Recipe For Successful Erp Implementation
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This document outlines key factors for successful Enterprise Resource Planning (ERP) system implementations based on lessons learned from prior projects. It identifies top management sponsorship, clear communication, sufficient training, and change management as critical success factors. The document also cautions that ERP projects should not be treated solely as IT projects and that scope changes can undermine benefits if not properly evaluated. It emphasizes the importance of planning, defining metrics, and rewarding milestones to help ensure ERP transformations deliver their intended returns.
Recipe For Successful Erp Implementation
- 1. RECIPE FOR SUCCESSFUL ERP IMPLEMENTATION Business Transformation programs using ERP implementation are of strategic importance to companies because of the impact that these programs can have on the organization’s agility to respond to customers and hence their bottom-line. In the past, we have seen companies like Nestle that have successfully implemented ERP system to define and implement common process across geographies and achieve efficiencies of scale. Nestle started on a multi-year, multi-country SAP ERP implementation in 2001 which has transformed the company into a Globally Integrated Enterprise now. On the other hand there are horror stories of companies like FoxMeyer Drug that embarked on an ERP implementation journey in mid 1990’s that lead to the company’s bankruptcy and eventual lawsuits against the ERP software vendor and the implementation vendor. Hershey Foods has a major impact on their top-line as well as bottom line in 1999 because of an unsuccessful ERP initiative. Successful business transformation does not depend solely on the ERP software selected but a multitude of factors that play a role in achieving the business benefits. Outlines below are key success factors in successfully implemented ERP Programs are outlined below based on experience implementing ERP programs at multiple Fortune 500 companies Sponsorship and commitment from Top Management: ERP programs by their very nature affect more than one department and have to have representation from key decision makers in the organization. Running an ERP implementation program as an IT Project is setting the stage for failure from the point go. Employee involvement and Focus: The best employees from the business as well as technology teams need to commit to the ERP program either on a full time basis or as their number one priority during the implementation. Some of the key business and process improvement decisions require the best minds in the organization to come together to implement the program successfully. Clearly defined Scope: More often than not, the scope of the ERP Projects is extended way beyond the one planned initially or the initial scope on which the business case approved. The ERP Program should stick with the planned scope and any change in scope should be reviewed against the benefits to be realized by the management team. Quality and Clear Communications: It is imperative that stakeholders both internal and external to the project get clear, timely and accurate communications about the ERP initiative and its progress. Depending on the complexity and size of the teams involved, the option of having dedicated resources for evaluating and supporting the communication needs should be considered. Sufficient Training: Training needs both formal and informal should be evaluated and delivered through the most optimal methods that include Classroom trainings, Virtual trainings, on the job trainings, Shadowing Opportunities and so on. Early on during the evaluation phase of the ERP Program, the executives should be made aware of what an ERP implementation can achieve and what it cannot.
- 2. Clear Performance Measures: Sufficient time and energy should be spent early on during the planning phase of the project to define the Key Performance Metrics (KPIs) and how the implementation of ERP Program will help achieve these KPIs. These KPIs should in fact, be part of the business case developed for getting executive approvals for ERP implementation. The program goals should align with delivering a high ROI. Organization Impacts: Any change in roles and responsibilities of the employees needs to be evaluated and planned for. It is important that employees receive official communication of changes to their responsibilities and are communicated and trained (if required) for the change. Change Management: Some organizations have a project and/or matrix form of structure and have the right skills required to implement the ERP Program whereas others need more specialized resources during the implementation of the program. The readiness of employees to implementation of ERP Program should be evaluated and sufficient measures put in place to ensure a successful transition. The organization more often than not goes through a big change and that needs to be managed well. Rewarding success: The road to end of the tunnel at time appears long when setting on an ERP transformation journey. It is important that the team working on the implementation is rewarded on milestones achieved; battles won and hours spent working hard on their assignments. Using internal champions: With any major initiative and more so with an ERP transformation there is a need to identify champions who can go out the stakeholders both internal and external and highlights the benefits of the program. These champions should play an active role in establishing a trust relationship with the stakeholders involved. It is important for any organization embarking on a ERP journey to understand the importance of these critical factors and account for these and plan ahead to make the implementation a success and hence achieve the goals stated in the business case.