitate extensive go/no-go assessments for our clients before they go-live to ensure that things are on track. Following are a few things to keep in mind as your ERP implementation go-live draws near:
Are your business processes working? There is a big difference between software that works and business processes that work. Too many organizations think that workable software constitutes the threshold for ERP readiness. Instead, companies should be just as (if not more) concerned about how well-defined and tested their business processes are – especially if the company has undertaken or expects significant business process reengineering ahead of implementation. Business processes shouldn’t be defined by your IT department or ERP project team in a vacuum but should be defined, validated, and tested through the involvement of key business stakeholders in your organization.
Are your people ready for the organizational changes associated with your new ERP system? Similar to the above point, business processes that are well-defined and tested on paper are different than business processes that are understood and executed by employees. In fact, it is safe to say that your front-line employees will ultimately determine whether or not your ERP implementation is a success or failure. A thorough organizational change management plan should be implemented as part of your overall ERP project to ensure that people are ready to execute the expected changes resulting from the new ERP system. This plan should not simply focus on training but should address change impact, organizational readiness, employee communication and other key organizational change activities that happen well ahead of go-live to ensure your people are as ready as possible when that day comes.
Beware of the “Hail Mary” go-live. A few years ago, we had a client who was adamant about their planned go-live date. Roughly 30 days prior to go-live, we outlined some significant operational risks and suggested that the date be pushed by 30 days. This move would have cost the company another $200,000, so the CEO asked that we push on despite the risks. At the end of the day, it was much more costly to not delay. The company attributed over $2 million in lost sales orders as a result of poor readiness for go-live. This client isn’t alone: according to our 2014 ERP Report, approximately half of all ERP implementations experience some sort of material operational disruption at go-live, such as not being able to ship product or close the books. There are typically plenty of warning signs related to these “Hail Mary” implementations, and an objective and structured ERP readiness assessment will usually identify those risks before it’s too late.
ERP implementations typically see plenty of risk, which is why most of them fail. No project – no matter how well-planned and executed – is without risk, which is why it is important to have a formal ERP readiness assessment in place to mitigate those risks. Much like an insurance policy, the cost is much less significant than the alternative.
Learn more by downloading our white paper, Ten Tips for a Successful ERP Implementation.