Manufacturers face a host of challenges that include difficult-to-manage processes, variable raw materials prices and complex supply chains. On top of that, they face the challenge of operating in today's accelerated business environment in an industry that hasn't been known for rapid changes.
Distributors also face new challenges brought on by changing marketplaces, increased global competition and a critical need to create differentiation and added value.
The solution for many companies—big, medium and small—is modern ERP solutions and other technologies that help manage more effectively, streamline key functions and enable digital transformation.
However, the ERP selection and implementation processes often present challenges of their own. To steer you around trouble and help you drive success, Ultra's expert consultants compiled this list of common pain points—and their solutions.
What's inside.
Establishing Accurate Requirements and Relevant Priorities
Selecting and Negotiating with the Solution Vendor and Implementation Partners
Generating a Feasible and Realistic Implementation Plan
Estimating Resources Needed, Making a Backfill Plan and Upgrading Aging Hardware
Building Effective Organizational Change Management
Managing Implementation Partner Performance and Ensuring Accountability
Why Ultra?
Establishing Accurate Requirements and Relevant Priorities
Effective ERP selection and implementation is impossible without determining accurate requirements and relevant priorities—an important, but challenging aspect of the ERP acquisition process. ERP systems are complex and expensive, so it is essential to choose the right one for your business and to implement it correctly. If you do not have a clear understanding of your requirements and priorities, you are at risk of selecting the wrong ERP system or implementing it in a way that does not meet your needs.
There are several factors that lead to this pain point, including:
- Complexity of ERP systems which makes it difficult to identify and document all of your
requirements accurately
- Lack of consensus among stakeholders which make it difficult to reach a conclusion on
what is truly important
- Changing business needs which make it difficult to keep ERP requirements up-to-date "First and foremost, clearly outline the organization's objectives and the pain points the ERP system is supposed to address. This could help you focus on the capabilities and features that correlate with your business objectives."1 —Mudassir Iqbal, IT Consultant
- Determine and document the
current state
- Develop a succinct and focused list
of requirements and opportunities
- Develop and vet priorities with
leadership and core users
- Formalize documentation to
support findings
Selecting and Negotiating with the Solution Vendor and Implementation Partners
Selecting and negotiating with the solution vendor and implementation partners is another key pain point in ERP selection and implementation. ERP systems are complex and expensive. Therefore, it is important to choose the right vendor and partners. You also need to ensure that you get a good deal on the software and services.
Several factors lead to this pain point including:
- Complexity of ERP systems which make it
difficult to evaluate different solutions and compare features and functionality
- Unclear pricing which may be caused by ERP
vendors not being transparent about the systems' true costs or about the total cost of ownership of the systems
- Over simplification which may be brought about
by a lack of necessary expertise in-house for this level of purchase
Homegrown selection protocols are seldom successful, and they often create limitations that are not discovered until well into the implementation process.
- Develop and apply a structured
- Develop standard measurements
approach to selection and criteria
- Evaluate functional fit as the primary
- Ensure apples-to-apples grading
focus, but also consider technical,
- Utilize intelligent and appropriate
implementation and cost fit negotiation techniques
- Pay attention to contract clauses
Generating a Feasible and Realistic Implementation Plan
Generating a feasible and realistic implementation plan is a critical step in any ERP selection and implementation process. However, it can be one of the most challenging steps for your business if you have never implemented an ERP system before.
The following factors may lead to this pain point:
- Lack of understanding of your business' needs which can lead to a plan that is either
too ambitious or not ambitious enough, both of which can lead to problems
- Lack of communication and collaboration between stakeholders which can lead
to a plan that does not have the support of the people who will be responsible for implementing it
Trying to avoid this pain point by relying on a vendor-templated plan, which rarely caters to specific needs or unique situations, may leave many parameters unmet.
"A feasible and realistic implementation plan is the foundation for success. Without a solid plan, you're just setting yourself up for failure."2 —Elon Musk, CEO of Tesla and SpaceX
- Leverage the vendor's approach, but create a customized version that addresses unique requirements and includes all supporting activities
- Have realistic expectations that align with a transformation roadmap
- Generate a budget that will meet the needs of the plan
Estimating Resources Needed, Making a Backfill Plan and Upgrading Aging Hardware
It is important to accurately estimate the resources needed for ERP selection and implementation. This includes both internal resources (e.g., employees, time and money) and external resources (e.g., consultants and vendors).
Furthermore, ERP selection and implementation can disrupt normal business operations. It is important to make a backfill plan to ensure that critical business functions continue to operate during the implementation process.
"Incorrectly estimating the time and cost required for an ERP implementation causes unrealistic expectations surrounding implementation planning and is often the root cause of ERP systems flops." —David Saunders, Technology-Agnostic Digital Transformation Expert
The following factors may lead to this pain point:
- Lack of experience with ERP implementation which can lead to underestimating the
scope of the project and the resources needed
- Unrealistic expectations which can lead to problems such as resource overallocation,
missed deadlines and budget overruns
- Poor planning which can lead to problems such as excess resource estimates, missed
deadlines and budget overruns
- Unforeseen events such as if a key employee leaves the company during the
implementation process, it can be difficult to find a replacement with the necessary skills and experience
The implementation effort often is misunderstood and underestimated. Most implementation failures are attributable to resource issues.
- Develop a realistic view and honest
- Mitigate conflicts with backfill plans
assessment of resources available
- Anticipate circumstances that will result in
- Gain solid leadership support and core the costly utilization of outside resources
team sponsorship or the purchasing of new hardware
Building Effective Organizational Change Management
The process of ERP selection and implementation is a major undertaking that requires significant change across your organization. This change can be disruptive and stressful for employees, so it is important to have an effective organizational change management (OCM) plan in place to mitigate these risks and ensure a successful outcome.
"ERP systems are complex; however, adopting the right change management strategies can ensure a smoother transition and minimize disruption."3 —Vikas Garg, CTO, Technology Evangelist, Digital Transformation Expert
OCM is the process of helping people and organizations adopt change successfully. It involves understanding the impact of change on people, developing a plan to manage the change and implementing the plan effectively.
The following are the main factors that contribute to this pain point:
- Lack of understanding of OCM which can make it difficult to successfully implement the
new ERP system
- Resistance to change which can be caused by a number of factors, such as fear of the
unknown, concerns about job security or simply a dislike of change
- Poor communication which can lead to confusion, anxiety and resistance to change
- Lack of training and support which can lead to problems and delays with the ERP
system implementation
OCM aspects are often forgotten, yet even the most robust implementation plan will fail without them. ERP implementation does not simply carry existing processes into a new platform. In many cases, these initiatives require a redesign of the way things are done at multiple levels throughout the organization.
Change causes stress, and knowing who will be impacted—and proactively communicating it to all stakeholders—goes a long way toward mitigating uncertainty and fear, helping ensure a positive outcome.
- Implement strong governance protocols, and have effective collaboration tools in place
- Document accountability measures, and get buy-in and sign-off from all relevant parties
- Prepare for resistance to change—and be ready to manage it
Managing Implementation Partner Performance and Ensuring Accountability
ERP implementation is a complex and challenging undertaking, and the role of the implementation partner is critical to success. A good implementation partner can help your organization select the right ERP solution, configure it to meet your specific needs and migrate your data and processes to the new system. However, an implementation partner that is not managed effectively can lead to delays, cost overruns and other problems.
The main causes of this pain point include:
- Lack of clear expectations and goals which makes it difficult to manage performance
and ensure accountability
- Poor communication which can result in misunderstandings, delays and other problems
- Unrealistic timelines and budgets which makes it difficult for the implementation
partner to meet your organization's expectations
- Insufficient resources which can lead to problems with performance and accountability
Project charters without specific deliverables, guarantees, performance incentives, breach penalties and exit clauses are almost worthless.
- Insist on a proper project charter
- Pay close attention to contract
details and clauses—and demand clarity
- Establish a risk management plan
to avoid mid-implementation questions and confusion
- Monitor adherence to budget,
timeline and scope
- Communicate effectively when
there are risks—and escalate when appropriate Why Ultra? For more than 25 years, Ultra Consultants has utilized our proven methodology, ERP expertise and industry knowledge to deliver measurable business performance improvements to manufacturers and distributors in virtually every vertical.
- Our services are built for your industry. We understand your processes and requirements
- Our solutions leverage our expertise. We help you choose the best software to meet your
unique needs
- Our results reflect our extensive ERP experience. We minimize risk, maximize benefits
and deliver success
For more information and additional resources on how to bring our expertise right to your doorstep, visit us at ultraconsultants.com.
References
- Iqbal, M. (2023, June 9). Selecting the Right ERP System for Your Business: Considerations and Best Practices. https://
www.linkedin.com/pulse/selecting-right-erp-system-your-business-best-practices-iqbal/
- Journal, W. S. (n.d.). Elon Musk on Infrastructure and What Comes Next for Tech Innovation. WSJ. https://www.wsj.com/
video/watch-live-elon-musk-on-us-innovation/D6D76CC2-41D8-499A-B645-E7A2AFDCE47E
- Garg, V. (2023, April 10). Top 4 Change Management Strategies while adopting a new ERP. https://www.linkedin.com/
pulse/top-4-change-management-strategies-while-adopting-new-vikas-garg/