Determining the best ERP implementation strategy can be tricky. It sounds easy enough: define what you need, design and configure the system, run some testing, train the employees and boom – you’re in business. Most ERP vendors, system integrators and less experienced ERP consultants may make enterprise software initiatives sound this easy, but as anyone who has been involved in ERP implementations in the past can attest, this is typically not the case.
Despite the tendency of the industry to over-simplify the effort and risk associated with ERP implementations – which explains why so many of them fail – defining the best strategy for rolling out a new ERP system involves a number of variables. In addition, there is no one-size-fits-all strategy that works in every situation. The type of strategy that may not work well for one of your industry peers may work very well for you, and vice versa. Too often, organizations fall prey to the fallacy that a generic, boilerplate ERP implementation strategy and plan is going to work for them.
So how can you avoid the same mistakes when defining the best ERP implementation strategy for your organization? Here are a few things to think about when defining the implementation approach that makes the most sense for your organization:
1. Reengineer business processes or pave the cowpaths? Companies that rush into their ERP implementations without a more deliberate focus on business process reengineering are more likely to automate their already inefficient processes. The business process reengineering guru Michael Hammer popularized the notion of “paving the cowpaths” to describe this phenomenon, and many companies head down this troubled path when beginning their projects. After all, the path of least resistance is typically to keep doing things the way you always have, so spending millions of dollars on a new ERP system isn’t going to fix that without the right mindset. CIOs and project managers who are more interested in transforming and improving their business processes need to build the appropriate level of effort and focus in their project plans, or else their organizations will naturally revert to the cowpaths, no matter how hard they may try otherwise. Unfortunately, inexperienced ERP consultants and system integrators will typically underestimate the time and effort required to focus on business processes, which further complicates this issue.
2. Standardization versus autonomy. During the project planning phase, it is important to determine if and where the company will standardize business processes across the organization. Despite the internal resistance that typically rears its ugly head when the rubber meets the road, most of our clients embark on ERP implementations intending to heavily standardize across the company. Regardless of where your organization may fall on the spectrum, it is important to recognize that standardization will require more time up front in the business process reengineering and business requirements phase of the project, while companies that lean toward less standardization will require more time and resources during the design, test and training stages. This is a prime example of where a one-size-fits-all strategy won’t work – you have to tailor your strategy and corresponding plan to fit your company’s needs and priorities and build an ERP implementation plan accordingly.
3. Waterfall versus agile software development. This may sound like an overly technical concept that shouldn’t concern CIOs or others within the boardroom, but this decision will materially affect your ERP implementation strategy and plan. Traditionally, most ERP consultants and system integrators follow a waterfall approach, which entails a more sequential and formalized approached to design, build and testing. Agile development, on the other hand, entails a more iterative and less structured approach to rolling out new functionality. Waterfall approaches typically work for larger organizations or those that are looking to standardize business processes, while agile approaches can work better for smaller or more nimble organizations that aren’t as concerned about standardizing operations. Most of our clients prefer the waterfall approach, but many have found the agile approach to work as well. Either way, it is important to understand the pros, cons, risks, and tradeoffs of each approach and decide where on the spectrum your ERP implementation will fall.
These are just three important variables to define when defining your ERP implementation strategy. There are plenty of other strategic considerations that should also be defined before signing vendor contracts and beginning implementation, such as organizational change management and communications, integration, data, language, single system versus best of breed and a host of others. The three variables discussed above are a good place to start and should be further defined along with others as part of an effective ERP implementation strategy and planning process.
Learn more by checking out our webinar tomorrow on Organizational Change Management: A Critical (and Often Overlooked) ERP Implementation.