ERP Implementation: The Factors of Success:
With the push towards Omni-channel retailing, many organizations are forced to quickly adapt to the customer’s needs for a seamless shopping experience, by enacting flexible fulfillment options. In order to be able to provide said “flexibility” many retailers are opting for an upgrade, or complete replacement of their existing ERP. The primary goal of any ERP is to tie together all the disparate systems into a suite of integrated applications that a company can use to collect, store, manage and interpret data from many business activities. The Enterprise Resource Planning platforms are designed with optimization in mind, reducing manual processes if not eliminating them altogether. The path to implementation is one often fraught with peril, and 20+ years of implementation failures has led to a series of best practices which Advantage2Retail has adopted for over 10 years.
The below are a series of points which are not presented in any particular order, as there is no cookie-cutter approach to an implementation, but are intrinsic and invaluable to the success of any implementation.
Software and Vendor Selection:
Like snowflakes, ERP’s are not created identical, and not all are a fit for your business requirements or strategic objectives. Likewise, Software Vendors are dissimilar, and not all may be a fit with your business objectives or culture. There are a few points to ask when trying to make a selection of both:
- Do the software application’s features match our business requirements?
- Will the system require extensive customization to manage the day to day processes the business utilizes?
- Is the application specific to our industry?
- Does the software vendor understand our business?
- Does the vendor’s culture match ours?
The Last point can be somewhat subjective, but if in addition to locating and procuring an ERP platform, you also avail yourself of the Vendor’s implementation and integration, let alone project management and consulting services, ensure that their Business Culture and yours is a match. This can be extremely important in the long run, as it avoids friction and misunderstandings, as well as having a partner which can help guide and direct the strategic vision and business objectives.
Change and Project Management:
Change is never easy, and never is there the potential for massive change in an organization as when implementing an ERP. The simple reason for this is an ERP implementation touches every aspect of the business. Having a clear vision from the outset is one important rule of thumb the other is utilizing change management to ensure everyone is on board with the changes, and despite their painful realities, understanding the reasons for those changes in the long-term and what it means to the business.
In order for change management to be effective and embraced, a consensus must be reached about the changes and who they will affect. The changes then need to be effectively communicated to those affected, establishing solid reasons for why these changes need to occur, as well as guidelines established on how members of your organization must behave and react to these changes. Communication is at the heart of change management, and frequent updates to reiterate or to reinforce business objectives is the key to ensuring success. ERP implementations bring huge changes to an organization, and the only way to ensure its success, is to embrace change management that will cohesively unify a team to see it through.
Likewise, Project Management is also a key factor. Strong Project Management serves as the glue that will hold the disparate teams and groups together, as well as keeping the overall project on track. This will also ensure that everyone and everything flows along the paths of expectation, and strategic vision, keeping all factors on time and on budget.
Master Data Cleansing and Integrity:
A large factor that is overlooked for its overall importance is Data Cleansing and Integrity. Whether upgrading or implementing a new system, the success of any testing, and therefor training, depends on the completeness and accuracy of your master data sets. During an upgrade there can be very little, if any changes to the overall table structures, however with the migration to a brand new ERP, there can be drastic changes to how data is collected, stored, accessed and transmitted between the various components and modules, and should require at least a level of uniformity before migrating to the new database(s). This could be something as simple as abbreviations in addresses.
Another major reason for master data accuracy and completion is that the successful implementation requires extensive testing, and unless your data is accurate and complete, your testing will be flawed. Training of the users requires that all system and user testing was successful, and so without accurate and complete master data, your training will be flawed. This stretches right up until go live date, if the testing and training were flawed because your data was not properly scrubbed and tested for accuracy and completeness, your trained users will be using the system improperly, and thus compounding the problem, if not leading to its exact failure.
In addition to these factors, keep in mind having a singular view of the customer, and thus providing them a seamless shopping experience across platforms and sales paths. This requires accurate and complete data, failing this, you fail the Omni-channel nirvana that today’s retailers seek.
This may be a strange point to have in the middle, but think of this as a reiteration of strong Project Management and Change Management. For there to even be an ERP to implement, the various heads of all the departments would have had to come to a unifying consensus on the system. The major stakeholders would have given their two cents (and hopefully due diligence) on the project and the business objectives. This should be a given before the project even begins, but due to the fear, which like an insidious virus, that spreads up from the lower ranks, strong leadership in the company is required to assuage the worries of the company, and to reiterate the purpose and reasons behind the implementation.
By utilizing change management and keeping up a constant series of updates (even to the ad-nauseum level) the employees will understand the direction the company is taking with this initiative, instead of constantly crying out that “the ERP is going to ruin our business!”. This is not to say the architects of the company vision are infallible, or that all have done their homework when it came to the vetting and selection process of the ERP. Effective leadership is about weighing all the risks and communicating with all of the stakeholders before making the ultimate call. A change in ERP that is improperly planned and executed generally results in a change in leadership when it fails.
Effective Teamwork & Implementation/Integration Consulting:
Along with strong and effective leadership, a successful ERP implementation relies on the strength of the team behind its design and execution. Returning to the first point about Vendor Selection, sometimes it may be more cost-effective to rely on the skill-set of the consultants, rather than attract and hire the talent in house. They have been there, and should have a tired and tested track record, and will be able to bring invaluable skills and experience to the project. If you have the talent in-house, this is also a plus, but not generally the norm when it comes to large scale projects such as this. Regardless if you opt for internal or external talent to execute the company’s business objectives, keep in mind that this team must function optimally, much in the way the expected ERP should function.
Communication and cohesiveness lay at the core of effective teamwork. This is achieved via strong leadership to guide them, and effective change management to communicate with them. Strong project management ensures that even if the team is comprised of internal and external professionals, that the common goal is in plain sight at all times, and that they function as a single unit towards the design, testing and integration of the implementation project. Personalities should take second stage in this arena, and professionalism should reside at the core.
System and User Testing:
As mentioned in the Master Data section, the implementation cannot occur without successful testing and training. The system testing ensures the flow of data from each module or component, and ensures there is no latency or bottlenecks that may have been overlooked in design. Think of this like a finely crafted watch: it requires gears and springs that work in tandem to move the second, minute and hour hands about the face to tell the time. The same can be said about the modules and components of an ERP, allowing data to flow in synchronicity from stores, to warehouses, to the head office.
Once the initial system and integration tests are complete, the end users will begin their portion of the testing, and usually this is where the first major obstacles occur. Business Processes are shaped around the systems that are used in the day to day functions; and so with major changes to the way the ERP functions, comes changes to the day to day processes. Here effective Change Management can be employed, through gentle reminders that the ERP will bring about change to the way the business operates, and how they must test the new system based on the “vanilla” implementation. Reminders that the point of their testing is to ensure the system works as it is designed to, and now how they were used to doing so in the previous system. When those objections are overcome, the user-testing (due to its functional application) can expose flaws or weaknesses that may have been overlooked by some of the more technical members. These findings can lead to tweaks and corrections that may otherwise have ended up in production, thus cutting the overall efficiency or cost effectiveness of the system.
It is an unspoken (yet widely repeated) rule of thumb that an ERP implementation will cost more than double the initial estimates. Keep in mind, this is not a simple roll-out, and as mentioned in previous sections, the ERP implementation touches on every aspect of the business, and cannot be seen as an IT Project alone. Implementations generally take between 11 and 22 months, or more, and despite the best estimates, there can always be unforeseen issues and risks associated with the undertaking. Under budgeting will most certainly lead to failure. The best rule of thumb to use in implementation budgets is to forecast an additional buffer, or contingency fund, to compensate for these out-of-the-blue expenses, and to ensure that you stay within budget for the project.
The best way to proceed is by examining the Needs and Wants of the Organization. “Needs” are the necessary components required for the implementation to be successful, while the “Wants” are “nice-to-haves” but are not business-crucial. If you can complete the project within two-thirds to three-quarters of the budget on the “Needs”, you can have a bit of wiggle-room to focus on the “Wants” usually within the Business Process Optimization period.
Business Process Optimization:
The long months of decision and design, of hard work, testing and training complete, the system is close to completion, but due to the nearly “vanilla” implementation, and the budgeting of “Needs vs. Wants”, the system could use some improvements prior to go live day. The System integration testing allows you to know the data interchange is flowing in expected parameters, or allowing for some areas of improvement, while the user testing shows areas where the improvement is needed to automate or to simplify certain processes.
Enter the Business Process Optimization experts; their role is to examine the ways in which the users need to work with the system and how the system works with the other disparate systems that are integrated, and looks for bottlenecks or other inefficiencies to overcome. Once they have summed up their findings, they are able to deliver to the development or design teams improvements that can help to create new applications or modifications to enhance the performance of the system. Once the new mods/enhancements are in place, and tested thoroughly, the Business Process Optimization expert can then lead the end-users through the new business flows while gaining valuable feedback on the improvements. Usually it is at this stage that the most vociferous objectors become silenced, and they can truly begin to see the advantages of the new system for what it truly is, a radical force for change within the organization.
There is no exact science to implementing an ERP, nor are any two implementations exactly alike; however, by utilizing a methodology like the above, you can begin to minimalize the risks involved and surely lead your company towards a successful launch.