Ask any ERP veteran, and you’ll get pretty much the same answer. There are, in short, two critical phases with a new ERP system: making the right final selection, and going about the implementation in the right way.
And if pressed, they’ll tell you that of the two, it’s implementation that is the scariest prospect.
For proof, go no further than typing “ERP disasters” into Google. The result is sobering. From iconic American chocolate bar manufacturer Hershey to IT giant Hewlett-Packard, there’s no shortage of failed ERP implementations to pick over.
And those are just the tip of the iceberg. Even seemingly successful implementations may turn out to have stalled part-way, even if they don’t actually warrant the description ‘disaster’.
All too often, for instance, an ERP system become finance-centric, driven by accountants and not manufacturing people. The result: shelfware — functionality bought and paid for, but sitting unused or unimplemented.
“Companies implement ERP starting with the core back office functionality: financials, and basic supply chain functionality such as purchasing,” warns Chris Jordan, a principal consultant at Siemens IT solutions and services, which provides internal support to industrial giant Siemens’ global operations. “But after that, it can start to drift — leaving large parts of the intended functionality unimplemented and not delivering benefits.”
That’s the bad news. The good news is that these days, an awful lot of lessons have been learned about how to successfully implement an ERP system, and many of the bear traps are well-signed.
For instance, don’t make the mistake of thinking that ERP is solely an IT challenge. It is an IT challenge — but it’s also a people and process challenge as well.
“In many respects, the softer stuff, such as managing the people components of your business process, can be the difficult part,” says Alan Bowling, information systems director at Northern Foods, and chair of the UK & Ireland SAP User Group. “Training and support is critical, along with effective and appropriate user interfaces.”
Alongside IT objectives such as good data management — in order to establish and maintain ‘one version of the truth’ — he urges manufacturers to actively solicit feedback both before and during implementation.
“Manufacturers should look to establish a user network, comprising of users, ‘super users’, and support staff,” he says. “By doing this they will be able to get the right balance between people, processes and technology, rather than focusing solely on the technology.”
Another mistake — often driven by user pressure — is to automate what is already in place, rather than to optimise and improve it first. Users at all levels, it turns out, are often loathe to change from the familiar comfort of existing practices and processes — even if these are outdated, wasteful and inefficient.
“Before a project begins, a business should invest time into defining its vision for how the company will operate once the new technology is in place,” says Steve Tattum, manufacturing product manager at ERP vendor Sage. “Guided by executive level input, the implementation team should have the responsibility to identify and examine existing processes, as well as have the authority to re-engineer these business processes or develop new ones.”
Which is why, of course, a growing number of ERP vendors offer pre-configured industry-specific versions of their products, with best practice processes already ‘baked in’ as implementation templates to follow.
And if a manufacturer has gone about the selection process correctly, says Phil Lewis, business consulting director at ERP vendor Infor, it will be just such an industry specific template that is being implemented — in which case, he advises, stick to the template.
“Don’t complicated matters by trying to change things,” he urges. “A lot of the configuration work will have been done for you — stick with that, and fine-tune later, if you must. Focus on ‘time to value’, and aim to implement — and get benefits — quickly, and efficiently.”
John Hammann, industry principal for manufacturing at SAP, concurs. “Have a solid business case, focusing on the intended benefits and the required functionality to deliver those benefits, and don’t get side-tracked,” he stresses. “A pre-configured and packaged approach is best, as it will deliver the fastest and most assured return.”
Tinkering and fine-tuning comes later. “Don’t stop at the ‘go live’ date, but recognize that this is just the start,” he says. “Keep the implementation team — and its skills — in place, and then build on what you’ve got.”
In short, despite ERP’s rich history of implementation failures, there’s no need for your own company to add to the list. Success isn’t assured, but following some simple rules does an awful lot to stack the odds in your favour.