Posted by Jim DeLoach on Wednesday, February 26, 2014 - 00:00 | Follow me
This post is originally from The Protiviti View. Protiviti, a subsidiary of Robert Half, is a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit. The Protiviti View, the company’s blog, features commentary, insights and points of view on key challenges and risks facing companies today.
Search Enterprise Resource Planning (ERP) on Google, and you’ll find tales of epic failure outnumber success stories seven to one. If I had a $100 bill for every CFO I have heard complain about his or her frustration with an ERP platform, I’d have a serious bankroll on my hands. Today I thought I’d even the score a little by offering my two cents (since I don’t have that bankroll, unfortunately) – much of this courtesy of Protiviti’s own ERP leaders and experts – on how to make your ERP selection succeed.
The keys, you’ll see, are to address critical areas before selecting and designing your ERP system.
Key 1: Manage Change
I could spend days debating the fine points of SAP versus Oracle and Microsoft. But frankly, that’s their job. Success or failure, more often, depends not on functionality, but on management’s ability to get employees, suppliers and buyers aligned behind the implementation effort.
Like diet and exercise, ERP implementations typically fail for lack of commitment and/or motivation. What looks like progress from the boardroom or C-suite – streamlined processes, increased accountability and enhanced analytics – may spark fear in the rank and file, as well as resentment from suppliers, who have their own billing systems (for better or worse) and may need to be shown exactly how your organization’s desire for process improvement also benefits them.
This “What’s in it for me?” factor cannot be overestimated. ERP solution providers know this only too well, and have developed implementation strategies to deal with it with varying degrees of success. Therefore, identify companies that have successfully navigated these waters, ask your prospective ERP solution providers about their implementation strategies and adapt proven best practices to your needs.
Tone at the top is critical when you are implementing a change of this magnitude. Make sure your operational managers are informed and well represented on the ERP project team, and make it clear that this project is important to you. Surveys by both PayStream Advisors and the Institute of Financial Operations cite lack of executive leadership/commitment as one of the primary hurdles for data automation initiatives.
Key 2: Optimize Your Processes
You wouldn’t plant a garden without weeding it. The same principle holds true in ERP solution design. Bad processes, even automated ones, merely get you to bad results faster. (Garbage in, garbage out.)
To get better results, you need to start with a clear picture of what success looks like to you and your board, and reverse-engineer your way to the ERP features and solutions that will deliver results to your satisfaction.
Given a focused picture of what you want to accomplish, make sure you empower your line managers to take a close look at current processes. The goal here is to simplify, focus and automate the work and eliminate the workarounds. Encourage them to poke into the dark corners and examine the hand-offs in the “white space” between processes, and make it clear that there will be no sacred cow legacy systems. Everything you exclude will live on as an extra step and an obstruction to one-touch processing. Empowering line managers to define business requirements provides them a much-needed stake in the outcome of the implementation process.
Be sure that your team’s process mapping accurately reflects the complexity of all critical data streams, especially consolidation of data from multiple legal entities, revenue recognition, pricing, contracts, taxes, and data from geographically dispersed regional and satellite offices. Compliance and mobile applications are emerging concerns, as well, that should be addressed.
Only after your team has a clear understanding of the project scope and the critical integrations required should you authorize them to begin designing the ERP solution, which is, in its simplest form, a fastidious mechanical clerk that takes in data and processes exactly as instructed, and answers questions and grants access according to established business rules and chain of command.
Key 3: Use Business Requirements to Focus the Selection Process
By defining the requirements upfront, your team can enter the ERP vendor bid process well informed, and less likely to purchase unnecessary modules.
Demonstration scenarios based on your team’s solution design help vendors tailor their presentations, and will give your team a better sense of how each system will perform specific tasks, under the specific conditions and complexities prevailing at your company.
Finally, depending on your organization’s specific needs, encourage your team to explore the viability of cloud-based ERP solutions. These subscription-based services have evolved to offer high-quality service with built-in maintenance and real-time system upgrades, at a fraction of the cost of maintaining your own system in-house. All major ERP solution providers now offer such solutions, typically known as Cloud Stacks – incorporating infrastructure, platform and software in a tiered structure for optimized data retrieval.
The above keys will enhance your organization’s chances for success.
Have you recently implemented or upgraded your ERP system? How did it go? Please share your strategies for a successful implementation. I also have listed below a couple of Protiviti white papers (links included) that may interest you: