Monday, July 20, 2015

How an ERP Implementation Can Go Off The Rails

There is very little that has a greater effect on a company’s success than it’s ERP system, which functions as both the memory and conscience of the business and forms the backbone of every business process. Yet many companies fall prey to the same common implementation errors, which may cause the project to fail or be less effective than it could have been, Here’s a look at those common traps and tips on how to avoid them.

No Full Time Project Leader

An ERP system has tendrils in every part of the business, and it is a complex project involving multiple people from every department and many decisions that affect them all. Most companies wouldn’t plan to build a new brewery without a project plan and a strong project leader, yet companies neglect to develop a plan and to appoint a full time project leader with the authority to arbitrate decisions. The project is too complex and too time consuming to be done as an additional task along with an already full plate. It can’t be done effectively by an external consultant or a person with no organizational clout. Without a full time in house project leader reporting directly to the project steering committee, the project will not do as well as it should.

Selecting the Wrong Software

There are hundreds of ERP software applications. Some are broad in scope, designed to fit many industries; others are unfocused and don’t fit any industry well. The best solution, especially for small or mid-sized companies in less than mainstream industries—craft breweries, for example—are ERP systems designed specifically for that industry. By selecting a solution designed for your industry, you can be assured that the business processes reflect industry best practices and you will minimize the number of customizations and workarounds you need.

Lack of Goals

If you don’t know why you are implementing a new ERP system, you will never know if you have been successful. Take the time to define your goals and express them in measurable ways. “Reducing order cycle time to less than 1 day” is a better goal than “entering orders faster.”

Scope Creep

Without goals and a strong project lead, many companies drift through the implementation process and add new processes, customizations or departments to every phase of the project. Resist the temptation by sticking to your goals.

Lack of Training

Companies have limited resources, and training often seems like an easy place to cut costs. Training a few people who are then tasked with training everybody else seems like a good idea until you realize that most people only retain about 25 percent of what they’ve learned after a few weeks. Your team will not know what your new ERP system is capable of, and you will not achieve the ROI you expected because of it.

Treating ERP Like an IT Project

ERP supports your business. It may run on computers, but that doesn’t mean it’s an IT project. You need to make the line of business people responsible for its success, or it won’t succeed.

Management Commitment

If many of these points of failure sound like they stem from lack of management commitment, you get the point. Without management commitment, the project is doomed. Make it the top priority for people charged with the implementation, and take the time to get involved. With management commitment, an ERP implementation has a good shot at success. Without it, ERP is doomed to failure.

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