How to Implement an ERP System ?
 

Your organization has decided to implement an Enterprise Resource Planning (ERP) system. Whether the driver for change is that the current Legacy system is out-of-date, cannot handle the volume or is causing customer service issues, it is imperative that your organization not fall into the trap that plagued hundreds early ERP adopters. Here are a number of steps to a successful implementation as well as issues to avoid which may lead to failure.

Steps to Success :
Create an Implementation Team
This team should be composed of 10-15 people in the organization that are identified as the best people in each area. Quite often Jim from Marketing is not put on the team because he is ‘too busy’ with driving sales, so John, a recent hire, is put on the team for fill this role. John, of course, is still learning how the company operates and is not the best candidate for the team as he has limited knowledge of processes within the Marketing area. The implementation team should report to a steering committee in the organization, which is a group of the highest level executives that have authority and responsibility for the success of the project. The steering committee should act as a guide to ensure that the timelines and objectives of the implementation are being met and to remove any roadblocks that the implementation team experiences.

Document Processes in all Functional Areas
The implementation team should then document all functional areas that will be on the ERP system.
This includes Finance, Sales / Marketing, Operations and Human Resources. The team should create a process map for each area. In addition, ask employees in different areas what they like best about the current process, what  they dislike and what would make things better. Not only is valuable information gained by this process, but it

also involves employees and creates a shared responsibility to make the process work after the software is implemented.

Select the Software
The implementation team should undergo a software selection phase where its goal is to match the best software package to its core business processes. It is highly unlikely that it will find a 100% match. The goal is to find software that will best mirror the organization’s business processes. If the software can match to 80% of the processes, then two things must happen to get to the other 20%; either the process must be modified or the software must be customized. The decision on which option is suitable rests on whether or not the process is a core process of the organization (a core process is defined as a process that is vital to the organization and its customers).
 

Begin Implementation
Once the software has been selected it is time to begin the planning for the implementation. The implementation team should develop a project plan using a project planning tools (gnatt charts, etc.). Some of the main components of the process are: ensuring that the data

 

transfer is ‘clean’ and that no data is lost during the transformation; creating a change management process for modifying business processes; creating a testing and approval methodology; approving the system and sign-off; and developing training processes. The implementation team should work with the supplier consultants to help them with technical issues during the implementation.

Common ERP Implementation Issues to Avoid :
 
 

Underestimating the Cost of Implementation
Many organizations did not realize the full extent of implementing all of the modules in an ERP system. By nature, the ERP system is highly process-oriented, and if your organization does not have all of its processes documented, you have your work cut out for you. For example, not including the cost of process mapping, will increase implementation costs and lead to frustration when the budget is increased for the project.
 

 

Cutting the Budget Too Soon
As a result of increasing the budget for the ERP implementation, once the ‘core’ elements were in place, ancillary modules are not all turned on as they were not part of the main processes. Thus, the full benefit of the ERP system is undermined as this causes ‘work arounds’ that short-circuits the full value of the system. In addition, training becomes one of the first areas to suffer budget cuts.

This creates problems as users have no-where to turn for help and go back to the ‘old way’ of doing things.

Branding the implementation as an IT Project
As this is a software implementation, many organizations believe that the Information Technology (IT) function should be responsible for the implementation. This creates a dis-connect from all of the other functional areas such as Finance, Sales / Marketing and Operations who are all stakeholders but do not give adequate input into the selection decision. This results in IT making assumptions on what the business requirements were, which are almost always incorrect.

Not having Proper Metrics
The first ERP implementations were a result of the Y2K bug. Rather than pay to upgrade a Legacy system, some organizations opted to install a shiny, brand-new ERP system, without calculating its Return on Investment (ROI). Each functional area in the organization should estimate

 

what the benefits of an ERP system are; whether its eliminating redundant activities, improving order fill rates or increasing supply chain flexibility, there must be a metric that management can follow to ensure it receives the benefits of the ERP system after implementation, as well as track its progress as the modules are being implemented. Remember, you cannot manage what you cannot measure.

By ensuring that your organization spends time understanding its processes and involving representatives of key areas, it will ensure that it has a high likelihood of success for the implementation.
These efforts will pay dividends when the implementation is underway.

 
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