Best Practices for an Effective ERP Implementation

An ERP implementation touches every area of an organization, cutting across functional boundaries and departments as well as impacting the extended enterprise. How can manufacturing and distribution companies ensure that an ERP project results in full utilization of the new system's stated functionality and anticipated benefits? It's all about the implementation.

This document comprises a collection of several key strategies that our experts recommend for effective ERP implementation. We've given special attention to the six phases of a typical ERP project. In each phase, we describe the best practices proven to speed the rate of adoption. The paper concludes with key considerations for the ERP implementation team.

Table of Contents

Level 0: Pre-Implementation Phase...............................................................................................................

Level 1: Project Planning Phase........................................................................................................................

Level 2: Product Education Phase..................................................................................................................

Level 3: Design/Configuration Phase ..........................................................................................................

Level 4: Development/Test Phase..................................................................................................................

Level 5: Go-Live and Post-Implementation Phase..................................................................................

Considerations For The ERP Implementation Team............................................................................

Final Thoughts.........................................................................................................................................................

About Ultra Consultants......................................................................................................................................

Successful ERP Implementations: A Matter of Time

Most successful and seamless ERP implementations occur when the manufacturer's or distributor's leadership team is fully engaged in the process, including being in full alignment with the ERP vendor and other implementation resources, such as a specialized outsourced implementation team. This level of engagement should begin long before the go-live stage. The team must take the time at the outset to determine the right participants within the organization, locate appropriate vendor and external resources and build solid plans. Carefully managing the extensive phases of implementation will ensure the project's success.

Best Practices at Each Implementation Phase

How long should a typical implementation project last? The average timeframe is around 7-8 months, depending on the project's complexity.

Some factors that affect the project's completion date:

The complexity of the system being The level of automation within the implemented organization The production environment The existing IT infrastructure The number of facilities and processes … and many other considerations

Given this level of complexity, our experienced team recommends working through the following six ERP implementation stages, each with key tasks and activities that we've summarized for you.

"We have a culture of confidence, but we know we are not invincible or infallible, so we decided to harvest the strengths of our organization and bring in the outside expertise we needed to ensure success." Don McNeeley, CEO Chicago Tube & Iron

Pre-Implementation Phase

The pre-implementation phase forms a solid foundation for the ERP project, with success at this early stage greatly increasing the likelihood of success at go-live.

Typical best practices take place in the following areas:

Vendor Due Diligence SOW and MSA At the tail-end of the technology evaluation The ERP Project Team receives Statement of cycle, the Project Team handles final Work and Master Service Agreements from details with the vendor of choice, including preferred vendors necessary paperwork

• Include services, timeline, budget, etc. in
• Request site visits Statement of Work
• Call customer references
• Request list of vendor team members
• Review evaluation activities with profiles to verify fit with company's
• Review contract culture and necessary expertise for
• Negotiate contract implementation tasks
• Finalize contract
• Research vendor references for "lessons learned" from previous client

The Team and Charter implementations The ERP Project Team confirms key

• Request Master Service Agreement from

stakeholders to lead the implementation vendor with all terms of contract and creates a charter

• Review MSA with legal team, IT leadership,
• Determine Implementation Team members company management, etc.
• Outline Implementation Team

responsibilities Outputs:

• Create ERP Project Charter with statement
• Implementation Team formed

of core goals, objectives and scope

• ERP Project Charter created
• Stipulate IT project governance process
• Agreed-upon final contract with vendor

with roles and responsibilities during

• Consensus on MSA and other areas of

implementation vendor relationship

• Consensus on vendor's Statement of Work
• Agreed-upon start date for planning and other documents preparing for next phase

It's surprisingly important to ensure that the culture and credentials of the vendor team mesh with the manufacturing or distribution company's team." Brian Puz, Service Delivery Manager,

Focus on fully understanding the vendor deliverables and statement of work (SOW) early on. With an understanding of what is expected, your project has a better chance of success." Danielle Brashear, Service Delivery Manager,

Project Planning Phase

During the Project Planning Phase, manufacturers and distributors build upon the foundation set in Level 0, solidifying the details within it by carefully confirming all final aspects of the vendor contract, including the Statement of Work and understanding vendor deliverables.

Typical tasks for best practices are in the following areas:

Vendor Contract Review Statement of Work The Implementation Team leverages the The manufacturer or distributor's organization's legal team and all key Implementation Team outlines the vendor's stakeholders when reviewing each detail of responsibilities and tasks in the Statement the Vendor Contract of Work

• Compare contract vs. demonstrated
• Implementation

product

• Migration
• Compare Contract vs. needed functionality
• Testing
• Review limitations of user licenses to
• Training

assess critical functionality vs. actual user

• Support

counts

• When new work orders will be needed
• Review final ERP application footprint
• What level of support the company will provide vendor

Vendor Deliverables The Implementation Team writes detailed performance expectations in the Vendor

• Finalized Contract

Deliverables

• Finalized Statement of Work
• List each project deliverable
• Finalized Vendor Deliverables
• Clearly define each deliverable
• State timelines
• State expected completion dates

Product Education Phase

In this phase, serious, systematic education helps accelerate adoption and increase buy-in from key stakeholders. With complex manual operations at manufacturers and distributors, ERP implementations run smoother with practical, hands-on training to address the new capabilities, new processes and the expected value after implementation.

Vendor-Based Education Enterprise-Wide Education Roll-Out Plan The ERP vendor should have robust, proven Once the ERP project team has completed manufacturing- or distribution-specific system training, a roll out plan brings training available training to the enterprise

• Request in-person and online training
• Deploy short, targeted training sessions
• Specify core team members to be trained
• Encourage members to try out what they

first have learned

• Expand training to all key process owners
• Develop ideas for process modifications and system optimization

Certification, Training Assessment Assessment vehicles must test and certify the capabilities of the user so that key

• Formalized education curriculum

process owners have the information they

• Roll-out plan

need to configure and use the system

• Testing mechanisms assessing team
• Prepare for a lengthy process that could members relating to ERP features,

last months, depending on the depth of functions, reporting and user interface the new product, technology infrastructure familiarity and data integration

• Ongoing training and support programs
• Consider formal certification programs as

needed

"Save yourself and your team future headaches by ensuring that the ERP vendor provides training so that process owners are better able to absorb and retain key information about new features and functions." Aaron Olin, Senior Research Consultant,

Design/Configuration Phase

At this stage, an application consultant from the vendor engages with the company's process owners.

Interactive Team Workshops Workshops help process owners further their understanding of the capabilities of the product as it is being configured for specific business requirements

• Load master data, led by vendor or IT

consultant

• Configure system, reporting, dashboard, etc.
• Identify any gaps between new solution and

business requirements

Conference Room Pilot The IT consultant leads the pilot

• Observe the system in action
• Identify gaps in processes
• Identify data integration tasks and issues
• Design and configure data conversion,

business process mapping and assignment of data to relevant process owners

• Pilot completed
• Data converted
• Technology integrated
• Verified ERP meets needs of business process

owners

• Plan developed for additions or customizations

"It's best to have configuration follow directly after product testing to leverage the most recent findings. Avoid combining education, design and configuration in one step." Brantly Chavis, Service Delivery Manager,

This may seem obvious, but the final simulation just prior to go-live must successfully simulate running the complete business. Don't take short-cuts." Neil Brody, Organizational Change Management Specialist,

Development/Test Phase

This is typically the lengthiest, most involved phase of ERP implementation, a time to simulate using the ERP in real-life scenarios within the enterprise.

Test Simulation Scenarios Process Owner Involvement Here the team prepares several test Testing responsibility shifts to the process scenarios that simulate running the entire owners at the manufacturing or distribution business within the new system company

• Test simple processes: e.g. create a PO,
• Verify satisfactory results of the continuous

order entry, etc. iterations of the testing cycle, fixes, retests

• Test complex processes: e.g. from purchase and configuration

order to receipt of product

• Notify vendor of any remaining issues for
• Confirm that both team and the ERP resolution

system are ready for the final go-live phase

Continued Interactive Workshops

• Completed all tests

ERP implementation workshops become

• Completed all adjustments and

more detailed as the entire enterprise configurations accesses the new system

• Verified system optimization
• Test for data integration
• Test for data usage in multiple user

scenarios

• Address any functions or features still

needing configuration to meet business requirements

Go-Live and Post-Implementation Phase

With successful conclusion of pilots, tests, fixes and system fine-tuning, this stage brings user instruction, final documentation and training, and a timeline for cut-over activities.

Establish the "Cut-off" Strategy Post-Implementation Audit With confidence in the new system through This audit helps organizations determine testing, the team develops a strategy to whether the "to-be state" is a reality cease using the old processes and systems

• Measure Key Performance Indicators (set
• Develop comprehensive cut-off strategy during ERP selection)
• Single instance (all users migrate
• Translate KPIs into individual and

simultaneously) departmental metrics

• Parallel adoption (both systems run
• Set target levels of performance as basis

simultaneously for a set period of time) for post-implementation audit

Manage the Shake-Out Period The ERP vendor team is on-site through

• Schedule of metrics tracking

the cut-off and go-live, and stays on to help

• Schedule of post-implementation audits

manage issues

• Note possible issues with reporting, data,

customizations, etc.

• Make final assessment of all processes to

reveal continued gaps or performance issues

• Address all noted issues

Remember that the go-live date isn't the end of the road. Postimplementation activities are critical to increase the ROI of your new system." Katrine Maguire, Finance Specialist,

Considerations for the ERP Implementation Team

While familiarity with the phases of ERP implementation is important, special attention must be given to the ERP Implementation Team.

Through the years, we've compiled the following ERP Implementation Team key success factors:

An Emphasis on Project Management Due to the complex nature of an ERP implementation, the team must be led by an experienced project manager

• Manage tasks and responsible parties

• Hold parties accountable
• Lead with transparency
• Be decisive

A Commitment to Apply Appropriate Resources Significant internal and external resources must be expended for ERP implementation

• Don't underestimate required resources
• Plan for critical, resource-intensive phases
• Don't trivialize the scope and scale of the implementation
• Allocate the proper amount of time and resources to the

project

Collaboration with IT While an ERP implementation affects the whole enterprise and extended supply chain, IT must be at the center

• Communicate and coordinate with the IT team wherever

possible

• Build-in collaboration with the IT team

A Focus on Change Management An ERP implementation brings with it drastic change for the entire enterprise

• Anticipate how the workforce will react to a new ERP

system

• Enlist a project sponsor to champion the project and lead

their people to success

• Gain consensus from all team members

A Focus on Education An ERP implementation is only as good as the end-user's ability to operate it

• Design workshops
• Create learning opportunities to teach how to fully

utilize the system

• Be accessible and approachable for critique and

individual problem-solving

Final Thoughts

A complex project of this magnitude deserves careful planning and execution. We've shared these best practices in the hopes that they help our potential clients in manufacturing and distribution to have needed insight for an effective ERP implementation.

However, the best advice we can give you about ERP Implementation is simply this: Don't go it alone. We have experienced ERP consultants who can be tapped to implement a new ERP system much faster and more effectively than business professionals who are unfamiliar with the rigors of an ERP implementation. You're the expert at running your business. We're experts at helping you optimize it.

About Ultra

Ultra Consultants is an independent consulting firm with the experience and ability to quickly deploy top industry experts into your company in order to improve business processes and select the most effective technology solutions for your organization.

Our Clients: Our clients range in size from a $21 MM regional plumbing distributor to a $16 B multinational minerals manufacturer, each with an unrelenting desire to be the best in their respective fields. They team up with us because we specialize in the manufacturing and distribution sectors, in verticals as varied as aerospace, food and beverage—and everything in between. We understand your business.

Our Expertise: Our unique, proven methodology is BPI-based and ROI-driven to improve revenue and customer satisfaction, enhance financial management and real-time decision making and increase productivity while reducing time to market. In short, we provide deep experience in best practices and current technology solutions for manufacturing and distribution process optimization.

Our Commitment: When you utilize Ultra Consultants, you can expect greater ROI, better information flow, shorter time-to-value, and an easier transition from your legacy system to your new ERP. We understand the unique complexities within manufacturing and distribution companies, and we know how to get you operational with new efficiencies and increased visibility from supply chain to customer care.