ERP surely remains the leading strategic solution for transforming a business and supporting its development. However, sometimes, an ERP project can be an intimidating prospect: the risks that deter decision-makers include delayed implementation, a “painful” start-up, possible malfunctions and budget overruns, but, separating myth from reality, what is the actual situation?
The deployment of an ERP system is obviously a major project for any business. As such, it entails risks and aspects to watch that must be anticipated if the project is to succeed. However, when an ERP project is carefully prepared, the evidence is that many run according to schedule, following the planned phases, start operating on limited but scalable operational scopes with the right level of change management support for business users, and all within budget. Why is this? What factors have a positive influence on an ERP project? What lessons can be learned from the difficulties encountered in some projects and what practical advice can be taken from the positive experiences of those who have successfully implemented ERP?
First of all: what is an ERP project – why choose ERP and what benefits are to be expected?
Many corporate ERP project managers approach their plans by addressing the three areas of functional scope, schedule and budget. These are essentially the three mainstays supporting the success of any project, i.e. knowing what we are going to do, when we are going to do it, and how we are going to do it. For an ERP implementation, there is a fourth vital aspect to be added – why are we going to do it? What would happen in the business if there were no change to ERP? What are the benefits sought from the project and how are they intended to support the business strategy?
In fact, an ERP implementation will transform the organization, since the main objective of the project is to combine all master data to leave just “one shared vision of the truth” and harmonize all management processes to eliminate burdensome operations and “uncontrolled” processes. In this way, the corporation quickly gains a better view of its business, and it can more easily seek competitiveness improvements to support its development.
The first place to improve competitiveness is by improving internal productivity. The long-standing argument that a single ERP system with a single, centralized database eliminates duplicate data entry still holds true. This firstly gives the business control over end-to-end management of each process, meaning it can automate and control them, and secondly it provides a full data audit trail.
These internal benefits will help profitability, but to gain competitiveness in these times of digital transformation, the business needs to be able to differentiate itself more quickly than its competitors, including by offering more services and responding more quickly. To achieve these aims, businesses with full control over data flows thanks to a centralized ERP are in the best position to improve the customer experience, because they will be able to give all their employees the means to react appropriately to customers throughout the purchasing process, and ensure flawless execution of processes both internally and externally…
How to manage an ERP project. How should roles and responsibilities be divided up within the project team?
One vital question is how best to manage the ERP project. Should it be driven by deadlines, or the achievement of competitive benefits or strategic objectives?
Although senior management often has a tendency to want to get things done, and done quickly, viewing an ERP project as an IT project alone, albeit a large one, is the first pitfall that will cause problems. The impacts on the organization and processes mean that it must be viewed as a real business-wide transformation project and, as such, senior management needs to lead it.
In addition, an ERP implementation will never succeed unless the business users are properly involved in the project. In fact, these users will be the first people affected when it comes to managing purchasing, production, sales, shipping, and so on in the new ERP system. A representative user panel must form the core of any project team. They must also be given sufficient time away from their usual work to get fully involved in the ERP project, right from the solution selection phase.
This need to build shared involvement across the entire business, from senior management down, is perhaps one of the most important factors.
Two crucial tips for the preliminary stages: simplify the specification and aim to make a more detailed comparison of a smaller pool of possibilities
An ERP project is therefore to be addressed in the round, and as a long-term effort, but preparation and preliminary analysis remain the essential first steps to choosing the right solution.
The project team set up must ensure that the chosen solution will be a good fit not only with the functional needs, but also with the current culture and organization of the business. This first stage therefore aims to produce an ERP specification that will determine the project’s scope. However, a complete list of the functionalities expected from the system is not necessarily the best way to determine the project scope in advance. In contrast, a clear statement of the processes that the ERP system is to handle, supported by concrete examples and real management data to enable them to be modeled in the shortlisted ERP solutions, is very much best practice.
In order to be effective and to match the agility and speed required by senior management, the ERP specifications must be focused on the project objectives and enable both the company and the ERP integrators consulted to see the desired target situation, in order to clearly identify the risks and thus be able to anticipate them.
It is consequently preferable to reduce the number of solutions examined in the ERP benchmarking phase to be able to look at them in greater depth. One recommended method is to produce a PoC or Proof of Concept on 2 or perhaps 3 ERP systems at most, to allow the project team to check precisely how each of the key processes fits with each solution shortlisted.
The project implementation and integration phase: the priority remains creating real synergy with the ERP integrator
The initial planning of the ERP project is essential, as it will enable the consequences of any delay in a phase or deliverable to be anticipated, but it is also necessary for the project management bodies to remain alert to slippage throughout the project. The implementation method determined for the project absolutely must be followed.
For example, the start of a project phase involving processes that are strategic for the business’s activity, such as distribution, must not see any deviation from the methodology. So for example, reducing the time spent on acceptance testing a key phase because the configuration stage has been delayed, in order to keep the same start date, would be a risky path to take.
The methodology set for ERP deployment will therefore form the backbone of the ERP project. Certain basic principles must be followed if the project is to run smoothly. The project needs to be described in clear steps with definite milestones. This will reduce risks and help ensure budgets are met. The methodology needs flexibility, however. This allows teams to adapt to any variance in the schedule that might occur, or to fit in any extra functionality. Some unforeseen factor and/or adaptation is bound to arise on a project of this size. There must therefore be total synergy with the ERP integrator for the project team to rapidly find the right solutions and together amend the project schedule.
This synergy will then continue during the operational phase either by virtue of expansion in the company’s business, or simply because of upgrades to the ERP by the publisher, which will certainly lead to the addition of extra modules or the integration of new technological developments…
The final word on successful ERP projects:
“Anticipate and plan, but do not fall into the trap of just pressing on regardless. Take a step back, and regularly take the pulse of the project and see how teams feel about their progress…”
The TVH Consulting Group
TVH Consulting brings together more than 170 Microsoft, SAP ERP and BI solutions experts, committed to 100% project success.
These contents may interest you:
- Reconciling ERP specifications with the need for agility
- SAP S/4HANA migration: why and how?
- Agri-food ERP systems: a comprehensive review to ensure the right choice
- ERP projects: advice on achieving success, from preliminaries to implementation
- How to make the right choice between Microsoft and SAP ERP systems
22, rue Guynemer – B.P. 112
78 601 Maisons-Laffitte Cedex
- +33 (0)1 34 93 17 27
- +33 (0)1 34 93 49 49