Preparing for a new ERP

As we all know, the failure rate for the implementation of a new ERP is quite high. You might hear numbers quoted as high as 75%. That is a little misleading, because many of the projects that are considered "failures", might have only just gone over their budget by a little bit, or missed their go live date by a week or so. There's not a lot of nuance in the ERP failure reporting.

Nevertheless, it's important to do everything possible to ensure the success of your implementation. This can start even before you sign your licensing agreement and Statement of Work. Here's three things you can do to prepare for your project:

Architect your Success

You should dedicate time to thinking about both your data architecture and your system architecture. This includes your plan for migrating data from your current systems that are to be replaced by the new ERP, and understanding how you want data to flow into the ERP and out of the ERP. The mantra here is generally "Enter once, access anywhere". You also should have a good understanding of what 3rd party systems are going to have to be integrated with the ERP. This could be anything from payroll, CAD, or a custom application. You should have a clear understanding the nature of the integration data flow. Will it need to be uni-directional, bi-directional? What fields will need to be involved and how will they be mapped between the ERP and the 3rd party application? Your ERP vendor and the 3rd party vendors will help with this, but the better you understand this flow going into the implementation, the smoother the architecture design will be.

Plan your Staffing

A general rule of thumb is that for every hour your consultant has in the statement of work (SOW), two hours of time will be required of your staff. So if your SOW totals to 800 hours of consultant time, your staff should anticipate 1600 hours of their time over the course of the project. This ratio can vary from project to project and vendor to vendor. One of my clients who is coming to the end of a particularly challenging construction ERP implementation figured it was more like 4:1 in their case. It's important to realize that when you sign up for an ERP implementation you are not simply purchasing something like office furniture. You are signing up for an immersive, collaborative project.

When all your staff is at capacity or over capacity with their regular work, taking on an ERP implementation can be a daunting task. There are several options at your disposal - you can bring in an external project manager on contract to oversee the project, you can offload regular responsibilities from staff that are planned to be highly involved in the project, you can plan to start the project when in your "slow season" - if that exists.

An external project manager teamed up with an insider that knows your company well can be an effective approach. If you end up liking the project manager you can always bring them on full time. An ERP often leads to ongoing projects around maintenance and extended functionality that will keep a project manager busy indefinitely. If they are really good, they could even fill a more strategic role like CIO.

The only constant is Change

Talk to anyone who has led an ERP implementation for their firm and ask them what they would do differently the next time and almost without exception they will say - concentrate more on "change management". Communicating, setting expectations, keeping everyone up to date. These are all critical elements in the succes of your ERP implementation.

I always say that there is no network that is faster than the corporate grapevine. As soon as folks see senior management meeting with consultants, they are going to be asking the receptionist what the meeting is all about. Shut down the speculation before it gets started - communicate early and often that you are planning to replace your current ERP. Include everyone in the ERP selection process - make everybody feel that they are part of the project, not someone looking in from the outside. Identify any resistance to the project early and work to overcome any objections.

People are still by far the most important factor that will make or break your project. Start preparing your change management program as soon as you decide to replace your ERP.

ERP implementations are long, complex projects that can only benefit from detailed, comprehensive preparation. As the saying goes - "If you are failing to prepare, you are preparing to fail."

Ken Tucker is the founder and lead consultant of Connaught Ealing Solutions.