If you have read some of the stories about ERP project problems you might wonder if it is worth the risk. The answer to this is twofold:
- The reports on ERP project failure mainly refer to large organizations implementing fairly large projects and are not representative of projects undertaken by small and mid-sized businesses.
- It’s how you approach ERP implementation that is a significant determinant of success or failure.
Where and how to start?
The lead-up to an ERP project is a good time to consider Eli Goldratt’s Theory of Constraints Thinking Processes, which is a set of tools to help organizations identify what can be done to significantly improve any business system. From there, you should address why a change is needed along with the following:
- What to change in your business
- How to cause the change in your business
A number of organizations might think that all they need to change is their business system when in reality they will probably also change and streamline processes, and realign roles and responsibilities. Therefore I recommend the following steps:
1. Conduct a business process blueprint
To answer the abovementioned questions, you need to understand the processes that operate in the business. A process blueprint provides a graphical view of the way processes work, who is responsible for the processes, and the interaction between different roles. It also helps by creating a view of the business that both IT and business can understand and discuss – a common, visually-based language. From the blueprint, you can see more clearly what might need to change (e.g., in terms of streamlining processes), and with a decent blueprint tool you can try out different changes to see what might be most appropriate. The blueprint enables you to identify solution gaps and define integration points between IT solutions.
2. Check that key project issues are covered
Evidence from many projects shows that there are four main factors that create project problems, and so mitigating them will improve the chances of project success.
Main causes of project problems
How to mitigate them
|Unclear objectives and poor focus||Focus on strategy, involve stakeholders, and define project teams responsibilities and accountability|
|Changes in project scope||Ensure project team and all affected staff are aligned to work towards common project goals|
|Lack of appropriate skills||Ensure appropriate skills are available|
|Unrealistic schedules and poor planning||Have a good project manager|
3. Plan the project in phases
The implementation project plan describes how the transition from the current state to the envisioned future state will occur – it addresses how you can cause change for your business. It’s wise to plan the project in phases and implement over time, for several reasons:
- It’s easier to estimate and manage the budget for a smaller set of tasks than it would be for a “big bang” type of approach
- It restricts the impact of the change to a smaller number of people, which means disruptions to everyday work can be minimized
- Showing rolled-out wins will keep people motivated
4. Make sure change management is included
The biggest cause of failure in IT projects is not software, it’s people. Resistance to change can block even the most perfect plans, so building active consensus and buy-in is crucial. The whitepaper, The Transition Model for Change Management on an ERP Implementation, highlights why change management is the most important aspect of an implementation, and how too many organizations drop the ball in this area. In addition, it proposes a better approach: a new transition model based on years of successful ERP implementations.
Lastly, although you may have undertaken a thorough business process analysis, and done the proper project planning, be prepared for unexpected complications that occur during roll-out. This is especially true for manufacturing businesses with complex processes, and where integration with other manufacturing applications is needed. If, however, you have done the upfront work, you will be in a position to handle these complexities without seriously impacting the project or the business.
What is your experience with starting an ERP project? What other tips would you add?