ERP Implementations

An ERP (enterprise resource planning) system is a critical component of any business that wants to be successful. Regardless of whether it replaces an old on-premises system, adds functionality to an already deployed cloud environment, or replaces a legacy spreadsheet-based system, implementing an ERP system is essential to achieving success.

No matter which ERP software is selected, the ultimate outcome of the ERP system—regarding user acceptance, process integration, data quality, and business fit—will depend on whether the implementation goes smoothly.

The primary factor for long-term success with an ERP system comes from implementation. While there are many successful implementations, the landscape is littered with implementations that range from abject failures to barely functioning accounting systems.

According to Gartner, nearly 75 percent of all ERP implementation projects fail. There are many reasons why ERP implementation may fail, but it is often due to the misalignment of business objectives and technology.

Luckily, clear guidelines for success are available to provide a roadmap for organisations interested in implementing an ERP system. In this article, we will discuss seven tips for success, including questions to ask vendors and references during the selection process to ensure your ERP implementation is successful.

An ERP solution provides a single, integrated view of every aspect of your business operations. In addition to financial accounting, human resources, inventory control, and customer relationship management, an ERP includes tools for managing procurement, production scheduling, quality assurance, and much more.

ERP implementations are generally "complex" but can be straightforward once you understand the business needs. Here are some key points about implementing an ERP:

• Define system requirements: The most critical step in implementing an ERP is defining what business process the system is supporting. What types of transactions does it maintain? How extensive is your database? Do you need to integrate systems like CRM, HRMS, and eCommerce? Are there specific functionalities you would like to include, like supply chain management or automated workflows? You will likely find that the features you thought you needed aren't necessary, while others you never even considered might prove essential.
• Determine your business processes: Once you've defined what you need from your ERP system, you'll need to decide how to get it. A typical ERP implementation involves several phases: planning, configuration, installation, and testing. Each stage builds upon a previous one, so you'll need to plan to make sure everything fits together smoothly. For example, during the planning phase, you'll consider whether your current processes lend themselves well to automation, which will help you identify where you need to automate. During the configuration phase, you'll determine how best to design your data model and implement the software. And during the integration phase, you'll set up the interfaces required to connect the components.
• Make sure the ERP software works: After implementing your ERP, you should perform a series of tests to verify its functionality. Tests are executed by running reports on the system's performance, checking the accuracy of your data, comparing the results of manual calculations against those generated automatically, and so forth. If you don't test thoroughly, you could end up spending thousands of dollars fixing problems after the fact.
• Maintain ongoing technical support: As with any significant technology change, maintaining ongoing support is critical to ensuring your ERP works effectively. Vendors typically offer maintenance contracts at various service levels, from essential updates to full-time support. The level of service you choose depends on your needs and budget.

Most ERP implementations fail because of a lack of forethought. Business owners often struggle to implement ERP systems because they lack a strategy for dealing with unplanned events.

Before starting any ERP implementation, consider your business requirements and the impact an ERP implementation might have on your various business processes. If you don't understand the ERP implementation process well enough it could lead to unplanned interruption to your business process during the transition period.

ERP implementation may rarely fail, but when they do it can be catastrophic for organisations. Read further in the ERP Research of some of the most well-documented Oracle, SAP, and Microsoft ERP failures.

Here are the ten most common reasons for ERP failures:

1. Poor software fit /inaccurate requirements
2. Business leadership is not committed to the implementation
3. Insufficient team resources
4. Lack of accountability to make timely, high-quality decisions
5. Lack of investment in change management
6. Insufficient training/support
7. Insufficient funding
8. Insufficient data cleansing
9. Insistence on making ERP look like legacy
10. Lack of testing

The software is the heart of an ERP system, but to use it effectively, you need to migrate your data, determine new workflows, and train your users on the new processes and procedures. These steps may be the most important to get right.

Even the best enterprise resource planning software will be useless if your team does not feel comfortable using it.

Troubled implementations can have significant long-term costs in additional consulting, support, and lost time spent resolving issues. To avoid these risks, carefully evaluate the software provider's proposed implementation process.

If your organisation is looking to implement a new ERP solution, here are seven factors to consider ensuring a smooth and successful implementation process.

1. Consider an ERP Implementation an Investment

Implementing your ERP is not a cost; it is an investment that will yield profit in the long run for your business. When you purchase an ERP system, you are buying a system that should improve your business operations for years to come. 

The return on investment (ROI) you realise is based on the value you derive from the life of your system, usually ten to twelve years. Therefore, when you start planning and making selection decisions, it is essential to choose a system that meets your current requirements, as well as those you anticipate you will have in the future.

Planning and preparing for your implementation investment is critical. You need to ensure your investment planning includes the cost of business process optimisation and process automation in addition to the people and technology costs.

Before selecting, do a thorough assessment of your current and future business needs. Look at your ERP system as an investment in your company's future; don't focus on the short-term purchase cost. The right solution may not be the cheapest, but it's better to pay more now for a system that will meet your needs in the long term.

2. Leverage Experienced IT Project Managers

The project manager directly influences the success of an ERP implementation in charge. Think of your ERP implementation as a "symphony" and your project manager as the "maestro." To be successful, the project manager must flawlessly orchestrate all the activities and people involved in the implementation.

Project managers lead the most successful ERP implementations when they participate in both the selection and implementation. They should have the ability to get into the details of the implementation while not losing sight of the overall business goals, project scope, schedule, and budget. 

Since ERP implementations are cross-functional, the project manager needs to understand not only their department processes but how all the other departments operate as well. As ERP implementations frequently require reengineering processes, they should be able to think creatively to help define new and better methods.

Project leads for an ERP implementation should understand both the line of business (LOB) and end-user application needs. Enable that individual – but hold them accountable for documenting the needs. The project manager should have the most to gain or lose from a successful implementation.

3. Start with a Solid ERP Implementation Strategy

A successful implementation should follow a systematic process. The implementation strategy needs to be in line with the goals of the organisation. Lack of a clear strategy, desired outcomes, and precise definitions of problems you are trying to solve can lead to challenges during the ERP implementation.

A good strategy should involve critical business processes, financial benefits, scope, budget, and deadlines. It also needs to consider how day-to-day operations are incorporated, ensuring they do not interfere with the ongoing implementation.

By remaining focused and executing a well-thought-out implementation strategy, your organisation can improve its competitive advantage, increase productivity and utilisation, raise customer service levels and reduce inventories.

4. Partner with Experienced Integration Consultants

Experience makes a huge difference when implementing ERP. Given the long-term expected use of the system, it's important to identify experienced leaders for your project. Ideally, key team members should have experience in implementing the specific ERP you are deploying. You may want to consider hiring new employees with ERP implementation experience before kicking off your project.

When evaluating outside consultants, look for those that know your industry and business processes, not just the tool itself. They should also have experience implementing it in organisations like yours and be able to blend the tool knowledge with your business requirements and complexities.

Assemble a core internal team that is knowledgeable and can make important decisions about methodologies, scope, go/no-go decisions, budgets, schedules, and more. In addition to knowledge and experience, you want employees and external consultants that can commit to the project's duration. Although you may need to offload significant portions of their day-to-day job duties during the implementation – you want the project to be a success.

5. Do Rigorous Application Testing

Many implementations fail due to inadequate testing throughout the process. It's critical not to cut testing as you work to meet aggressive ERP implementation deadlines. Testing allows organisations to identify problems early on that could be far costlier later. Think through your organisation's key business scenarios and process flows and develop testing around these various scenarios. Try to make your list as comprehensive as possible.

Identify the power users across your organisation that can help test these scenarios. As you run tests, ensure that all the transactions are flowing through the ERP system correctly and that data and reporting are accurate. Stress testing should be a part of this to ensure the system can support the transaction volumes you expect.

6. Prepare with Comprehensive User Training

To help businesses ensure successful ERP implementations, employees must be educated, trained, and prepared to use the new financial and project-management system. A solid training program will help to ensure a smooth transition. On average, successful ERP implementations dedicate 10% or more of the total budget to education, training, and change management. Often software vendors offer a training package as part of their offering – so be sure to negotiate it upfront in the selection process.

Since an ERP system offers complete automation of most departments within your organisation, the training should be in-depth and include all impacted users. Knowledge of how to effectively use the system will ensure optimal usage and faster adoption. Developing in-house capabilities for the long-term is critical.

A comprehensive training program should include online learning, classroom training, and on-the-job training with experts working on your project. Live training with your team and system experts will help to ensure best practices.

7. Be Ready for Change Management

Change management is an essential component of ERP implementation success. Your entire organisation must be engaged and ready for the change. To embrace the new system and let go of the legacy system and processes, they need to understand that the end state will be far better than the current state. Transparency and frequent communication throughout the implementation process will help move the organisation more quickly through the transition.

To help speed up the adoption process, try to decommission the legacy system on time. The longer it remains available, the longer it will take to move your end users to the new system and processes.

According to a report by the Aberdeen Group (Improve your Midmarket Business Operations with Cloud Applications) the Cloud provides tangible business benefits in operating costs, schedule compliance, and on-time delivery.

Aberdeen reported that the average profitability improvement over the past two years for mid-market companies that are not in the Cloud was 9%. However, small and mid-sized companies that were Cloud-enabled reported a 17% improvement in profitability over the past two years. This profitability difference is a staggering 8-point difference. These market leaders saw an ROI that improved their overall bottom line by providing the technology tools their people needed.

For many small and mid-sized businesses, moving to the Cloud is necessary to save up-front costs. But another significant benefit is the speed of implementation and the ongoing software maintenance.

Cloud ERP solutions provide companies with greater speed, improved security, reduced cost, and increased flexibility. These solutions allow companies to focus on their core business strategy instead of worrying about managing IT infrastructures.

Deltek is the leading provider of ERP solutions for project-based businesses. We offer purpose-built applications for government contracting, manufacturing, construction, and service industries that want to take control of their business. Our cloud-based ERP software offers a range of features, flexibility, security, and reliability.

Our mission is to deliver solutions that help our customers connect and automate the project lifecycle that fuels their business. We believe that better software means better projects. Our industry expertise makes your projects successful and helps you achieve performance that maximises productivity and revenue.