Anyone who has been involved in an ERP implementation project will attest to the fact that they are very difficult projects that are often late and over budget. Why is that? At Ultra we see a number of reasons:
- Lack of executive support and alignment
- Unrealistic expectations
- Wrong people on the project
- Ineffective project management and change management
Typically, these issues are created at the very beginning of the project. With proper attention to building a solid foundation from the start, an ERP project can be easier and can be successful. Building a foundation starts at the very beginning of a project, even before you initiate conversations with the vendors. I have found that there are many reasons behind the genesis of an ERP project, but I do hear a common process. Somewhere in the manufacturing organization the capabilities of current system are questioned. Eventually the issues get discussed at the top management councils of the company. It is at this point that management should initiate action that will result in the development of a solid foundation.
Key Pieces of a Solid Foundation
Executive alignment – The executive team of the company should draft the definition of the project: what do we need, why, and when. Once the executive team agrees on these points then the team should identify who on the executive team should be the executive sponsor. I have seen companies assign this role to a variety of titles. Usually this role is filled by CEO, CFO, or VP of Operations. The executive sponsor then needs to build out a project charter that evolves and is reviewed regularly by the executive team to insure everyone is in alignment. There are many pieces to a good charter: scope, budget, timeline, internal resources, etc. The CIO will have input. If you do not have the answers, get educated or bring in a consultant expert to provide guidance. Expectation Alignment – One word of caution: everything takes longer than you think. Here is a list of expectations:
- Scope. How big is this project? We may say we want to implement all the capabilities of the ERP vendor, but that could take years to absorb! My advice always is keep it simple and think in terms of easy steps. For example, step one let’s just get off our old system, with new technology and improve our access to information. Then the next year, let’s implement CRM, etc.
- Timeline. Everyone has general guidelines, but following them can get you in trouble if you do not align the timeline with the scope.
- Cost. There are a lot of articles and white papers that explore the average cost of ERP by user. Again, you will need to align cost with timeline, with scope.
- Resources. I will address the team in more detail in next section. This is the last piece that needs to be in alignment the scope, timeline, and cost.
Resources – At Ultra we encounter a lot of companies that make mistakes in this area. The put the wrong people on the project, they make the team too big, or they do not give the resources enough time to do the work. Successful projects have a small dedicated core team supported by subject matter experts. Project Management and Change Management – These are two distinct management skills. If you do not have them, hire them. They are critical. Here are two definitions:
- Project managers manage project tasks, resources, and issues.
- Change managers manage change within the organization
- Both of these need experienced resources. Most problems in these projects can be traced back to ineffective project and/or change management.
Your Next Step
To address some of these issues, download a white paper entitled: The New Rules of ERP. The free resource shares key points to consider in establishing a strong foundation for your ERP project. Please share your experiences and challenges related to setting a foundation for ERP in the comments section below.