Since 2008, Panorama’s ERP consultants have been monitoring the ERP industry for trends relevant to organizations’ ERP projects. Our analysis has been vendor-neutral and thought-provoking, providing organizations with realistic expectations for their ERP implementations.
The 2019 ERP Report delves even deeper into the data to analyze what these trends mean for organizations now and in the future. The findings from this year’s report point to one important concept: ERP projects are most successful when focused on integrating people, processes and technology.
This concept has proven true in our ERP consulting experience, and it also is supported by several findings from our report:
1. Many respondent organizations found the technical aspects of their implementation easier than the process and organizational change aspects.
Organizational changes are difficult because people naturally resist change. Employees may refuse to learn new processes, or they may speak negatively about the ERP project amongst coworkers.
The most difficult part of organizational change management (OCM) is identifying and eliminating the barriers preventing employees from using new ERP software. This involves extensive communication and training aimed at developing new organizational digital competencies. We recommend developing an organizational change management plan before you begin ERP selection.
Don’t let technology challenges distract from people and process challenges. Focus on all three components of ERP success, while paying close attention to people and processes, in particular.
The 2020 ERP Report
This report summarizes our independent research into organizations' selection and implementation decisions and their project results.
2. The most common ERP selection scenario among respondents is an ERP upgrade.
How is this relevant to the “people, process, technology” paradigm? Well, an ERP upgrade usually is not as technically-demanding as a full ERP implementation. By upgrading your current ERP system instead of completely replacing it, you can dedicate more focus to people and processes.
As outlined in the report, most organizations are focusing on change management, and most are improving key business processes. This indicates that organizations understand the importance of people and processes, and the reason they’re pursuing ERP upgrades may be that it allows them to more easily dedicate an intense focus to these success factors.
With a more dedicated focus on change management and business process management (BPM), guided by an ERP consultant, these organizations likely would have achieved the business benefits they expected and avoided budget and timeline overruns.
While an ERP upgrade is not the best choice for every organization, it’s an option that every organization should at least consider. While weighing different options, you have the opportunity to define organizational goals and determine what software functionality you need to achieve these goals. Oftentimes, organizations find that the newer version of their current software provides all the functionality they need to acheive their organizational goals.
When organizations are focused on bells and whistles offered by other ERP systems and ERP vendors, this often foreshadows a very technology-focused ERP project. While evaluating other systems and vendors is wise, you should ensure your business needs are what’s actually driving the evaluation.
3. Almost all organizations improved their business processes as part of their ERP implementations.
This likely indicates that many organizations understand the importance of aligning new technology with future-state business processes.
In our experience technology delivers the most benefits when it supports efficient processes. When organizations do not optimize their processes, or they select technology that can’t support optimized processes, their new ERP software cannot enable business transformation.
4. The most popular implementation approach among respondents is implementing ERP in phases.
When implementing ERP software, large global organizations often face more organizational change management challenges than smaller organizations. Implementing ERP in phases gives large organizations more time to address any lingering people and processes issues experienced by individual business units or locations. If they went live with all business units and locations simultaneously, they would need to address all of the people and process issues at once. They might not have enough time to dedicate the level of focus necessary.
This consideration may be one reason so many organizations in our study are using a phased implementation approach.
While change management and business process management are typically addressed before implementation, there are always lingering issues – or new issues – that emerge once the system goes live. Some of the people and process issues we’ve seen in organizations post go-live include residual resistance to change and the need to reinforce process and system training.
One of our recent clients began their phased implementation with the business unit that was the most enthusiastic about the ERP implementation. This energized the rest of the organization and facilitated project buy-in.
5. Less than half of organizations used ERP consultants for either OCM or BPM services, and by no coincidence, few organizations realized expected business benefits.
For example, only 19% of the organizations that expected to realize benefits related to growth and competitive advantage actually realized these benefits.
We have found that a lack of benefits realization is often related to inadequate change management and business process management. While most organizations in our study improved their business processes, many of them likely followed an ineffective methodology – or no methodology at all – since they didn’t seek the guidance of ERP consultants.
The BPM methodology we use engages stakeholders from across the organization, which encourages collaboration and enables cross-functional efficiency. We ensure organizations focus on business process reengineering before ERP selection so they can select technology that aligns with their future state business design.
People, Process, Technology
While many organizations in our study appear to at least have a basic understanding of the importance of integrating people, processes and technology, they do not seem to have a full understanding of what it really entails. Organizations can increase their understanding of ERP success by working with an ERP consultant, like Panorama, to build a holistic project plan. We ensure your project plan includes all essential activities at the right stages throughout your project. To learn more about ERP success, download Panorama’s 2019 ERP Report.