Management Approaches to ERP Implementation
February 12, 2023
ERP systems don’t just help you plan–they’re key to running your business
ERP stands for “enterprise resource planning.” That isn’t, however, what ERP has come to mean. A modern ERP suite attempts to provide all of the functionality business managers need to run their organizations, not just planning its resources.
Which makes implementing a new ERP suite or replacing one that’s reached the end of its useful life an ambitious and complex undertaking, requiring careful planning and management.
What does planning and managing an ERP implementation entail?
Start with the business need – something that’s easy to say; not so easy to achieve once you take into account how many stakeholders will have to reach consensus: If an ERP suite has all the functionality business managers need to run their organizations, “stakeholder” means every business manager. No, scratch that: it means every executive, middle manager, supervisor, and staff member.
Further complicating the situation is that the most common business driver for an ERP implementation comes from within the IT organization, not from business management.
Not that IT’s issues don’t matter. What’s driving IT is the obsolescence of the systems the company is using right now, with “obsolescence” encompassing a wealth of engineering sins that make keeping data and business logic consistent throughout the enterprise difficult; inflexibility that makes adapting these systems with new functionality exponentially more difficult with every project that touches them; and recruiting and retaining quality talent willing to work on them is a challenge to make HR’s recruiters burst into tears.
These are all important issues – ones that can cripple a business trying to adapt to rapidly changing marketplaces – but they’re one or two steps removed from the business problems and opportunities that constitute business needs as recognized in the executive suite.
And without clearly stated executive-suite-level business needs, an ERP implementation will look like a business impediment – a drain on IT resources that interfere with business management’s most important priorities.
Modern ERP suites offer capabilities that should make business managers salivate
In particular, they can:
- Deliver out-of-the-box (OOB) process flows superior in some cases to those currently used to get work done.
- Simplify the process of adding and integrating new functionality needed to further optimize processes for which the ERP suite’s OOB process flows aren’t suitable.
- More easily incorporate advanced functionality into customer-facing information technology – especially websites and mobile apps.
- Provide sophisticated support for business analytics.
- Provide Compliance Management with the tools it needs to monitor the organization without becoming a drag on the company’s ability to compete in its marketplace.
Key approaches top management can take to ensure a successful ERP implementation
- Embrace the Program / Initiative / Project business change hierarchy: Programs achieve strategic change. Programs are composed of multiple business initiatives, each of which accomplishes a well-defined business change. Initiatives, in their turn, are composed of multiple business projects, each of which delivers the tangible work products needed to accomplish an initiative’s objective and goals. The work needed to implement the new ERP suite and the business benefits planned for it should be packaged into this structure.
- Develop a program roadmap that takes into account both the structural logic of ERP module dependencies, and which ERP modules have the highest business priority. Don’t make the mistake of attempting to implement the entire system in one “big bang.”
- Involve key stakeholders: Engage key stakeholders, including staff-level employees, management, and IT staff, in the planning and implementation process. This helps ensure that the ERP system is tailored to meet the needs of all stakeholders and that there is buy-in from all parties.
- Select an ERP system and vendor: Not all ERP suites support all industries with equal facility. And not all vendors support the systems they sell to the same level. Remember that when you’re selecting a system you’re also committing to a long-term relationship with its vendor. Build this recognition into your selection process.
- Select an ERP implementation partner with the same care. Very important: Insist on meeting and interviewing each potential partner’s proposed program manager and key initiative managers. In many respects, the implementation partner you choose matters less than the actual implementation team members, as they’re the ones who will be responsible for most of the heavy lifting.
- Select the internal implementation team. These should be stakeholders recruited from the affected parts of the business; and they should be the star employees from those areas, not those managers can most easily do without.
- Establish formal program governance to: set and adjust priorities; monitor and track progress; and to address and resolve barriers to progress as they arise.
- And finally, establish a formal organizational change management (OCM) plan, to identify and deal with sources of change resistance throughout the enterprise while keeping all stakeholders informed about the ERP program’s status and progress. Especially, communications should constantly reinforce the message that the program isn’t about installing new information technology.
In the end, it’s all about achieving intentional business change.
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