Enterprise applications Toolkit

10 essential tips for implementing an ERP system

Tags:
Implement,
Sarbanes-Oxley,
ERP

Staff Tech Republic

Published: 28 Sep 2006 17:35 BST

ERP implementations can take years to complete and the process can be delayed or derailed by faulty planning and execution. Businesses rarely remain static, and requests for changes in scope during the project can get out of control.

The technology may work, but many organisations miscalculate the impact of process change. Incomplete needs analysis almost always results in understated costs of ERP implementations. Infrastructure and integration requirements, if incomplete, can also result in hidden costs. Managing time, scope and money is truly a challenge.

Here are 10 key considerations organisations need to keep in mind when they undertake an ERP system implementation.

#1: When ERP projects go wrong, the results can be disastrous
Doing it right can be rewarding; failing can be devastating. For example, one company went millions into the red as a result of technical problems with the rollout of a supply chain system, leading to inventory shortages and incomplete orders filled. Another company took a several million dollar hit on profits as a result of a product oversupply related to problems with an ERP system.

The software itself is rarely the cause of big problems. The root cause is often due to the huge business and process change required with ERP implementations.

#2: Prior to implementation, make sure you understand the 'why' Understand the value proposition and the business case for your ERP system. What are the key deliverables and objectives? What is driving the project? Where is the win? What assumptions does the sponsor hold? The answers to these questions will help the team understand the target and the expected results.

#3: Make sure you have a strong sponsor
Your sponsor's level of commitment and support can have the greatest impact on the delivery of an ERP system. Issues and risks are likely to be escalated to the sponsor if they aren't resolved earlier. Your sponsor can also serve as the champion for the project when conducting status briefings and training across the enterprise.

ERP systems can stretch resources beyond capacity, so you must have a rational project plan not padded by wishful thinking. Roles and responsibilities must be crystal clear to the sponsor and stakeholders. Strong sponsorship and project management can dramatically affect the outcome, as critical decisions are often required.

#4: Gap analysis is a must-have
What are the gaps between the "as-is" and the "to-be" systems? Has the existing system been customised? Identifying functional and nonfunctional gaps between the existing and planned systems is one of the first major tasks to be completed. It's highly recommended that the gap analysis be reviewed and approved by the executive sponsor.

An incredible number of details are involved in the implementation and integration of ERP systems. The vendor may provide an "off-the-shelf" implementation plan, but it doesn't know your integration requirements or functional gaps. So it's up to you to make sure you fully understand and accept the functionality to be delivered. Leave no surprises to surface after it's too late. Gap analysis is a major means of avoiding scope creep down the road and preventing delays due to misunderstood deliverables.

#5: Vanilla is best
Stay with vanilla at all costs and use the standard off-the-shelf package with as little customisation as is feasible. Once the enterprise has implemented the core modules (GL, AP, AR, payroll and so on), it can phase in new features and build things around the edges, such as remote Web interfaces and wireless networking.

Plugging a vanilla system into a legacy system can be tricky, as there may be years of customisation built into the original system. Some say that businesses building too much complexity into ERP systems can spend up to 30 percent more per employee on finance operations.

#6: Success equals change
Success means delivering change. Functionality must enable existing processes, or processes must change. Business process implications cannot be glossed over, no matter how arduous the task of process mapping/process engineering. What processes and functions are in scope?

Socialise change across the organisation with key stakeholders and those most affected by change. Whether the changes entail the processing of...