May 17, 2018
If your business has data scattered across its departments and divisions with little interconnection, you may want to consider purchasing an Enterprise Resource Planning (ERP) system. Sound ERP software can provide your company’s management with a complete overview of the business’s operations and help facilitate informed and productive decisions.
ERP systems allow you to harness the power of centralization, pulling the data from every aspect of your business into one system that can be accessed by all departments. The first step toward achieving this goal is selecting the right system. The answers to the following questions can help focus and narrow that selection process.
1. Is now the best time? One of the major factors in whether to invest in an ERP solution is the financial health of your company. Can you comfortably afford the full system? Or should you investigate, but wait? Other questions to consider are:
- How mature are the business processes at your company?
- Have you continued to upgrade and maintain infrastructure?
- Do you have the in-house expertise to implement an ERP solution, or will you need to hire consultants?
- Have you identified a project sponsor who will lead the selection and implementation effort?
The answers to these questions will help you and your managers decide whether the timing is right.
2. What does your company need? It is important that each department determine and outline its requirements for, and expectations from, an ERP system. If your organization is large or complex, you may want to hire a consultant to help identify, organize and document those needs, which will be your guide throughout the selection process.
3. What are your company’s priorities? Rank the requirements the departments submitted in order of importance. They should range from absolutely critical to it would be nice to have. Be prepared to compromise.
4. What are the risks? Setting up an ERP system carries inherent risks that increase with the breadth of the project. Among the most common problems are cost overruns, failing to deliver on the promised benefits and value to the business. Consider talking with people from similar-sized companies about the problems they encountered during installations. This can provide significant insight into what you want to avoid.
Once your business has chosen an enterprise resource planning (ERP) solution, the installation phase begins. And this is no small undertaking.
Putting a successful ERP system into place requires extremely careful planning. Fortunately, following these seven steps should significantly enhance the probability that your organization’s system will be up and running in no time, with few, if any glitches:
Designate a project sponsor. Few installations of any kind are problem free. With an ERP system, the difficulties can multiply with the size and complexity of your company and the project. Without executive support and guidance, the process could falter and the costs escalate. Appoint an executive to be responsible for keeping the company focused and enthused, even in the face of seemingly insurmountable barriers or staff resistance to change.
Obtain employee buy-in. Employees resist change in general, and they can really dig in their heels when the scale of a project is as large as an ERP set up that will likely significantly alter the way they perform their jobs. You must gain their support and trust. Here are a few tips:
- Choose staff who embrace change well and have them champion the new system. They can help employees understand and learn the value it will bring to the company and to their jobs.
- Train employees, particularly in ways the system will change the key business processes they perform.
- Involve some employees in the decision-making and planning process. This will help encourage them to take more ownership of the project.
The more your company’s employees know about how the new system will benefit them and affect their jobs, the less resistant they will be and the more accepting once the changes go into effect. This will go a long way toward a successful installation.
Review your goals. Before launching the installation, take a close second look at the benefits you hope to derive from the system. Refocus on the goals of the project, document them and set up a system to monitor progress regularly and frequently.
Be realistic about scope. The project sponsor should develop, take ownership of and communicate a charter that clearly outlines the breadth of the project. Be realistic. Changes to the original scope may be necessary, so make them before the project starts. Frequent alterations during the installation can demoralize the project team and send the wrong message to employees.
The charter should include the business processes, divisions and departments that will be included in, and affected by, the installation and outline the details of the installation plans. Supervisors, managers and the C-suite should review and sign off on the charter.
Assign a project manager. Day-to-day management of the installation should be overseen by an experienced project manager. Ideally this is a specialist who has several successful projects similar in type and complexity under his or her belt. There are many skilled consulting firms that can help you find the right manager.
Select a project team. Assign some qualified employees to the project. This may take some time, particularly if you must bring in some outsiders. If this is the case, see to it that they are quickly made to feel at home and a part of the team. Anxiety levels may rise because of the size of the project and the perception that there is no end in sight. To help reduce this stress, give the team frequent recognition for their work and communicate the overall status of the project as often as is reasonable.
Test early and often. It is crucial to test how the system functions before going live. Failure to test its effectiveness and its ability to interface with existing technology will almost certainly mean errors will go undetected until the system goes online, creating a major disruption of daily operations. In addition, releasing a flawed system can hurt the reputation of the project within the company and potentially have a negative effect on its customers. Testing should be conducted by the end users, the results documented and the issues raised discussed and resolved by everyone involved in the installation.