Improving ERP Implemenations - Part One
ERP implementations often fall short of desired expectations. Indeed, the past-experience of an ERP implementation can leave a permanent mental scar of those involved, so much so that a new ERP implementation becomes a rather daunting and un-confrontable affair.
However, ERP implementations can be a positive experience from start to finish, with any minor bumps smoothed out by a strong partnership with those involved and backed with strong executive sponsorship. But let's cut to the chase, what can be done to ensure an implementation is successful?
Rather than attempting to address this broad topic in a single blog, we'll take this up in multiple parts. This will be part one of a series of blogs.
The first aspect of the ERP implementation is the software itself. Potential customers evaluating ERP software will review several products and will do its best to select the best possible product for the company.
The organization selling the product will naturally do its very best to sell the product. If the selling organization conducts itself ethically, it will not sell its products to a customer in which the product does not fit well with the potential customer's business or budget.
This is sometimes where trouble begins. In this case, the seller pushes the wrong product on the customer and the customer accepts the product. Although it may be possible to customize the product to fit the customer, the budget to do so is well outside the customer's reach. Nevertheless, the product is sold and implementation attempted and fails. Both parties lose.
One can avoid this major misstep by doing internal preparation for the demos, by selecting key personnel to represent the various departments of the company and having them determine how the software addresses their needs. This data can then be assembled and comparisons between products can be analyzed. Don't be swayed by salesmanship or promises, look at the data and evaluate based on the facts and the facts alone.
Find out what the system does out of the box, what requires customization, and approximately how much those customizations would cost. The selling organization may use terminology such as "configuration" and avoid the term "customization". It would be best to clarify these terms with the selling organization.
Configuration could be defined as something that can be accomplished by setting pre-built options within the software itself and requires absolutely no programming or modifying of source code. An example would be configuring a built-in approval system to approve purchase orders based on various dollar thresholds.
Customization could be defined as something that requires programming or source code changes to accomplish. Typically, customization takes longer than configuration and the cost is higher, sometimes significantly so.
In some cases, the software is not customizable at all or very difficult and expensive to, and you are expected to live with the functionality as-is. In this case, you are forced to modify your business processes to fit the software. This is not always possible and an important distinction and must be understood.
Another area that is worth delving into is third party add-on software. Be sure to clarify what functionality is standard and what is being provided by third-party vendors. ERP products, although rich in features and scope, typically do not do everything a potential customer needs and this is where third-party developed products can fill in the gaps.
The third-party products may be written in the native language of the ERP system itself or may be a completely standalone product interfaced with the ERP system. What is the track record of the third-party vendor? How many successful implementations have there been? How do upgrades affect the third party software? Who will be implementing the third-party software? Get references on the third party vendors/products as well as the ERP system.
Find out what implementation process the selling organization uses. Is it waterfall or agile? This will be covered in a future blog as this is an important topic. But for a few quick definitions: Waterfall is a traditional approach to project management where one step in the project follows after another in sequence. Agile is a cyclical approach to projects in which the delivery of the product occurs incrementally in predefined regular periods of time called 'sprints'.
How is the product deployed? Is the product installed on-premise or it is hosted in the cloud? You may not want your data exposed on the cloud or you may desire ERP hosted in the cloud. Many ERP products offer both options and some are cloud-only. You'll have to determine the best option for you.
Finally, ensure you get a detailed estimate of the software and implementation. Do not accept a general estimate which is just a range of service hours or dollar amounts. A detailed software estimate should include no. of users, software modules, third-party modules and recurring fees. A detailed service estimate should include design, configuration, customization, training, data conversion, user acceptance testing and support for the go live, at the very minimum.
This is by no means a full primer on how to select ERP software, but may give you some insights and things to look out for.