Implementing an ERP is a major undertaking, requiring extensive commitment and resources. From my experience, companies invest in an ERP to simplify processes, integrate data and automate controls. Regardless of the imperative, ERPs can significantly improve operational performance by unleashing resources to focus on value-added services.
When a company decides to implement an ERP, there is a belief that it will be relatively easy, quick and within budget. This is a myth ERPs are difficult, take years to implement and are rarely within the original budget. That said if done right, it can certainly be worth the effort, time and cost. Therefore, making decisions regarding business processes and reporting strategies, to selecting your leadership and to measuring value, are all critical elements. Any of these items can affect the success of the project. My advice is to weigh each equally and know you are embarking on a challenging yet rewarding endeavor.
“A mistake most companies make is not having a clear vision of corporate reporting”
Business Process Strategy
One of the perceived values of an ERP is leveraging industry best practices in lieu of customizing to your existing processes. Customizing an ERP is costly upfront and continuously for on-going maintenance and support. In general, customization is not recommended, however if required it should be kept to a minimum. While the decision to minimize customization seems logical, it will trigger the need for change management. This means you will need to change the way your company manages its processes, which affects employees and potentially other systems. Do not underestimate this effort acquiring external assistance on change management is worth it.
A mistake most companies make is not having a clear vision of corporate reporting. Standard ERPs provide local and operational reporting, however if your company needs consolidated reporting, then a strategy and governance process must be defined in the early stages of the project. Performing this afterwards usually leads to tremendous effort, time and money.
Once your company decides to invest in an ERP, it needs to dedicate resources. Many companies view an ERP as something IT implements and manages. In my opinion, the most successful ERPs are those led by the business and supported by IT. The business functions need to adopt the new way of working and business leaders need to plan the transition from, “as is” (today) to the “to be” (the future). While IT can certainly assist in this transition, the most successful projects have leaders from Operations, Procurement, Finance, HR, etc. who lead their change management.
As these decisions are underway, the project team needs to ask “how do we measure value?”I haven’t met an ERP that didn’t cost in the tens of millions of dollars. Of course, benefits are part of the business case, however as the project progresses, the focus on benefits usually slips away from the discussion. Every decision taken should include a question on the impact to the benefits and every project milestone should assess value realization. The discipline of weaving in the ‘value check’ should eliminate the open question of “did we realize value from this investment”?
ERPs are a journey and the most effective implementations are those that evolve with your company. Change is the new normal, so knowing you can quickly incorporate new products and services within your ERP framework is paramount.