Out of the many types of projects and programs there are, the ERP program is probably one of the most expensive and complex. A running joke on many ERP implementations are that the budget is usually 2-3X the original estimate and if the project is complete within 12 months of the original estimate, that is deemed a success. I do not believe a project that has failed at both the budget and schedule dimensions can ever be deemed a success, no matter what the excuse. So, why are ERP issues so common? Here are some reasons:
- Company does not realistically estimate the time and/or resource load that will be consumed by the project.
- Underlying business processes are inefficient and not compatible with the ERP input and data flows.
- Business requirements and critical success criteria are not properly captured.
- Data migration and conversion are not fully considered or underestimated until it is too late.
- Risk management is incomplete.
- Training programs are lacking and the new system changes take a longer than expected time to stabilize.
To date, I have been the lead program manager on four large global ERP initiatives. My methodology has been successful with SAP, Oracle, and Microsoft Dynamics. I am confident it will work on other ERP packages as well. Companies and accountable leaders within the company need to agree on the need for ERP and maintain a rigorous focus throughout the implementation. Additionally, data and metrics around business disruption, productivity, and enterprise stabilization or adoption need to be analyzed in addition to the standard project metrics of budget, schedule, and deliverables. The practices detailed below will help if you are leading an ERP initiative to increase the probabilities of success in your favor.
- First and foremost, the company needs to have an enterprise resource management process in place to adequately account for and estimate resource availability throughout the implementation. If there is not such a process in place, accomplishing a medium or large ERP implementation will encounter delays and overruns. A proper enterprise resource management process has visibility into each resource’s allocation at least 1-2 months in advance as well as considering their business as usual responsibilities along with the ERP initiative. Once this is properly in place, all scheduling and planning will be more accurate.
- Ensure that either internal or external subject matter experts on the ERP (both process and configuration) are identified during the earliest phases of the initiative. There will be a team of external and internal resources and there needs to be clear hand-offs, alignment, and knowledge transfer planned for well in advance.
- The underlying business processes should be analyzed and re-engineered, if necessary, to ensure that processes are optimized before additional technology and automation is deployed. I have found that redesigning business processes that are not only efficient, but consistent with the ERP inputs/outputs helps tremendously with the stabilization and training efforts later on. Furthermore, if productivity, waste reduction, or OpEx improvements are experienced before the ERP is deployed, this will provide positive momentum.
- During the initiative planning, focus on the process areas, communication planning, and data migration. Process decisions and fully specifying the data migration are sometimes missed or addressed too late in the process to prevent impacts. Data cleansing should also be included in the plan, as historical data will need to be dispositioned.
- During the future state design, the underlying business processes should have already been updated if there were elements not consistent with the ERP or inefficiencies. There are a variety of decisions and configurations to enable in the system to ultimately influence the future state. Take a process mindset and focus the decisions on an optimized end process as opposed to acute features that are requested.
- Plan for extensive testing. This includes unit, system, quality, and user acceptance testing. I recommend using a more agile approach and prototyping certain system setups for a representative group of users to make more rapid changes before the full testing occurs. The end users must be extensively involved throughout the entire process.
- Collect various KPIs at the start of the initiative and throughout. As part of the communication plan, disseminate a regular report highlighting these progress indicators. As processes are optimized for ERP, the KPIs should be favorable and build more and more support for the ERP initiative. People love a winning team, so keep the wins coming as the long initiative progresses.
- Organizational change management is crucial for an ERP project. This addresses the human elements of change. Prior to going to deep into the initiative, identify those who have referent and expert power throughout the affected areas of the organization. These people often do not have formal authority, but are well respected by the staff in their respective areas. Enlist these people early on as change agents and empower them to excite, train, and provide guidance to the staff as the initiative unfolds. They can also give you feedback from the operational levels which can present logical pivot points throughout.
- ERP and new process training plans should incorporate principles of andragogy, or how adults learn, into their design. This ensures the learning curve is as efficient as possible and stabilization can occur in an expedited manner. The key to andragogy is something called scaffolding which means adults more effectively learn by building off of their current knowledge in a more gradual manner. The training that is developed should incorporate this principle in the module progression.
- At the end of the initiative, ensure that there are adequate resources to stabilize the changes. This includes issue management, ad hoc training, guidance, etc. Only when the initiative is in a stabilized and business as usual state should these resources be disbanded.
-Jonathan Ozovek
