Embarking On An ERP Implementation
Whether it is finance, operations, HR or planning, implementing an ERP software helps streamline the processes by enhancing communication and information sharing across various functions. This post substantiates how ERP systems are looked at as not just auxiliary tools for the business processes, but also as control systems which harmonize the processes.
Are you equipped to drive the change?
It is not uncommon for companies to consider investing in ERP software that complements the business processes. Be it finance, operations, HR or planning, ERP helps streamline the processes by enhancing communication and information sharing across various functions. ERP systems are looked at as not just auxiliary tools for the business processes, but also as control systems which harmonize the processes. A successfully implemented ERP project has a very tangible effect on the processes. Research indicates that the satisfaction with the implementation and the ERP system varies severely. More often than not, the success is measured subjectively. Planning in advance, setting measurable indicators and instituting the probable bearing of the new systems helps smoothen the implementation process.
Choose your ERP
Determining the right ERP package suitable to the business needs is a challenge in itself. The decision is to be arrived at, taking multiple factors into consideration like the following among others.
- Functional fit available as a standard package
- Reporting features available
- Flexibility to customize
- Scalability and modularity
- Availability of support
- Engaging Implementation Partner
The choice of the vendor for the implementation also plays an important role in the success of the project. Statistics show that cost plays a major role in today's competitive market, with many vendors trying to lure customers. Whether to succumb to the cost factor or choose an alternative which is worth investing in, decides whether the implementation ride will be smooth or bumpy.
Any implementation should start with the top management aiming to synchronize the project objective with the corporate mission and vision. Even for a project impacting a very specific process, the objective should be such that, when integrated with the other processes, it should help in realizing the organization's mission. Effective communication of the project mission and objective to all the stakeholders is fundamental. An effective method of ensuring this alignment is to measure the project performance by setting key performance indicators, which actually help in identifying if we are on the path to reaching the target or not.
Strong Core Team
Building a strong team of business process owners to drive the implementation is one of the key initiatives that has to be taken up. These BPOs should serve as a very effective two way communication channel, a bridge between the implementation partner and internal stakeholders. The availability of resources during the course of implementation is obligatory. There is always a conflict in these projects where time has to be allocated to the current business to ensure nothing stops as well as the future process. It is in scenarios like these that the mettle of the management is tested. Involving key personnel and spending enough time for knowledge transfer to the implementation partners is much required. A well-defined project scope mirrors the clarity of purpose and ensures that the direction ahead is pretty clear. The BPOs have to manage the expectations of the internal stakeholders as to what is within the scope and what is not. Backup plans have to be formulated for the expectations which are out of scope of the ongoing implementation.
It is only human to want everything under the sun for ourselves, but it is virtuous to take only what is absolutely required. Though philosophical, this conveys an important underlying message that there has to be a sensible communication of the business requirements. What is expected to be done in the ERP system has to come out with absolute clarity. Mapping of the requirements to the functionalities available in the system is equally important as this determines the future processes that are to be performed. Achieving a complete sync between the as-is and to-be process may seem rare, but most of the ERP packages are built to address the standard business processes which are acceptable across the globe. Having established that, we cannot rule out the possibility of any gaps between the requirements provided and the functionalities available in the system to meet those.
Mind the Gap
The biggest dilemma that most businesses face is whether to adopt changes to the current business process or stick to the current process and opt for customizations. It is advisable to address the gaps with workarounds within the standard package. Customization may look like an obvious proposition to address the gaps, but what needs to be understood is that though it is worthwhile, it comes with extra effort and cost, not only for implementing, but also for the support, because these are not part of the standard package and are like add-ons tailored to the needs of the business. The idea is not to discourage customization, but to be judicious with them. There is a demarcation between the 'nice-to-have' and 'must have' features and this has to be clearly understood and thoughtfully applied. More often it so happens that the workarounds increase the workload of the employees. The decision being taken in situations like these has a very significant impact on the way success of the implementation is perceived.
With the route and destination for the journey set, deciding on the means of transport is another key aspect. An implementation methodology which is suited to the organization's needs and is acceptable to the stakeholders has to be arrived at. An effective tracking system has to be put in place to monitor the progress of the various phases of the project. Understanding how to make use of the various phases of the project is absolutelyessential. The user acceptance testing for instance, has to be fully utilized by the end users to test the new system for every possible business scenario that they have come across and expect to encounter in future. But to do that, the earlier phases of the projects like the conference room pilot have to be taken seriously to understand the system. Time has to be invested to get trained on the new system sufficiently to be equipped for the testing. It is during these phases, that more gaps in the process fit, grievances or inconveniences related to the systems are identified. Enough time has to be budgeted well in advance to address these kind of situations. Issue tracking mechanism becomes vital in such cases.
Another important aspect which makes the journey cumbersome or convenient is the supplies that are carried. Data and implementation process like system configurations, upgrades etc. are the important supplies which have to be used cautiously during the course of the project. Many clients prefer simulating the live processes before-hand to avoid surprises. While this sounds justifiable, using them in abundance can lead to spill-overs in the time lines. For example trying to use excess data for the user acceptance testing to simulate three to four month end processes is strenuous and is a superfluous activity.
Migrating the data from the legacy systems during live is also a challenge. Business has to ensure well in advance that the data that is being migrated to the new system is clean. Complete validation of the data is to be done to avoid duplication and junk. The most daunting task for the vendors as well as the business is to finalize the transition activities. Cutover activities and planning for the go-live date becomes vital as these should not have an adverse effect on the business and at the same time should not be hurried into. Utmost care has to be taken to ensure the pre-live activities are not impacted. This is a sensitive situation where business as well as the implementation partner have to understand the pressure on each other and work hand-in-hand. In case of migrating from legacy systems, downtime becomes all the more critical. Effective communication has to be made to the customers regarding the migration and the downtime.
Though the above mentioned factors do not provide an exhaustive list of the factors impacting the project success, it is safe to summarize that the critical factors for a successful ERP implementation are largely driven by management initiatives like effective communication of the project objectives, scope and setting the right expectation with all the stakeholders regarding those.Understanding the business requirements and as-is process and formulating an acceptable to-be process is essential as the final process has to meet the requirements even with acceptable workarounds.
Adapting to new technologies can be challenging, but with the right attitude towards change, the transition can be made smoothly. More often, we would see the end users drawing comparisons between the legacy system and the new ERP system. These comparisons start becoming pain points if there is no understanding of the current system, its advantages and limitations. This is where the management has to be pro-active and set the expectations on the processes.
The ERP implementation should not be looked up on as a project for implementing new technologies, but as a project for driving sustainable change to achieve the ultimate goal through effective change management.
Santosh, a Functional Consultant at Sonata Software, has been working for its Oracle practice for the past 5 years. He has worked extensively on implementation and rollout projects in the areas of supply chain and finance. An avid writer, Santosh combines his unending passion for ERP and the tacit knowledge gained through his experience of working on a number of challenging projects to provide a lucid insight into the real world of ERP. His qualifications entail a bachelor’s degree in Mechanical Engineering and Master’s degree in Business Administration.