The Comprehensive ERP Success Guide

The Comprehensive

ERP SUCCESS GUIDE

C O N S U L T A N T S EBOOK COMPILED BY TERILLIUM, INC. & ULTRA CONSULTANTS | 2021

Terillium is an award-winning Oracle Partner specialized in Enterprise Resource Planning (ERP) Consulting. Terillium's team, made up of 170+ consultants, has an average of 16 years ERP experience. Terillium has helped over 700 businesses implement ERP.

Ultra Consultants is an independent ERP consulting firm serving the manufacturing and distribution industries in North America and around the world. Since 1994, Ultra has helped hundreds of clients streamline their business processes, select ERP software, and implement a complete ERP solution that meets the unique needs of their industry, specialty and organization. is a collection of information, insight and advice from recent ebooks, whitepapers, website content and blog articles created by Terillium & Ultra Consultants.

Note: In some cases, the original content has been abridged, edited or modified for this publication.

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PART 1: ABOUT ERP SOFTWARE

SKIP TO > Capabilities & Benefits of ERP Software > Which ERP Solution is Best? > The Future of ERP

The Era of Modern ERP has Arrived

The idea of enterprise resource planning has its roots in 1960s manufacturing management and 1980s materials planning. Since then, the concept of ERP has expanded in scope, and new technologies have enabled significant evolution. Today's modern suite of business applications is the result.

Modern ERP software offers business professionals an integrated solution with full visibility into all their business data, as well as reporting tools that define and deliver key performance indicators, measure performance and plan for growth.

PART 1: ABOUT ERP SOFTWARE

CAPABILITIES & BENEFITS OF ERP SOFTWARE

ERP solutions enable better and more efficient business processes across your organization. Business leaders choose ERP software to solve a variety of problems. Perhaps "I need a better way to manage my warehouse inventory" sounds familiar. Or, "My financial information is in several programs that don't talk to one another" is something you've heard. These are two of many issues that an ERP system can resolve.

While serving as the central source of business information, ERP software can be configured to streamline multiple processes and operate in real time.

Structured in a modular design, ERP software modules include:

• Budgeting and forecasting
• Procurement
• Financials
• Project management
• Human Resources and Payroll
• Quality
• Logistics
• Supply Chain Planning
• Manufacturing
• And more
• Order processing

Modern ERP software eliminates manual processes and provides your organization with options for automation. As you are aware, automation of standard business processes reduces risk of human errors, eliminates the duplication of data and streamlines operations.

Additionally, ERP software, being a single platform for business information, breaks down the virtual walls between departments in order to foster collaboration. And an ERP solution provides better cross-departmental visibility into important company data.

WHAT ARE THE KEY BENEFITS OF ERP SOFTWARE?

Data visibility One of the primary reasons businesses choose to implement ERP software is to improve data visibility. If your business data is separate and reporting is complicated and difficult, ERP offers the solution.

Improved efficiency Once your business data is visible and reporting is optimized, the information can be used to make your processes more efficient. Whether that's improving your inventory management or prioritizing ways to increase your company's cash flow, efficient operations benefit your bottom line.

Better reporting and planning Better visibility and reporting lead to moreinformed business decisions and better longterm planning. These benefits apply to virtually every function, from finance to operations.

Automation of manual processes A main method to making your operations more efficient is to automate manual processes. Employees who perform tasks that require manual work, such as invoice creation, routine communications and financial report generation, can set up functions within ERP software to complete these tasks automatically.

PART 1: ABOUT ERP SOFTWARE

WHICH ERP SOLUTION IS BEST?

When you've decided that a new ERP solution is the answer to your organization's problems, it's time to determine which software is the best fit. ERP in general is designed to help you manage your business by streamlining operations and increasing communication and collaboration. But every organization has unique needs, and every solution is different.

As you explore your ERP options, consider the following:

Cost and Budget Replacement or Upgrade Your Industry Money comes into play in several ways. If you're already running an ERP system, Some ERP solutions are better for specific First, your budget might steer you toward an upgrade of your older system to a more industries. Identify the software vendors a particular level of functionality. Second, modern solution, or to the most up-to-date with expertise in your vertical's unique how that software is delivered might also be version of your current software may be a requirements. Is their toolset optimized for determined by budget – cloud-based systems quicker and more cost-effective solution. If your industry? Do many of your competitors typically have lower upfront costs due to their you're facing issues such as poor integration run this software? How does software address subscription-style billing. Third, the number or loss of vendor support, however, it might be your company's specific pain points? of users your organization will have also is time to replace. an important factor and will determine the The question of whether to replace or upgrade number of software licenses you'll need. depends on your company and the factors involved in the decision. Does the most recent version have the tools your business needs? How old is your current software? How many customizations do you currently have? How quickly do you need to have new software up and running?

PART 1: ABOUT ERP SOFTWARE

THE FUTURE OF ERP

While companies have used ERP software for decades, it's constantly evolving.

As technological advances are made, businesses are adapting, and so are their business tools. Here are some of the top trends to watch in ERP:

Cloud Mobile Artificial Intelligence While cloud ERP is Many top ERP vendors and Machine Learning commonplace by now, continue to integrate mobile AI and machine learning it's still one of the tools into their software. options are fundamentally top trends. More and With an emphasis on realaltering the way ERP is built more businesses are time visibility, users take that and used. ERP vendors are recognizing the benefits to the next level by having developing tools that are of the cloud, whether for access to up-to-date data configured to complete data storage or to run the from anywhere. manual tasks, such as in entire solution. Much of accounts payable with These options take a range the movement appears to payment processing to of forms but tend to be be with small- and midminimize fraud. inexpensive and don't sized businesses, which require significant changes AI tools are intended not to likely is due to the lower to infrastructure. take the place of a human, upfront cost. but instead learn how Vendors with on-premises a human would make a solutions see the advantages specific choice based on the too, and are offering their criteria of that decision. This solutions in the cloud. allows the employee more time to complete highervalue tasks that require critical thinking. MORE THAN EVER, companies are combining ERP with IoT technologies to increase interconnectivity and further automate manual processes.

Internet of Things ERP for Subsidiaries More than ever, companies While the core idea of ERP are combining ERP with is to control the whole IoT technologies to enterprise through one ERP, increase interconnectivity some companies are running and further automate their subsidiaries with manual processes, such as smaller-scale solutions. configuring the software One reason is simplicity: it's to monitor a product in a become easier to deploy facility to send you an alert SaaS-based tools, and when it needs servicing or a businesses are choosing replacement part. to do so with a smaller Additionally, IoT can be subsection of the enterprise. configured to minimize And sometimes this is done the need for forecasting to test-drive a potential by better optimizing your replacement of an oninventory management and premises system or to gauge planning operations. the solution's ability to fit into the current system.

PART 2: MAKING THE BUSINESS CASE

SKIP TO > Ten Questions to Ask Before You Get Started > Modern ERP Delivers Competitive Edge > 8 Big Benefits of Modern ERP Solutions > Where's the ROI in ERP? > How to Build a Business Case for ERP

Making the Business Case for ERP

Whether your existing ERP is at the end of its lifespan, your vendor is sunsetting support for your current software version, or you feel you're not getting enough value from your solution, moving to a new ERP system is a big undertaking.

Before you take the leap, make sure you need to replace your current solution, and determine that your organization is ready.

PART 2: MAKING THE BUSINESS CASE FOR ERP

10 QUESTIONS TO ASK BEFORE YOU START AN ERP PROJECT

Does your current system lack capabilities you need?

If you're running an old ERP system, that's not necessarily a reason to scrap it. However, if it's been in place for more than 10 years, you're likely missing out on important capabilities, including real-time data access, AI and seamless integration – and business opportunities that can be unlocked with new technology.

Does your organization need better data integration?

Most enterprises use CRM, accounting, marketing automation and other applications to run the business. If these systems aren't integrated, you're unable to make decisions based on real-time information and use data to monitor operations and drive product development. A lot of companies will cobble together ad hoc integrations to keep data flowing between systems, but these integrations are brittle and require constant maintenance.

Are upgrades difficult or impossible?

The older a system is, the more it's been customized – often by employees who have left the company, taking their knowledge with them. As a result, when your ERP software vendor releases a new update, not only do you have to test everything to make sure the update won't crash the system, you also have to identify every customization beforehand. Excessive and extensive customizations can even make an upgrade impossible altogether.

Can decision-makers get the data they need?

Stakeholders often need accounting reports, like P/L statements, to make decisions. If the accounting department must run these reports, then decision-makers must request them and wait. This is extra, unnecessary work for the accounting team. And it means that critical data is not in the hands of those who need it when they need it.

REASONS TO REPLACE YOUR ERP

• Your organization is growing, has grown or is planning to grow significantly.
• Your organization needs enterprise software to better manage processes.
• Your organization was acquired, or made an acquisition, and needs to align systems.
• Your current system is outdated and cannot be upgraded.
• Your current system is not serving the business and users adequately.

TOP 5 REASONS FOR A NEW ERP

Support growth (28%)

Greater functionality (18%)

Replace outdated legacy system (18%)

Increase efficiency (17%)

Consolidate disparate systems (12%)

SOURCE: 2020 ERP Software Report, Software Path

PART 2: MAKING THE BUSINESS CASE FOR ERP

10 QUESTIONS TO ASK BEFORE YOU START AN ERP PROJECT (CONTINUED)

THE LONGER you've had an ERP system, the more likely it is that you've collected duplicate and outdated information. Of course, needing a new ERP is one thing, and being prepared for it is another. Here are six more questions to ask to determine your organization's ERP readiness:

Are your business processes messy?

Will employees be on board?

To get the most out of your ERP investment, you'll need to have efficient It's unlikely that your employees will be excited about changes to their daybusiness processes. In many organizations, business processes have to-day work processes and the need to learn a new system. But if they're evolved over time with little or no documentation, even for something complaining about how long it takes to conduct simple business tasks, they as simple as approving purchase orders. If you don't know what the may not resist change as much. Communicating the benefits of the new steps are, it's difficult, if not impossible, to set up the ERP system to system and offering proper training will go a long way toward getting them meet the demands of your business. fully on board.

Is your data dirty?

Will leadership champion a new system?

The longer you've had an ERP system, the more likely it is that you've No new ERP system can be successfully adopted without enthusiastic, collected duplicate and outdated information. Before you can move committed leadership. Make sure your executives understand the business data into a new system, you'll need to eliminate duplicates and make benefits of the system. And make sure to secure the necessary executive sure what you import is correct to avoid hindering your decisionsponsorship for the project. making, customer service and other procedures.

Can you successfully select and implement ERP?

Is your existing ERP preventing change and improvement?

An ERP replacement requires evaluating multiple solutions to make sure If your business plans to expand its market share, you likely need to they are the right fit for your organization, then undergoing data cleansing, look at a new ERP system. And if the goals of the business require using business process improvement and other complex tasks, followed by real-time data, offering mobile access to employees, or integrating with the software implementation itself. These lengthy and often challenging new technology like IoT, an outdated system likely can't support those processes probably should not be done using an in-house team. capabilities. Experience shows that few companies have the knowledge and expertise required to achieve success.

PART 2: MAKING THE BUSINESS CASE FOR ERP

MODERN ERP DELIVERS COMPETITIVE EDGE

An aging ERP system is like an automobile in that the older it gets the more it needs to be maintained. And, like a car, at some point it makes sense to purchase a new one rather than continue to fix the old one.

Estimates vary, but ERP systems typically have a lifespan of between seven and 10 years – although, with today's rapidly evolving technology, that may be pushing it.

While it's tempting to continue to squeeze as much life as possible out of a legacy ERP system, that may be counterproductive. Legacy ERP software can have significant technical or operational limitations and may not be able to support new business opportunities or strategies.

What are you missing? Here are five important and highly valuable capabilities a modern ERP solution offers your organization:

COMPREHENSIVE, REAL-TIME DATA ACCESS

ROBUST BUSINESS INTELLIGENCE

SEAMLESS INTEGRATION

MOBILE ACCESS

EASIER MAINTENANCE AND UPKEEP

8 big benefits of modern ERP solutions

Enhanced business

Significant cost savings

reporting

• Improved inventory planning
• Better reporting tools
• Better procurement
• Real-time information management
• A single source of truth
• Better customer service
• One integrated database
• Improved vendor relationship management

Improved customer

Tighter Data & Cloud

service Security

• Better access to customer
• Dedicated security resources information
• Prevent malicious software
• Faster response times
• Data distributed across
• Improved on-time delivery multiple servers
• Improved order accuracy

Modernized business

Improved demand

processes forecasting

• Automate manual or routine
• Reduced inventory costs tasks
• Fewer stock-outs and over-
• Smarter workflows stocks
• Greater efficiency

Improved cash flow

Improved Supply Chain

• Better invoicing and Management collections tools
• Effective demand forecasting
• More cash on-hand and lean inventory
• Reduce production bottlenecks
• Transparency through the business

PART 2: MAKING THE BUSINESS CASE FOR ERP

THE BOTTOM LINE: To meet the demands of modern businesses, you need a modern ERP solution. Without an upgrade, you may miss out on opportunities to innovate and gain a competitive edge.

MODERN ERP DELIVERS COMPETITIVE EDGE (CONTINUED)

Comprehensive, real-time Robust business Seamless integration Easier maintenance and Mobile access Monolithic single-solution data access intelligence upkeep If employees need to be ERP systems are giving way to Today's business climate Older ERP systems often Legacy ERP systems are physically present at their fit-for-purpose applications, requires up-to-the-minute have shortcomings when inherently more difficult to desks at a computer to especially in the areas of data for fast, informed it comes to analyzing data. maintain and require highly access ERP system features, customer relationship decision-making. Older ERP Typically, business users knowledgeable IT staff to you may be missing out management, manufacturing systems may be able to must ask IT to create custom fine-tune them for optimal on opportunities. Modern execution or product adequately report on data reports in order to see performance. And often, cloud ERP systems and configurators. Today's within the four walls of the critical information and problems are not so much low-cost thin client devices businesses require real-time company but are not able show important business with the solution itself but and tablets break down data and robust business to supplement internal data trends. But modern reporting because the business has physical and virtual walls, intelligence from across with external data. Modern toolsets are more usernot upgraded the solution and let employees be more multiple solutions. However, ERP systems can pull in friendly and intuitive, and in a timely manner or kept productive by enabling to do that with older ERP new data across multiple, can pull information from current on the latest release. access from the factory floor software often necessitates easily connected solutions across the organization. And The architecture of modern custom, brittle integrations or on the road. that cannot be replicated and platforms, and update self-service capabilities free cloud ERP systems all but easily when new technology, large data warehouses up IT by allowing users to eliminates the need to such as a CRM system, is continuously, allowing you create and manage their own maintain and update the added. Newer ERP systems to view real-time data from reports tailored to their role solution, as the responsibility often use open APIs so that your business, but also show and needs. for upkeep of these solutions it's easy to transfer data from you what's going on in your falls to the cloud ERP vendor. one system to the other, internal/external ecosystem. eliminating a lot of time spent connecting data sources and software.

PART 2: MAKING THE BUSINESS CASE FOR ERP

WHERE'S THE ROI IN ERP?

Every manufacturer and distributor is different. And every company will get a different return on their investment (ROI) on their ERP solution. Where will your organization find the payback?

When an ERP project is considered, one of the first tasks is to determine the ROI that your more efficient organization can realize with new technology and improved processes.

At the basic level, your return will come most directly from more efficient production and resulting reductions in operating, inventory and labor cost. But the benefits can be indirect, too.

Optimized processes streamline ordering, eliminate physical inventory, improve production quality and enable more efficient scheduling. Improved access to operational data offers more accurate materials planning, streamlined reporting, new dashboards and better, data-supported decisions. And there will be ROI driven by increased customer satisfaction, enhanced supply chain communication, delivery performance, and more.

Core Areas for ROI Realization Here's why it's important to determine ROI: It will provide the justification for your project. It will inform the software selection process. It will set up areas of focus and measurement – and give you the ability to determine whether your transformation process is a success.

When your organization sets out to make the business case for an upgraded or entirely new ERP solution, the search for potential ROI starts with the 11 core process outlined on the next page. QUANTIFYING RETURN is a significant challenge – and where an outside ERP advisor can help with industry benchmarks, experience with similar projects and business process improvement expertise.

Calculating ROI

Total Cost of Ownership (TCO) includes:

• Initial license fees
• Ongoing license fee or annual subscription
• Implementation costs
• Consulting fees
• Hardware costs
• Maintenance costs Use TCO (your investment) and the estimated value of your expected benefits to calculate ROI:

ROI =

Benefits - Investment Investment

PART 2: MAKING THE BUSINESS CASE FOR ERP

WHERE'S THE ROI IN ERP? (CONTINUED)

Financial Management Pricing and Margin Management Management and the entire Powerful pricing tools enhance organization benefit significantly margin/profit analysis, which enables from increased confidence in improved competitive positioning financial results and analysis, and, in combination with Product accelerated information access, Lifecycle Management (PLM) analysis, faster closing and period-end offers information that can be activities, and efficiencies driven by used to more effectively manage reduction (or elimination) of outsideproduct portfolio and drive higher the-system spreadsheets. profitability.

Forecasting Product Development With the improved information and PLM provides the ability to effectively analysis that comes with robust manage product lineup and mix, R&D Sales & Operations Planning (S&OP) investments, and identify products capabilities, it's possible to accurately that no longer meet the company's forecast demand, take advantage strategic objectives. of trends and be able to quickly, Production Management precisely and proactively manage Better production management changing sales demand, handle capabilities offer improved capacity market changes, disruption and planning, plus the opportunity economic shifts, and more accurately to conduct detailed analysis of plan production and resource production bottlenecks, routing capacity. times and material movement, Inventory Management workforce utilization, plant and Better visibility into sales demand equipment utilization improvements, and improved forecasting maintenance scheduling and enable more accurate inventory machine uptime. management, lower carrying costs and improved visibility into slowmoving and dead inventory. Quality Management Warehouse Management QM tools delivered greater visibility Warehouse Management Systems of product performance, as well (WMS) technologies improve speed as improved Return Material and accuracy using high-efficiency Authorization (RMA) root cause managed pick-up/put-away, analysis, visibility into rework barcoding and routing. activities, and better information E-Commerce on raw materials quality, supplied Enabling direct-sales channels, or component products and third-party improving existing e-commerce services. efficiency and customer experience, Sales Management offers a significant competitive Customer Relationship Management advantage and cost savings. A (CRM) capabilities provide robust e-commerce capability comprehensive sales performance drives higher customer satisfaction, analysis and deliver an important repeat buying, better forecasting insight into customer buying and higher margins. And there will patterns, customer demographic be efficiencies that come from redata, sales activities and sales organizing warehouse operations performance. to support efficient pick-pack-ship especially in a less-than-case-order Supply Chain Management environment. With improved inventory management, the entire supply chain can be managed better, delivering lower logistics costs, more effective supplier/vendor management (and higher performance), shorter lead times, and data that can be used to support strategic sourcing and vendor negotiations.

PART 2: MAKING THE BUSINESS CASE FOR ERP

WHY IT'S IMPORTANT TO BUILD A BUSINESS CASE

At its most basic level, the decision to implement a new ERP solution is about capabilities: Does your current system provide all the capabilities you need for today and for the future?

Of course, in reality, there are other, more complicated questions – and a compelling business case must be made for a possibly expensive, potentially risky and definitely disruptive overhaul of your core business processes and enterprise management system.

Thirty years ago, companies justified a new ERP system mainly on its ability to improve the balance sheet and, hopefully, the bottom line. Back then, "modern" integrated enterprise applications delivered return-on-investment (ROI) primarily by making it possible to reduce inventory costs, improve days sales outstanding (DSO) and improve margins.

But today's "post-modern" ERP solutions (as Gartner calls them) are broader and more flexible – and deliver ROI in dozens of direct and indirect ways. The challenge, for many manufacturing and distribution organizations, is sorting through the mountain of available information, compiling current operational data, predicting future performance metrics and determining ROI, and then, using that insight, build the business case. It's hard work.

It's necessary work, too. No ERP initiative should go forward without detailed analysis to ensure its scope is well-defined, that its budget is accurate and complete, and that its goals are clearly aligned to the company objectives. And no approval should come without determining ROI and the payback period.

Still, many organizations skip building a complete business case because they view it as simply justification for an investment in the technology. But a business case adds additional value beyond confirmation of a clear need: It is a critical vision- and goal-setting exercise. And, most important, it forces you to make a detailed plan that sets expectations, guides your project and drives your business transformation.

NO ERP INITIATIVE should go forward without detailed analysis to ensure its scope is well-defined, that its budget is accurate and complete, and that its goals are clearly aligned to the company objectives. And no approval should come without determining ROI and the payback period.

PART 2: MAKING THE BUSINESS CASE FOR ERP

HOW TO BUILD A BUSINESS CASE FOR ERP

Identify current problems and reasons for change

What are your pain points? Which processes do you want to fix? You can't make improvements if you don't know which processes are slow, bad or broken – and without identifying any obstacles to change and growth.

Determine and analyze opportunity

How can your organization benefit from process improvements? What are the solutions to your pain points? The majority of ERP benefits come from the interconnectedness of functions and processes – and the integration and accessibility of data across all departments.

Determine focus and define goals

What does your organization want to accomplish? What is your vision for your future state? With the potential benefits identified, the next step is to know which ones are critical to achieving your organization's future state and aligned with its transformational vision.

Evaluate potential solutions and vendors

Which vendors have expertise in your industry? Which solution offers capabilities to support your goals? After identifying pain points and their solutions, and clarifying your goals – you've got insight into your needs and how your organization can benefit from specific improvements – and are able to identify solutions suited for your organization and processes.

Estimate costs

What is an accurate number for the project cost? What cost factors should be included? A realistic and valid business case requires an accurate estimate of the total cost of ownership for a new ERP solution. The other significant cost is implementation services, including software configuration, change management and project management.

THE BUSINESS CASE is not simply justification for your project.

It's due diligence, a vision document, the roadmap for your business transformation and, ultimately, the basis for deciding whether your organization realizes the benefits it expected.

Analyze return on investment

What is the net cost of the new solution? What is the value of the intangible benefits? Revisit the opportunities identified and goals defined, and calculate their ROI. Typically, your return will come mainly from more efficient production and resulting reductions in operating, inventory and labor cost. Quantify these benefits. Remember to compare the operating cost of your current system with the system that will replace it. And know that indirect benefits have real value. For example: higher customer satisfaction = X% more repeat sales = $X revenue.

Identify risks and provide a mitigation plan

What factors put potential benefits and project success at risk? What mitigation efforts will reduce risk? Any major change to your enterprise systems creates risk. But careful and comprehensive project planning, effective change management and expert resources mitigate that risk.

Create a high-level implementation plan

How will the solution be implemented? A detailed evaluation of the business value of the project needs to include a big-picture view of how it will proceed, and a projection of both the resources required and the implementation schedule.

Present the benefits and value

How will each department and function benefit? What is the argument for a new ERP? You need to convince stakeholders across your organization that the long-term benefits will be worth the short-term pain. Focus on the value driven by improvement in their functional areas and processes.

PART 3: IMPROVING BUSINESS PROCESSES

SKIP TO > 3 Questions that Business Process Improvement Answers

> Top 5 Reasons Business Process Improvement Projects Fail

Starting with Business Process Improvement

Experience shows that the most successful ERP projects start by optimizing operational performance.

Here's why: A detailed analysis of your business processes, practices and technical environment:

• Pinpoints areas for improvement
• Accelerates time-to-benefit
• Informs the software selection process

PART 3: IMPROVING BUSINESS PROCESSES

75% OF ORGANIZATIONS

3 QUESTIONS THAT BUSINESS PROCESS IMPROVEMENT ANSWERS

Evaluating and improving your business processes is essential to ERP success. To change how your business works, and to transform your organization, you need to answer these three questions:

say BPI initiatives helped their organizations accomplish their goals.

• BPTrends "The State of the BPM

Where are we now? What is possible? What is our desired future Market 2020" The efficiency of most business Once the current state is state? processes declines over reviewed (and inefficiencies With the current state time unless a conscious and revealed), your business process determined and documented, continuous effort is made to reowners probably need to be and with possibilities and

BPI Delivers ROI

examine, re-imagine, re-engineer shown what can be changed, best practices known, a vision and improve them. An ERP enabled and accelerated using for improved processes and implementation is the perfect today's technologies. workflows – the future state – Optimized processes deliver new opportunity to take a close can be developed. efficiencies – and the biggest share As you would expect, most look at how your organization of ERP ROI. Here are 11 core process managers and users are not This effort starts with a review of currently performs its strategic areas for ROI realization: up to date on the capabilities your current processes and their processes, to document the of modern ERP solutions and inefficiencies, applicable best

E-commerce

current state, to determine the current best practices for core practices, future requirements opportunities to apply best

Financial Management

processes. They know your and technological capabilities practices, and to streamline and

Forecasting

system, and they may have some

• and ends with your desired

improve these processes. insight from a past position and

Inventory Management

improvements and plans for A view of your current state solution, but that is not the infuture processes.

Pricing and Margin Management

clearly exposes any problems depth knowledge required.

Product Management

that exist. While many executives Through a shared understanding

Production Management

are aware of inefficiencies in of the possibilities and problem their business, they are often

Quality Management

areas, your entire organization surprised by the extent of those can develop an appreciation of

Sales Management

inefficiencies, waste or problems potential process improvements

Supply Chain Management

in core processes. and opportunities for new

Warehouse Management

efficiencies.

PART 3: IMPROVING BUSINESS PROCESSES

TOP 5 REASONS BUSINESS PROCESS IMPROVEMENT PROJECTS FAIL

GETTING UPPER MANAGEMENT

Manufacturing and distribution organizations initiate business process improvement (BPI) projects to streamline

on board is absolutely critical for success.

business processes, identify areas where efficiency can be improved, and enable better, more effective utilization of resources and assets. But, experts say, the majority of BPI projects do not achieve their goals.

Why do so many much-needed BPI efforts fail? Here are the top five BPI pitfalls:

Failure to Assess Flawed Project Poor Alignment with Weak Support from Insufficient Focus on Current State Team Composition Business Goals Upper Management Business Objectives Before any real change can The BPI project team Every BPI project needs to be Without a champion at the The expression, "can't see be made, and before goals must represent the entire linked to business goals. If top, a BPI project is doomed. the forest for the trees" often can be set, it is critical to organization. Ideally, the the right metrics aren't being Getting upper management applies to BPI projects. If know and understand the team will consist of six to identified for the project, or on board is absolutely critical the organization typically current state of the business. 10 representatives from the project scoping doesn't for success because, without operates in siloes, so will This involves gathering different departments include a variety of areas in their commitment, the plug the project, with different key performance metrics, affected by the changes, the company, it's unlikely to can be pulled prematurely. functions and teams then mapping business super-users and meet the overall objectives of lobbying for what they need Obtaining support from processes to identify where management. Some team the business. If the business without understanding the upper management can be improvements will make a members will be driving doesn't have clear goals, or overall goal. done in several ways. An significant difference. change, and some will be the goals conflict at different orientation session can help One way to avoid this is in supporting roles. It's levels in the business, the bring them up to speed with to prioritize pieces of the critical to choose people project won't have clear the why and the how, and project linked to the overall from multiple levels who direction. including them in regular business goals – to shift the know and understand the Make sure that the BPI briefings and updates will focus to moving the entire processes and support the project is focused on let them see progress. Also, organization forward. Every initiative. meeting business goals. it helps to make the case for BPI project needs to benefit Define what the business how this project will improve the organization as a whole, wants to achieve before the bottom line. without detracting from launching a project. another function.

PART 4: ERP SOFTWARE SELECTION

SKIP TO > Think Beyond Functionalities to Make a Smart Choice > 5 Critical Enterprise Software Selection Factors > Best Practices for ERP Vendor Selection > How to Select the Wrong ERP Solution

Selecting the Right Solution

Choosing an ERP is a critical decision for any organization. There's plenty of uneasiness and concern when it comes to choosing the right platform.

Because, if you get it wrong, your ERP could end up being a costly, short-term solution.

To get it right, you'll need to gather an ERP requirements list and put it into context for your business.

PART 4: ERP SOFTWARE SELECTION

DETAILED PROCESS MAPPING will show you

every place where an ERP intersects with customer and employee actions.

THINK BEYOND FUNCTIONALITIES TO MAKE A SMART CHOICE

Align ERP requirements with overall Prioritize ERP requirements around Consider the impact of new processes business objectives process mapping and functionalities What do you want to accomplish with your ERP Look at how your organization accomplishes The most valuable functions of a new ERP are the ones that will be use. If you know how your adoption and selection? What are the uses and related tasks. If you want to improve HR team will adopt a new functionality, that's good. If needs of the separate groups who will use the efficiency, you need to first define your existing you're stuck on how to get staff to use a function, ERP have? practices. Mapping these processes will show it might not be right for you. For example, if you're you where an ERP module can integrate and Common goals for a new ERP solution include outsourcing your warehousing or have customer may clarify what kind of support you need. automation, improving customer response, service reps who spend more time in the field than enabling real-time data delivery, and more. Detailed process mapping will show you every at the office, some standard ERP modules might place where an ERP intersects with customer not be useful. You'll want to determine which goals are most and employee actions. It's an excellent exercise relevant and critical – and what process changes Business process re-engineering (BPR) is a change to learn specific requirements you have as well or ERP modules will be needed to achieve them. management practice that asks you to look at as to identify bottlenecks and pain points that adjusting your workflows before running headlong For example, if you're going to reduce overhead exist in your operations. Identifying these areas into automation. Instead of trying to automate or inventory costs, then you'll want an ERP that also can help you prioritize changes. your existing processes, look at what changes includes warehousing and shipping modules you could make to create an entirely new process designed to help you analyze your orders and Take another read-through your requirements when you adopt an ERP. inventory needed to meet those orders. list, adjust it relative to your pain points, and articulate the value of each module or tool in With HR and accounting systems, could you ERP vendors are eager to provide case studies precise terms. Be specific. For example, if your change how you onboard employees or invoice and reports about what their customers have business processes 8,000 transactions per customers? Could a warehouse tool allow you to achieved. When you hit a stage where you're month, automating these with the ability to scale change how you pick and pack orders, or change wondering if an ERP can help with a certain up to 12,000 transactions monthly would deliver your inventory layout to be more efficient? business goal or improvement, ask for these immediate savings by reducing time and labor, proof points. If you currently have separate systems that your but also allow you to grow significantly without ERP would replace or integrate with, you'll be needing any new software or upgrades. able to improve your operational efficiency with the new system and a BPR plan to implement it.

PART 4: ERP SOFTWARE SELECTION

5 CRITICAL ENTERPRISE SOFTWARE SELECTION FACTORS

Buyer's remorse for enterprise software is a very real phenomenon. Up to 40% of companies regret their software purchase because they don't use it, it doesn't align with their business processes, or it can't scale to meet their needs. To avoid this, here are five critical selection factors:

Alignment of Functions and Needs Most companies will choose enterprise software that solves a business problem, such as reducing manual errors or automating month-end financial closings. When looking at new

Total Cost of Ownership

software, it's critical to note whether the vendor's offerings align with the company's needs. For example, if the organization needs an automated expense reporting feature, and the software doesn't offer that, keep looking. While cost isn't the most important factor in choosing software, it is significant. There can Vendor Investment in Product be a lot of hidden expenses, particularly when Before making the commitment to a new solution, researching the vendor's roadmap for selecting subscription-based enterprise software. the product can prove very illuminating. If the vendor doesn't have a clear vision or path Companies need to consider: for updates, that may indicate that the product will be sunset in the all-too-near future.

• Licensing fees

Additionally, the technology roadmap needs to fit with the business strategy – or the

• User fees

organization risks choosing software that will not fit its needs.

• Annual maintenance
• Implementation services

Strong Support Ecosystem

• Upgrade costs

Chances are that the internal IT team can't answer every question or address every issue

• Third-party integrations

that arises. When evaluating any kind of enterprise software, the support offered should

• Support

play a critical role in the selection process. Ideally, the vendor has a strong ecosystem of support partners, including but not limited to their own phone support, as well as consulting All of this can add up quickly, and in some firms and implementation partners. cases, might not be apparent until after the implementation is completed. For example, Interface and User Experience one large ERP vendor charges when third-party One way to ensure that nobody in the organization uses the new software properly – or programs access data inside the ERP system. at all – is to choose a solution that is difficult to use. If the majority of employees don't This is not a common pricing model, but it's worth investigating whether this will apply to understand the interface or have difficulty navigating to the functions they need, they'll find any chosen vendor. workarounds that may not align with the original reasons for purchasing the software.

PART 4: ERP SOFTWARE SELECTION

BEST PRACTICES FOR ERP VENDOR SELECTION

Whether your company is implementing an ERP system for the first time, or replacing a legacy implementation, it's critically important to make the right choice.

An ERP solution is, at its foundation, a strategic choice. What new capabilities does your organization need and want? What problems are you trying to solve? What do you want your core processes to look like? How can new tools enable your organization's digital transformation?

Emphasize Industry Experience

Assess the Total Cost of Ownership

Focus on industry experience when choosing Establish a budget in terms of implementation an ERP vendor, including (and especially) and total cost of ownership (TCO), then ask your industry segments. Here's why segment potential vendors if your budget and their solution expertise is important: An ERP vendor may are a fit. have manufacturing experience but may not A solution quote usually includes software, firsthave deep knowledge of the unique needs of a year support and implementation consulting. specialized segment like aerospace. Look at their (Additional sites and add-on modules will be presence in your industry segment, particularly extra.) TCO, however, is broader, and takes into if yours has stringent regulatory or customer consideration per-user license costs, training, requirements. maintenance, customizations, upgrades, internal Ask your potential vendors to tell you how costs and other fees. they plan to be a leading solution in your If the system is Cloud or Software as a Service, industry. Evaluate their features and functions take a hard look at the Service Level Agreement to see how well they align with your industry's (SLA) for any hidden costs, such as system challenges. Read the case studies and success enhancements and upgrades. stories provided by the vendor – they are a good source of insight into how they build solutions The scale and complexity of most ERP projects for companies like yours. Ask for the product make it difficult to get, and stick to, a fixed price. roadmap for your industry segment. Be aware that ERP vendors that offer a fixed price might exclude necessary work and training. Identify and note all inclusions and exclusions.

ON AVERAGE, companies spend 17 weeks

selecting an ERP solution.

SOURCE: 2020 ERP Software Report, Software Path

Consider Technology Strategy

Know that an ERP solution must fit the overall IT strategy of your organization. And because the IT department plays a primary role in determining whether an ERP system is feasible, it should determine and provide any technology requirements at the outset.

If on-premises ERP systems are a consideration, the IT department will need to have the resources to maintain and upgrade the software, as well as be able to provide the necessary infrastructure, servers, databases and security.

If the company is going with a cloud-based system, it's still essential to have the IT department involved in the ERP vendor selection process. There may be connectivity and integration issues with existing systems, particularly legacy on-premises systems.

PART 4: ERP SOFTWARE SELECTION

BEST PRACTICES FOR ERP VENDOR SELECTION (CONTINUED)

OBTAIN VARIOUS VIEWPOINTS

Put the Vendor Under a Microscope

Speak with Real Customers

from across the organization when you gather requirements in the software selection process. Where will the vendor be in the next five or 10 Don't let your ERP vendor get away with giving years? Many niche players have been acquired you a list of hand-picked customer references or merged with other ERP vendors – with both in a variety of industries. positive and negative results. To get the best idea of how a solution will What's important to your company? The major perform for you, ask for references that ERP vendors offer big, broad solutions that will have been on the solution for at least a year,

Top 10 ERP Selection Criteria

meet most of your needs. Specialized vendors are in the same industry as your company, offer "smaller" solutions that will meet your are roughly the same size, and have similar

• Functional fit

industry-specific requirements but may not be requirements. Then make the effort to speak

• Industry experience

as strong in some core functions. with these customers (particularly their ERP professionals) to get their insight, opinion and

• Software price, TCO and ROI feedback. Choose one for an on-site visit.
• Vendor viability
• Implementation considerations
• Technology

By applying these best practices, your company will better understand the strengths and weaknesses of potential ERP vendors. And it will be easier to narrow down the list and choose a

• Risk

software solution that will deliver greater efficiency, improved visibility and a competitive advantage.

• Scalability
• References
• Post go-live support

PART 4: ERP SOFTWARE SELECTION

HOW TO SELECT THE WRONG SOLUTION

The enterprise software selection process is a long and complicated process – for several good reasons. The solution you choose will affect the way you conduct business for years to come, and it will impact virtually every function. It's a significant investment. And with as much as 50% of ERP implementations failing to achieve their goals, it's critical to find a solution suited to your business and its unique needs.

Here are the top five misconceptions that derail the enterprise software selection process:

Thinking that technology Assuming that all ERP Believing that a highly Thinking that an ERP Assuming that big-name is the most important solutions are the same detailed RFP is required project is an IT project solutions are always the consideration best solutions If you've ever bought a new Many companies think Companies need to get Many companies replace car, you know that every they need to create various viewpoints from Many organizations start their enterprise software model is different, even lengthy RFPs, which often across the organization ERP selection with a list because it's outdated or those built on the same amount to hundreds of when they gather of the biggest and bestno longer supported by platform. Each includes pages. But since most requirements in the known companies in the the vendor. While these various features and vendor offerings address software selection process. ERP software marketplace. are valid reasons to move benefits, including subtle core problems, such as All too often, important The big-name vendors to a new system, they differences in appearance. automating reports, these stakeholders are left offer excellent choices for shouldn't be the only ones. It's the same with ERP. documents don't need to out of the conversation. small, medium and large The software selection At first glance, it may be nearly as long. Instead, Before looking at different enterprises in a variety process is the perfect time seem like two solutions companies should look systems, assemble a team of deployment models. to evaluate business goals are exactly alike. But at the business problems with employees from Their powerful products and map them to your once you look under the they want to solve with every department that may not be right for your new solution. For example, hood, you learn that one the new software, not uses, or will use, your ERP. organization, however. you may want to reduce is more powerful. As you core functionalities that Whether it's accounting, Extensive customization operating costs or improve test drive with a demo, typically are the same sales, marketing, shop may be necessary to meet order accuracy. If you have you may find that one is across multiple vendors. It floor, warehouse, logistics, the requirements of your these goals in mind, you're more comfortable. The is more beneficial to create operations or any other industry and company. Or better able to narrow down differences may seem a shorter RFP that includes department, it's important you may have to purchase your choices and request small, but looking critically specific problem areas to know what is causing specialized industry addrelevant demos from at them is the key to vendors need to address. problems and what they ons to get it to function vendors. finding software that fits need to do their jobs the way you want. Instead, your business. better. consider all the options available.

PART 5: IMPLEMENTING ERP SOFTWARE

SKIP TO > Two Tips for Implementing ERP > Win With These ERP System Implementation Best Practices > 4 Implementation Pain Points – and How to Avoid the Sting > Smart Implementation: Critical Change Management Strategies

Navigating an ERP Implementation

A new ERP system offers a rare opportunity to transform your company by increasing efficiency, enabling new capabilities and improving business performance.

But, while a modern ERP solution can supercharge your organization, its implementation is one of the most complex and high-risk projects you will ever undertake. Learn best practices and how to avoid common pitfalls.

PART 5: IMPLEMENTING ERP SOFTWARE

TWO TIPS FOR IMPLEMENTING ERP

An implementation is about more than just software. To ensure a successful outcome, consider these elements too:

Use an implementation partner

Using an implementation partner is highly recommended. Choosing a partner is a lot like choosing your ERP software: You need to find one that is the right fit for your industry, organization and processes. But what should you look for?

A potential partner should have previous, relevant and recent experience with both the software you've chosen and your industry. Additionally, consultants should be certified and have substantial technical experience.

While your potential implementation partner doesn't have superpowers to make your project perfect, they can simplify a complex process and provide leadership and guidance. Select a partner with a proven methodology. No project is exactly the same, but having a roadmap to follow ensures all the boxes are checked along the way. Your partner also should be equipped with tools for team communication and project management.

To achieve and measure progress, you'll need to have milestones and goals. An experienced partner will have the knowledge to understand what is doable and in an appropriate timeframe, as well as the leadership necessary to navigate the process.

A trusted partner also will have advice to provide regarding the technical and functional aspects of ERP software, as well as the implementation process itself. This can be in the form of recommendations for additional applications or tools that can optimize your organization's functionalities, or how to best leverage advanced technologies like the internet of things (IoT), artificial intelligence (AI), machine learning and predictive analytics.

CHOOSE YOUR BEST PEOPLE for the implementation team. It

should consist of the people you least want to pull off other projects

Apply best practices

Your software, by itself, is not the reason for your success or failure in an implementation. It's only a tool. And it's important to use it properly.

Good data is critical. Your solution offers powerful tools, but bad data will make them useless. Convert your data properly so that it is complete, correct and coherent before migrating it to your new system. Plus, you should improve your business reporting processes in order to better understand and utilize your business data and ERP system's tools.

Choose your best people for the implementation team. Your team should consist of the people you are least likely to want to pull off other projects – the ones who know your business, understand your functions and processes, and are capable of making intelligent decisions. They'll need to be able to commit a significant amount of time to the project, too. Additionally, an executive must serve as the project sponsor, and the C-suite needs to be involved in order to provide leadership and make final decisions.

Use a proven methodology. Your implementation partner's approach should be tested and formal, but flexible to accommodate your industry's requirements and your company's unique needs. Communications conduits should be established to enable interaction among teammates and between teams – and to keep the project on track. A training plan will ensure employees are properly trained. And it's necessary to set up a process for measuring success toward project goals and benchmarks so you will know that your project is a success.

PART 5: IMPLEMENTING ERP SOFTWARE

WIN WITH THESE IMPLEMENTATION BEST PRACTICES

Implementing enterprise resource planning (ERP) software is a complex process, and it's important to approach the project with tactics for success in mind.

Leverage a methodology A methodology is an essential framework that shapes an ERP system implementation process. It provides structure and helps teams tackle the complexity of an implementation by dividing the work into manageable phases, workstreams and tasks. A methodology also helps to ensure that everyone involved on the project team is on the same page.

Test, test, test Functionality is all hypothetical until you test how it works. Focus on testing end-to-end business processes. It's not enough to demonstrate individual transactions are working. Only when you can run a complete business process – quote-to-cash, for example – have you proven that your ERP system can support your business requirements.

Don't wait to integrate Integrations are one area where, if neglected or delayed, can cause issues. The development of robust interfaces between third-party software and the ERP software requires coordination with external parties, and involves the use of multiple applications and integration tools. Involving all parties in the interface development is essential to keeping the integration effort on track. Setting realistic expectations and assigning clear responsibilities for every team member involved ensures efficient design, development and testing efforts.

Communicate early and often The importance of frequent and clear communication during an ERP project can't be stressed enough. You'll need an ERP implementation project website where all key information and documentation is shared. Create a comprehensive communication plan early in the project – and then follow through.

THE SEVEN DEADLY SINS OF ERP IMPLEMENTATION

DEADLY SIN #1: Poor project planning. It's not possible to overstate how essential proper project planning is to success.

DEADLY SIN #2: Less-than-thorough requirements gathering. Comprehensive requirements gathering is the foundation of successful implementations.

DEADLY SIN #3: Excluding critical users from the process. When users and functional managers are involved, you get critical decisions correct.

DEADLY SIN #4: Not prioritizing the user experience. The new generation of users expects an Amazon- or Apple-like experience from their ERP system.

DEADLY SIN #5: Failing to consider an industryspecific solution. Some ERP vendors understand your business at a deep level – and offer important and useful features.

DEADLY SIN #6: Providing inadequate internal support. A successful rollout is achieved with topto-bottom buy-in, committed resources and proper budget.

DEADLY SIN #7: Neglecting change management. Resistance to change is normal, and plans must be made to minimize its impact.

PART 5: IMPLEMENTING ERP SOFTWARE

4 IMPLEMENTATION PAIN POINTS – AND HOW TO AVOID THE STING

For many companies – big, medium and small – the solutions to many of today's tough business challenges lie in modern ERP solutions and other technologies – solutions that help them manage more effectively, streamline key functions and enable digital transformation.

Of course, the ERP implementation process 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.

PAIN POINT #1 PAIN POINT #2 PAIN POINT #3 PAIN POINT #4 Generating a feasible and realistic Estimating resources needed, Building effective organizational Managing implementation implementation plan making a backfill plan, and change management partner performance and upgrading aging hardware ensuring accountability Relying on a vendor-templated plan, These aspects often are forgotten, which rarely caters to special needs, The implementation effort often is and even the most robust Project charters without specific may leave many parameters unmet. misunderstood and underestimated. implementation plan will fail without deliverables, guarantees, Most implementation failures are them. Change causes stress, and performance incentives, breach Solutions: attributable to resource issues. knowing who will be impacted – and penalties and exit clauses are almost

• Leverage the vendor's approach proactively communicating to all worthless. Solutions:

but create a customized stakeholders – will go a long way Solutions: version that addresses unique

• Develop a realistic view and honest toward mitigating uncertainty and

requirements and includes all assessment of resources available.

• Insist on a proper project charter. fear, and will help ensure a positive

supporting activities. outcome.

• Mitigate conflicts with backfill
• Pay close attention to contract
• Have realistic expectations that plans. details and clauses – and demand Solutions:

align with a transformation clarity.

• Implement strong governance
• Anticipate circumstances that will

roadmap. protocols and have effective result in utilizing outside resources

• Establish a risk management plan collaboration tools in place.
• Generate a budget that will meet or purchasing new hardware. to avoid mid-implementation

the needs of the plan. questions and confusion.

• Document accountability
• Gain solid leadership support and measures, and get buy-in and sign- core team sponsorship.
• Monitor adherence to budget, off from all relevant parties. timeline and scope.
• Prepare for resistance to change—
• Communicate effectively when and be ready to manage it. there are risks – and escalate when appropriate.

PART 5: IMPLEMENTING ERP SOFTWARE

SMART IMPLEMENTATION: CRITICAL CHANGE MANAGEMENT STRATEGIES

Of all the possible errors you can make, poorly executed change management (or none) is perhaps

CHANGE MANAGEMENT

the most avoidable cause of project problems and failure. Resistance to change, even positive change, is normal and expected human behavior – and plans must be made to minimize its impact.

It's important to understand that change management is not a discrete phase of implementation. should be woven throughout the project, embedded in the methodology and infused in the project team culture. Instead, it should be woven throughout the project, embedded in the methodology and infused in the project team culture.

With that in mind, here are six change management strategies designed to support and enable a successful ERP implementation:

Develop and share the vision

Articulate the Case for Change

Mobilize and align leaders

Determine what your post-implementation Ensure that every person at every level of your Create a guiding group of leaders who share organization will look like and how it will run – company understands why it is vital to re-make a common vision for your organization's and then share it with your organization. core business processes and implement a new transformation and embrace the changes to ERP solution. come. Every company expects a new ERP solution to "transform" their business. But what exactly does It's critical to clearly articulate the case for These top managers must thoroughly that mean? Developing the desired future state change to your entire organization. What's more, understand and communicate the benefits of the

• and then communicating it throughout the we encourage clients and the implementation project and position it as a top-priority business

organization – is the key first step to successful teams to communicate project scope, rollout transformation initiative. change management. strategy and implementation schedule at the start of the project.

PART 5: IMPLEMENTING ERP SOFTWARE

SMART IMPLEMENTATION: CRITICAL CHANGE MANAGEMENT STRATEGIES (CONTINUED)

Engage with employees and stakeholders

Create the future organization

Prepare and equip your workforce

Analyze the impact of every change, and Develop and design the desired organization and Enable your people to thrive in the transformed communicate often with every employee, team future state. organization. and function that will be affected. Analyze the current condition of your business, This phase is more than training your workers An important tactic when it comes to locations and departments in terms of processes, on a new technology – it usually requires organizational change management is to develop organization and people systems. And, most significant job redefinition, skill acquisition and and execute a detailed employee communication important, make a transformation plan. This plan organizational design changes. Determine new plan. Your plan should cover what will be should detail the actions, responsibilities (and competencies that will be required. communicated, why, to whom (audience), by a timeframe) to get your organization to a new Make the effort to assess your workforce whom, when, and how. All communications endpoint. in terms of skills, abilities, experiences and should include the project scope, objectives, Define new processes using industry best capabilities, and assess any staffing impacts milestones and deliverables, present critical practices, and adapt them to your specific that will come with the new ERP solution. success factors and approaches, and discuss the needs as necessary. Assess job redesign Then develop, plan and implement training transition to the new solution. and competency requirements for the new strategies to close learning gaps. And, well before Also, it's vitally important to identify key environment. And you also will want to go-live, help everyone – end-users, leaders, stakeholders – influencers – within your business analyze HR implications such as performance implementation team members, process owners, and determine their understanding of, and level management, compensation and classification, customers and suppliers – clearly understand of support for, the ERP initiative. Make a plan to recruiting, hiring and on-boarding, etc. how their processes and work will be impacted. maintain and boost their knowledge and support throughout the project.

And, on an ongoing basis, assess the readiness

AT ITS FOUNDATION, the key to effective change management is to communicate

of your business and people for change. Monitor the mood, enthusiasm, morale and level of support of your people by conducting midimplementation check-ins. comprehensively and frequently about the project – and to articulate the case for change clearly and consistently. And it is critically important to reinforce and reiterate this messaging to ensure all levels of your organization stay focused on the benefits that will come with the future state – and not on the disruptions and uncomfortable changes that

come with ERP implementation.

PART 6: ERP SUCCESS FACTORS

SKIP TO > Technology Isn't the Reason Your ERP Project Fails > An Empowered Implementation Team Makes a Difference > Processes are Critical to Success > 7 Essential Strategies for a Successful ERP Project

Enabling ERP Success

An ERP project is a huge investment of:

• Time
• Money
• Valuable resources The content shared in the following section is a product of countless years of ERP experience. Read on for a compilation of knowledge gained, helping hundreds of businesses with successful ERP projects.

PART 6: ERP SUCCESS FACTORS

TECHNOLOGY ISN'T THE REASON YOUR ERP PROJECT FAILS

When an ERP implementation goes badly, people usually say "it's the software." But that's not the reason. Software is a tool. By itself, it won't cause failure

• and it won't ensure success.

To make your ERP software work for your business, it's important to focus on data conversion, integrations and reporting from day one of the project. Many companies don't look at these important technical steps until later in the project, when it's too late:

Data Conversion Integrations Reporting One of the biggest issues during an ERP project Early in the project, start thinking about what One of the biggest benefits of implementing a is data conversion – moving data from the old other systems need to integrate with your ERP new ERP system is gaining one source of truth for system and mapping it into the new ERP. system. Ensure that the software for these your business. Reporting often is one of the most systems is new or upgraded to the newest time-consuming tasks associated with an ERP Incomplete, incorrect and incoherent release. Spend time documenting the inputs project, so don't leave it to the end. information, duplicate data, bad data, little and outputs from any third-party systems that data – all can cause big problems. Get organized Very early on, ask employees to send an example will integrate with your ERP early in the project. by reviewing and identifying your master data of any business report they can't live without. When working with third-party systems, make entities, including your customer master, supplier Once you collect this input, catalog and prioritize sure your third-party vendors understand master, item master and account master. the list of reports. Having this information inyour ERP timeline and critical milestones, and hand can help drive decisions when configuring schedule their resources accordingly to meet The data cleanup exercise can be quite lengthy the software. It can enable better project your ERP project goals. and can extend the project timeline and cost planning because you know from the beginning beyond your original plans. A new ERP system what reports you need to have in the end. will not operate effectively with bad data. Start data cleanup before the implementation even Businesses that wait until late in the project to begins to get a head start. define and write reports find themselves either pushing go-live, or sacrificing key reports until after go-live. In these cases, many of the reports never end up being developed.

PART 6: ERP SUCCESS FACTORS

AN EMPOWERED IMPLEMENTATION TEAM MAKES A DIFFERENCE

Implemented by the right people from your organization, your ERP solution can be harnessed to bring your strategic business vision to life.

Gather Your "A" Team In addition to leadership involvement, your company's top IT and busines process people need to be involved. And you're going to need them to invest a significant amount of time to the project – probably between 30% to 60% of their time for the duration of the implementation. These team members need to know the business, need to be able to be drivers of change, and need to have authority to make some decisions.

What's more, the people you choose should be leaders and innovators, and come from different areas of the business. Different departments have different needs, and your project team needs to work together to make decisions that have the best interests of the whole business in mind.

Drive Success from the Top An ERP project is not an IT project. It's a business project. To be successful, top executives from your organization must be involved in the project. One of those top executives needs to function as a project sponsor – a leader to champion the project and be the final decision-maker throughout.

Performance Measurement

How will you know how you're doing if you don't measure? Identify key goals and metrics and processes measuring success during and after the project. Measure regularly to determine if you are making progress and if you are revisiting the same issues over and over. At the end of the project, what is required for you to call your project a success?

Identify specific goals or benefits for the project:

• Measure the current state against the future state
• Ensure the goals are quantifiable Define specific measurements for the project and review regularly:
• Adherence to project schedule and tasks
• Budget dollars versus actual dollars
• Participation by core members of your team
• Acceptance of change
• Communication
• Resolution of issues in a timely manner
• Achievement of key deliverables

PART 6: ERP SUCCESS FACTORS

PROCESSES ARE CRITICAL TO SUCCESS

ERP solutions are built on processes, and a successful ERP implementation is built on processes too:

Methodology Knowledge-Sharing You wouldn't go on a road trip without a roadmap to ensure you successfully Your implementation partner knows software. You know your business. It is the reach your destination. The same goes for your ERP project. A formal, highly job of consultants to transfer their knowledge to your team. Build processes to structured process – one that's proven successful – should be applied and make it happen: followed. And the methodology should be flexible enough to align with the way

• Up-front core team training

your business operates.

• Supplemental training from the software company

Communication

• Conference Room Pilot (CRP) tests/ Integrated Conference Room Pilot (ICRP)

An effective communication process is one of the most important factors tests in any successful ERP project. Change can be scary. Employees are afraid

• End-user training

of job loss. They worry they won't be able to adapt. They fear the unknown.

• Working side-by-side with the consultant

Communication is key to putting those fears to rest and ensuring that your employees are onboard and engaged.

Regularly communicate this information to your entire organization (not just the project team):

• Project goals
• What the project will do
• What the project won't do
• Project status updates
• Key milestones and successes (big and small)

IMPLEMENTED BY the right people from your organization,

your ERP solution can be harnessed to bring your strategic business vision to life.

PART 6: ERP SUCCESS FACTORS

7 ESSENTIAL STRATEGIES FOR A SUCCESSFUL ERP PROJECT

Implementing a new ERP solution is a complicated project – and not one companies do often. So it's common for organizations to be unfamiliar with the best practices and potential pitfalls. The following pages outline key considerations to effectively managing this enormous, business-critical project.

Make the project top priority

Resist the urge to go fast

Determine the ROI

Set up regular communications

An ERP project is a major The goal of the project is success. As an ERP project gets underway, Your executive team needs to set undertaking that will impact (and How quickly you can get your you must know and understand the tone by communicating the involve) your entire organization. new solution live is not the most the needs, cost, benefits and, importance of this project. important consideration. most important, the returnTo help ensure success, The project cannot be viewed on-investment that optimized management must make it the When you speed through or by the organization as an IT processes will deliver to the most important project. A rule of gloss-over the business process project. It must be viewed as organization. thumb: If a new ERP system is not improvement and software a productivity improvement your top priority, delay it until it is. selection phases, it's easy to make Look at both direct and indirect investment that will make the bad choices – mistakes that will benefits. Optimized processes company more competitive, When the priority is clear, and negatively affect the way you do streamline ordering, eliminate profitable and successful. It should when the project is enthusiastically business for years to come. physical inventory, improve be communicated that the ERP supported by all top executives and production quality and enable investment is as important as a management, there's a significantly The foundation of a successful more efficient scheduling. new plant or a new product line. better chance of achieving your ERP implementation is business There also are other important And the executive team needs to business goals. process improvement. When you efficiencies that will be the result give the project the same attention understand your requirements, of improved access to operational as any other top-priority project. In fact, when the new ERP is not a know your current state, determine data, including more accurate clear organizational priority, the your desired future state and materials planning, streamlined project likely is doomed. Users optimize your core processes, reporting, new dashboards and perceive the project as something you ensure your new solution better, data-supported decisions. that is not important, and users will deliver value. And with that And there will be ROI achieved and managers do not buy in and critical insight in-hand, you can from increased customer will not invest the time necessary implement a solution that will satisfaction, enhanced supply for success. address your unique needs, deliver chain communication, delivery efficiencies and improve business performance, and more. performance.

PART 6: ERP SUCCESS FACTORS

7 ESSENTIAL STRATEGIES FOR A SUCCESSFUL ERP PROJECT (CONTINUED)

Establish teams from across the business

Educate the teams

Establish a project charter

Your ERP project requires the best resources from To effectively chart a course toward a future state The ERP project needs a well-defined charter your organization. You will need to create the vision of optimized processes, the teams need that clearly states its mission and objectives, is following rolls: education in the current capabilities of modern endorsed by the entire project organization, and systems. includes these topics: The steering committee should be made up of the

• Project mission objectives

CEO and the top executives from the functions of the Experience shows that the typical ERP project business that will be impacted by the new system. team does not have a good understanding of best

• Organization (resources) practices. Team members typically know their
• Organization responsibilities

The executive sponsor should be a leader who will current system or systems at previous employers drive the project forward. Ideally, the sponsor has

• Scope
• all of which is outdated knowledge. This phase

been through an ERP project before.

• Problems of an ERP project should include a thorough education using a curriculum that utilizes up-to-

The project manager is a critical position that

• Needs date information from vendors, subject experts,

will quickly grow into a full-time role. The project

• Alternative solutions webcasts, seminars, consultants and other

manager should thoroughly understand all parts

• ROI resources.

of the business that will be impacted. Previous

• Benefits of new system

ERP project experience is ideal. If a full-time One more thing: An ERP implementation is only resource is not available, it will be necessary to

• Costs (over 5 years) as good as an end-user's ability to operate it. The

engage expert outside resources. The project team must design workshops and instruction to

• Expected returns (over 5 years)

manager reports to the executive sponsor. teach all business users how to utilize the system

• Budget to its full potential.

The project team must consist of the most effective

• Schedule

people from the functions impacted. This team will guide the rest of the organization to use the new system to improve the business. The team usually consists of up to 10 members representing sales/

IT'S CRITICALLY IMPORTANT to "sell" an ERP initiative by

marketing, customer service/technical service, R&D/ engineering, manufacturing and supply chain. The making the case for change, communicating fully, leading effectively, supporting users and managing expectations. structure of the team can be more complex if there are multiple locations involved. Bring into the project key users and managers temporarily as needed.

Why Ultra?

It's critically important to choose an ERP consulting partner with deep experience in your industry, expertise in your ERP solution, and experts who have worked in businesses like yours. And you will want to work with a firm that is independent, flexible and able to help you find the right solution for your organization.

For more than 27 years, Ultra Consultants has utilized its proven methodology, ERP knowledge and industry intelligence 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 software to meet your unique needs.
• Our results reflect our ERP experience. We maximize benefits, minimize risk and deliver success. Regional Offices Midwest West 939 W. North Avenue 1980 Festival Plaza Drive Suite 750 Suite 300 Chicago, IL 60642 Las Vegas, NV 89135