What is the Best Approach to ERP Implementation?
Over the past decade, businesses generated an unprecedented quantity of patents, products, and profit models. This trend of consistent expansion is accelerating—2015 being one of the most innovative years in history. In order to thrive in this age of explosive growth and competition, businesses must maximize resource efficiency. And, to do this, they must have tools that are in line with the pace of the 21st–century marketplace.
Arguably the most important of these tools is an Enterprise Resource Planning (ERP) software package. Industry leaders consider ERP software the cornerstone of their company’s organizational and operational efficiency. Yet, some business owners and executives consider ERP software cost-prohibitive due to the oftentimes shocking cost of adopting and implementing an ERP package. However, businesses can avoid many unnecessary costs, and significantly reduce their bottom line by following a series of steps.
We detailed these steps in a White Paper and broke it down in a series of articles. In the last article of this guide, we describe a method to implement an ERP System that has proven extremely successful over the years.
- Article 1 (Chapter 1): ERP Software Selection: Where Should I Start?
- Article 2 (Chapter 2): How to Create A Winning ERP Implementation Team
- Article 3 (Chapter 3-4): Do I Need to Customize my ERP?
- Article 4 (Chapter 5): How Can I Save Money on ERP Training?
- Article 5 (Chapter 6): How To Make Sure You Will Not Miss Your ERP Go-Live Date
- Article 6 (Chapter 7): What is the Executive’s Role in an ERP Implementation?
- Article 7 (Chapter 8): What is the Best Approach to ERP Implementation?
Chapter 8: What is the Best Approach to ERP Implementation?
Keep it simple stupid
As organizations make their transition into the age of innovation, many companies make a significant technological jump once the decision has been made to upgrade and automate. Due to factors such as cost, time, manpower, and complacency, most organizations taking on new innovative initiatives are converting from extremely antiquated business practices and procedures. The ‘if it ain’t broke’ mentality has encouraged practices like tracking production and inventory on hand-written documents, forecasting and procurement data reactively based on assumptions and opinions (rather than true facts and figures) and analyzing company key performance indicators through manually created and maintained spreadsheets. Over time, teams get acclimated and comfortable with these behaviors, which prolongs and widens the gap between the innovative stage of the company and its competitors. Thus, once the company finally decides to upgrade, through the adoption of an ERP for example, they most likely want to change almost everything.
Although it is important for an organization to automate and improve all areas of their business, it is important to remember the amount of work and effort required to properly implement a platform as extensive as an ERP. If too much is taken on during an ERP implementation, there are several risks that not only jeopardize the project but the organization as a whole. Most ERP packages are broken up into modules. Whether the ERP provider charges by the module, or by the work involved to set up, configure and train on these modules, there is always a cost associated with each module. Taking on more modules than necessary will result in drowning of project resources and time, extended project timelines, and a possible decrease in training retention—all of which are exorbitant costs that will quickly deplete the budget.
“The ‘if it ain’t broke’ mentality prolongs and widens the gap between the innovative stage of the company and its competitors”
Favor a Phased Approached
Through close communication with the ERP provider in the initial planning phase of the project, you can develop a project plan that will help deter some of these risks, and the costs associated with them. When first meeting as a company to analyze your company needs, qualify the benefits of each of the modules, and only plan to implement the ones that truly deliver value. If the list of modules is still somewhat considerable in length and time, a phased project approach will be necessary. In a phased rollout, rather than implementing all of the desired modules in one single instance, small groups of modules and processes are implemented at a time. This approach provides cost benefits including more time for users to adapt to the system as they go (avoiding re-training and inflated support costs). This approach can also develop super users for later phases (as users implement phase I, their expertise can be harnessed in the setup and implementation of later phases).
Additionally, by utilizing a phased approach, the company mitigates the risk of possible go-live disasters. Due to the integrated nature of a fully implemented ERP, any failure in any portion of the software could affect other modules and processes. If the implementation is all encompassing, there is an added pressure for users and stakeholders to be 100% prepared in all areas of the platform. If the company has ‘bitten off more than they could chew’, the threat of a go-live rollback (reverting back to the legacy system and planning another go live in the future) becomes much greater. Rolling back a go-live has immense monetary consequences—loss of implementation hours, loss of business and production due to shut downs, overtime costs from manpower, and additional costs from legacy platforms. These consequences will inevitably destroy any hopes to stay within the budget of the implementation. While phasing an implementation out may give the initial impression of added costs, it will most likely eliminate disastrous episodes and costs like these.
While ERP implementations can be intimidating to an organization on many levels, the apprehensions based on finances and costs can be removed by adhering to a proactive approach that follows some of the key areas discussed above. With proper planning and attention to these traditional blind spots of an implementation, organizations will not only dramatically decrease the overall cost of an implementation but also likely ensure a successful go-live and deployment of the new platform.
Did you like this series? Download and share the White Paper ““How to cut costs during your ERP implementation: a step-by-step guide to avoid unnecessary costs” with your team!