The first blog post in the ERP Know More series is intended to explore issues that invariably crop up during the early ERP implementation phase. And what’s more, we recommend some smart ways to handle it!
ERP implementation is definitely a great leap, for any organization. A successful implementation can boost your business; however, an unsuccessful one can destroy your business as well. Fundamentally, what one must understand about an ERP implementation is that it is going to impact almost every department in your organization, thereby linking almost all your applications.
Talking about implementation, several clients still feel threatened by the duration and the efficiency with which it is conducted. This is because different software vendors have different methods of implementation. A persistent diligence is definitely required to fine-tune this process. It is often mentioned that HOW an ERP system is implemented, is more crucial than the features and functions it comes with.
Some challenges that we have seen clients persistently face, post an ERP implementation, include resistance to using a new system, allowing inappropriate resources to handle the system, lack of a change management policy, over inadequate customization, poor planning and time management, lack of adequate participation from the top management, and excessive expectations.
So, how can we address each of these challenges?
There are several factors that an organization can take into consideration for optimizing its ERP deployments:
Regular measurement is critical for the success of an ERP optimum utilization effort. Companies need to categorize and institute performance measurement practices, which will show, precisely, how things are operating. Organizations should shift their focus from investment on ERP to the Return on Investment (ROI) it provides.
Like any large-scale initiative, an ERP implementation requires extensive involvement of executives. Communication from senior management pertaining to vision, strategy and opportunities for business transformation, as well as tangible and intangible ROI expected from ERP applications, is critical for the success of any ERP initiative.
To ensure widespread adoption of ERP across the organization, it is essential to involve both the business and IT professionals throughout process and implementation. They should be more comfortable with the application and workflow post implementation.
Organizations often tend to give less importance to process reengineering during ERP implementations. The prime focus of business transformation should be process optimization and tailoring the functionality to the organizational vision. ERP implementations deliver greater ROI over time when scalability of the application and process & function integration aspects, which impact business performance, is kept in mind. The application should feature a robust technical architecture, effective data management practices and a strong business intelligence structure that is aligned with the current business landscape and considers future business expansion initiatives.
Well, in addition to addressing the challenges as above, we recommend some smart practices that can help organizations make the transition from their legacy system to the new ERP system smoothly.
Companies, which implement ERP, tend to be intimidated by the time and cost of an implementation and also seek to accelerate the go-live date. Without the right strategy and tools, implementation acceleration carries the risk of curtailed end user training, change management, reduced reengineering of business processes, and other problems that can lead to higher over-all cost of ownership and the erosion of utilizing business benefit from ERP.
The best practices of ERP implementation are to involve all users in the planning stages of the process. During the planning stages, a time line and budget needs to be devised. This helps the company stay on track when things get rough or unsettling. It is also imperative that all employees are aware of the current organizational scenario, and how things will transform in the near future. ERP applications should be aligned with business imperatives, by not marginalizing the potential gains. In the same vein, companies should keep medium- to long-term objectives in mind at all times, and avoid shortsighted decisions.
The best practices of ERP implementation also involves finding a good software vendor and implementation partner who merges well with the vision of the company for the change management. This ensures that there is no difference of opinions across the organization.
However, while helping our clients during the implementation, one of the negative trends we observed at client sites is that some organizations plan for a prolonged parallel run involving the use of both the legacy system as well as the new ERP solution implemented in their organization. This should most definitely be avoided as the thought of moving back to the old system is tempting during this difficult phase. Here the implementation team requires the support of the senior management of the client’s organization. The senior management should enforce system controls & documents coming out of the new ERP system so that it needs to be mandatory used in order to complete key business cycles. These force the users to update the new system and keep it online since the business cycles are dependent on it. The senior management should also announce a parallel run period not exceeding one month. The clear announcement of a date for discarding the older legacy system also wards away any negative thoughts in the minds of users. The implementation team also plays a crucial role during this phase by ensuring that show-stopper issues are addressed on war footing and in a proactive manner to prevent any negativity from creeping in.
Look out for our next post in the series where we will deal with migrating from disparate software to ERP and some best practices for the same. Happy reading!
Contributed by Ashok Dash