Given that we are in the midst of our Manufacturing Vendor Showdown this week I thought it would be good to talk about what to ask your ERP vendor. ERP implementations never go quite as you might expect. Not only do most of them take longer, cost more and fail to deliver business benefits when compared to expectations, but they can also create operational disruptions at go-live.
According to our 2015 ERP Report, roughly half of all ERP implementations create some sort of material operational disruption at the time of go-live. The top two disruptions are inability to ship product and/or close the books. These disruptions vary in duration from just a few weeks to several months in some extreme cases.
These statistics are obviously very concerning. However, these are situations that can be avoided in most cases. Asking the following questions of your ERP vendor prior to go-live can mitigate the risk of go-live disruption:
Is the new ERP software aligned with the business? It’s one thing to say that your ERP software works, and another to say that it works for your business. Addressing technical configuration and working out the technical glitches is relatively easy, but ensuring that the software is aligned with your business needs and your people (and vice versa) is the tough part. Most ERP software is robust and flexible enough to address whatever your needs may be, so it is critical to define how the software will best fit your operations. When creating your implementation project plan and budget, expect to expend a majority of your resources on the people and process issues – much more so than the technical issues.
Are our employees completely trained on new business processes, expectations and the new ERP software? Speaking of people issues, training is a common obstacle for most ERP implementations. Most organizations are tempted by the apparent simplicity of leveraging boilerplate training materials supplied by ERP vendors, but these documents won’t get you where you need to be. While they can act as strong starting points, they will not be customized to your specific industry, business processes and organizational roles and responsibilities – all of which are critical in helping your employees understand how the new processes and systems will work. If you haven’t invested the time in creating custom training as part of your organizational change management plan, then you probably aren’t ready for go-live.
Are we at risk of a “Hail Mary” go-live? I coined this term several years ago after a client insisted on going live as planned instead of delaying by 30 days (as we recommended) to mitigate risks associated with processes that hadn’t been fully tested and fine-tuned. The delay would have cost an additional $100,000 on their existing $2 million investment, but as it turns out, it would have saved them over $1 million in lost revenue from not being able to ship product in a timely fashion after go-live. While your implementation team and executive sponsors will likely grow impatient as the project goes on, it is important to avoid the temptation to “just get it done” and settle for the consequences. As this client and countless other organizations have discovered, these sorts of go-lives can be extremely risky and costly.
Though ERP implementation risk can never be mitigated 100%, there are a number of things that you and your team can do to reduce the likelihood of some sort of disruption to your business. These three questions should help ensure you’re headed down the path of a successful “non-event” type of implementation rather than one that creates more pain and disruption than is necessary.