For today’s CIO, making the right decision about technology is a formidable task – particularly when it comes to enterprise solutions such as an ERP system which touches so many facets of the organisation.
The realisation that the current technology solution is out of date and doesn’t provide the benefits that modern ERP systems do presents both opportunities and pitfalls to avoid. The old adage “if it ain’t broke don’t fix it” does not apply in these situations. The reality is that you can’t afford to be complacent with the competition becoming more nimble, more efficient, more effective.
Many companies find themselves in the same boat: the current solution is 15-20 years old and showing its age. However there is no one left with the institutional knowledge of what an ERP implementation looks like; they’ve all retired or moved on to other opportunities.
Fortunately, proven methodologies can help guide CIOs in evaluating current options in the marketplace. A structured approach can help IT teams winnow the options down to the optimum choice for your unique organisation.
We have observed that the most successful implementations occur when an organisation is fully engaged from the outset, not starting at the go-live stage.
The first step is to evaluate and map the current state. Once that has been defined, we recommend a series of educational sessions to ensure that clients understand what can be achieved with a new system.
Then we are ready to create the desired future state where we define what success looks like after implementation. After this process is complete, we tackle a critical issue: which is the appropriate choice from the multitude of solutions available.
It’s easy to be swayed by traditional checklists provided by vendors, but they don’t always help you arrive at the optimum decision.
We decide on the best choice during the selection process by engaging in six areas of focus; features and functionality assessment, vendor synergy, solution agility and viability, technology alignment, total cost of ownership, and implementation confidence.
After determining the best solution we move to engaging with key strategies for an effective ERP implementation and break the typical ERP project into six phases that, when followed, ensure a smooth transition to a new, more capable operation.
Level 0: Pre-implementation phase
Vendor due diligence: Level 0 pre-implementation activities are those tasks found at the end of the technology evaluation cycle, involving vendor due diligence, site visits, ERP vendor customer references and other evaluation activities with the preferred vendor. This phase is marked by contract review, negotiation and finalisation.
The team and charter: Other tasks include development of the ERP project team – the key stakeholders who will lead the charge – and the ERP project charter, the ERP team’s concise statement of core goals, objectives and scope. In essence, a charter serves as the roadmap for everything that comes next. We’ve found that an effective project charter becomes a daily reference point for avoiding “scope creep” and keeping the ERP team focused on the end result.
Level 1: Project planning phase
We advise manufacturing companies to carefully confirm all final aspects of the vendor contract including the statement of work. Special care is taken during this phase to understand vendor deliverables.
Interactive team workshops: Workshops help process owners further their understanding of the capabilities of the product as it is being configured for specific business requirements. The vendor or IT consultant leads the effort in loading master data and driving the conference room pilot, which puts the ERP system through its paces in a test setting for further configuration and customisations as needed.
Conference room pilot: The pilot is a chance to see the system in action and to identify gaps and data integration tasks and issues. Design and configuration follows, to include data conversion, business process mapping and assignment of data to relevant process owners.
Level 2: Product education phase
Vendor-based education: The ERP vendor should have a robust and proven training program available to the manufacturer. The first round of training is typically delivered to the ERP project team made up of the core team members related to the implementation. This includes in-person and online training exercises targeted to key process owners.
Assessment vehicles must test and certify the capabilities of users so that key process owners have the information they need to configure and use the system. This is a lengthy process that could last months, depending on the depth of the new product, technology infrastructure and data integration. Formal certification programs should be considered as needed.
Enterprise-wide education rollout plan: Once the ERP project team has completed system training, a roll-out plan brings training to the enterprise. We’ve found that the best approach to training involves short, targeted training sessions. This allows the team members time to try out what they have learned and to develop ideas for process modifications and system optimization.
Level 3: Design/configuration phase
The core tasks making up the Level 3 phase typically include system set-up, design, configuration and data conversion. Usually, an application consultant from the vendor engages with the company’s process owners for system configuration, reporting, dashboard configuration and so on, as well as identifying any gaps between the new solution and business requirements.
As in the Level 1 phase, Level 3 tasks are assigned to interactive team workshops and result in a pilot which proves the concept and identifies any gaps or other issues.
Level 4: Development/test phase
Test simulation scenarios: Here the team prepares several test scenarios that simulate running the entire business in the new system. For instance, one scenario might involve creating a PO. Another test scenario might be more involved, tracking the process to create a purchase order, route it to the vendor, confirm vendor acceptance, receive the product and so on. The tests should confirm that the team and the system are ready for the final go-live phase.
Continued interactive workshops: ERP implementation workshops become more detailed as the entire enterprise accesses the new system and tests for data integration and usage in multiple user scenarios. The vendor addresses any functions or features still needing configuration to meet business requirements.
Level 5: Go-live and post-implementation phase
Establish the “cut-off” strategy: Once the team has confidence in the new system and user training through thorough testing, the team develops a comprehensive cut-off strategy. Depending upon the unique business setting, implementation might take place in a single instance, with all users moving to the new system on a given date. Other options include a phased roll-out, or “parallel adoption” when both the legacy and new ERP system run in tandem for a set amount of time.
Manage the shake-out period: The ERP vendor team should be on-site through the cutoff and go-live, and stay on to help manage issues with reporting, data, customisations or other surprises. A final assessment of all the processes might reveal continued gaps or performance issues which need addressing.
Post-implementation audit: A post-implementation audit helps organisations determine whether the “to-be state” is a reality – along with measuring any key performance indicators which were set down during ERP selection. KPIs should then be translated into individual and departmental metrics, along with target levels of performance to be used as the basis for the post-implementation audit.
When your company adheres to a logical and comprehensive series of steps like the ones mentioned in this article, the CIO can be assured that he or she has based decisions on unbiased, objective criteria. It’s the best way to ensure your organisation has made the right choices and is able to achieve the desired future state that ensures your enterprise maintains a competitive edge in the marketplace.
Editor’s note: A whitepaper with additional information on best practices for a successful ERP implementation can be found here.
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