Companies justify moving to a standard enterprise resource planning (ERP) solution based on a number of compelling reasons. By supporting a single system rather than several smaller and disparate systems, they can enjoy economies of scale. Additionally, having single application architecture with fewer user interfaces creates lower integration costs.
And through common tasks automation (as well as easier access to more information), best practice systems and procedures allow for efficiencies not available when using multiple systems. While the case for standardizing on a single ERP system can be relatively straightforward to make, the costs and impacts are sometimes easy to overlook.
Cre8tive Technology has created a six-part series on how to ensure a successful ERP implementation.
Companies should take into consideration a number of critical success factors for ERP implementation:
- Build a cross-functional team
- Set proper expectations to manage change
- Create new business processes in sync with the new system
- Implement in a phased approach
- Make the necessary time and financial investment
- Putting It All Together for a Successful Go-Live
Addressing these areas early on in the process can be the deciding factor in whether the ERP implementation is a success in the long run. This series will highlight the importance of each of these factors and provide recommendations on how to ensure a successful ERP implementation.
Build a Cross-Functional Team
Implementing a new ERP system inherently raises the need to address how the business should run now and in the future. Creating new business processes, determining the necessary reporting, and identifying possible software customizations require input from many areas of the organization.
Big Data Analytics News explains that ideally, “members of the cross-functional team come from the company’s own departments such as IT, manufacturing, logistics, sales, and finance. These members will provide valuable input to inform the configuration and design of the software to fit department-specific needs. This sub-unit is essential to the team because they are the ‘super users’ or end-users.”
A cross-functional team brings together team members from different departments and functions to ensure that all areas of the business are represented and their needs are met during the implementation process. This team can help identify potential issues and areas for improvement, as well as provide feedback and suggestions for optimizing the ERP system to meet the organization's goals.
In addition, a cross-functional team can facilitate communication and collaboration between different departments, which can help break down silos and improve overall efficiency and productivity. By working together, the team can ensure that the ERP implementation meets the needs of the entire organization and not just one specific department or function.
By building a cross-functional team, companies not only improve the likelihood that all areas of the business are addressed, but also help create buy-in that can drive the overall project’s success.
All cross-functional teams for ERP implementation should include certain key organizational functions such as project management, IT, and executive management.
This function manages a project based on the scope, available resources, budget, and key milestones. Very few organizations have the experience and bandwidth in-house to run such a complex project as implementing a large-scale integrated ERP solution. For companies that do not have these resources, it pays to partner with an implementation vendor that has dedicated project management resources that follow a proven methodology.
When working with an implementation vendor, it is also highly recommended to follow a “stage-gate” process, with formal sign-offs at key milestones within the implementation methodology. This signifies that both the implementation partner and the company agree that the stage is complete and the project can continue to move forward.
Implementation teams also require some type of repository or secure portal that all parties involved can use to access materials, status updates, and any other pertinent information relating to the project.
When implementing an ERP system, most companies are upgrading from older technology, and usually, a more established environment. Therefore, the IT staff’s skills also need to be upgraded. Some key areas that the IT team will need to prepare for during the implementation include:
- Understanding the hardware configuration in order to support good system performance
- The ability to extract data from their legacy system for conversion to the new ERP system
- Knowing how to download and apply patches and service packs
- Developing best practices around maintaining a test environment for testing new releases, customizations, or program fixes
Usually, the effort this takes is underestimated, but by having IT representation on the cross-functional project team, a company can catch these items early. Companies have a couple of options for addressing these items: one way is to invest in the necessary training required to get these resources prepared for managing such a system.
The other option is to participate in a Managed Service , where the ERP provider remotely manages and maintains the system on the company’s behalf, leaving the internal IT resources available for more strategic initiatives. Either way, the effort to build interfaces, change reports, customize the software, and convert the data should not be discounted. It is critical to have IT involved early in the implementation planning.
The executive management function serves as the project’s cheerleader, referee, and coach. Implementation projects need senior executive involvement to ensure the right participation mix from the business and IT, and to resolve any internal conflicts. This buy-in needs to be consistent from day one and continue through go-live.
To successfully take on a new ERP system, an organization also needs to address its corporate culture, which can be best driven by executive management . Corporate culture is a combination of two things: the type of people who are employed by a company, including their personal values, skills, habits, etc.; and the way the organization works, including the focus, decision-making process, attitude towards its staff, stability, etc. Both feed off one another.
Due to the nature of an ERP system, organizations need to become almost obsessed with detail. They need to have business practices that are adhered to, rather than just being documented once and forgotten. Employees also need to increase focus on profit and how the whole organization is impacted by their work, because ERP makes profit far more measurable, down to the department, customer, and material levels.
ERP requires employees to understand the “big picture” and how their individual areas have an impact in places they may never have envisioned. Employees can no longer just leave a problem for the next employee in the process because it makes their job easier, as ERP is truly a shared environment. Data integrity and how it is collected also becomes critical.
Many times, data collection is overlooked, but in reality, it is one of the most valued processes that contribute to the return on an ERP investment . For example, in the case of inventory moves, the user must follow the adage, “Tell the system what you know, when you know it.”
By not doing so, the business would be inaccurate in relieving the load on the schedule, moving things to the next stage of the process, issuing raw materials, and capturing real-time labor.
ERP implementation success stories start with a clear ERP implementation plan and demand the right ERP system. Cre8tive Technology believes strongly that Epicor is precisely the system you need for a successful project.
From an Epicor White Paper
Epicor Software Corporation is a global leader in delivering business software solutions to the manufacturing, distribution, retail, and service industries. With more than 40 years of experience, Epicor has more than 20,000 customers in over 150 countries.
Epicor solutions enable companies to drive increased efficiency and improve profitability. With a history of innovation, industry expertise, and passion for excellence, Epicor inspires customers to build lasting competitive advantage.
Epicor provides the single point of accountability that local, regional, and global businesses demand.