"Ensuring a Successful ERP Implementation - Part 1"

Doug Howardell, CPIM, PMP, member of the ACA Group
Published November, 2011

An ERP implementation is a complex undertaking whose success is by no means ensured. Studies have shown that it is an endeavor that fails almost as often as it succeeds, but it is critical to the business that the implementation does succeed. Companies spend up to six percent of one year’s gross revenue on an implementation - an investment too large to be wasted in a failure. The only way to ensure successful ERP implementation is to define success, plan for success, execute for success and manage for success. Part one of this article will address defining and planning for success and part two will address executing and managing for success.

Defining Success

Before we even launch an ERP implementation, we must define success. Success cannot be defined as completing the project to replace the old systems on schedule and on budget because completing the project on time and on budget is necessary, but not sufficient. Success must be defined as achieving the return on investment (ROI) on which the implementation is based. The ROI is the goal we must keep in mind in every step in the project. Achieve the return and the implementation can be called a success.

Planning for Success

Success in the end begins with good planning in the beginning. Too many people think the first step in planning a project is defining the tasks that have to be performed. Starting with tasks can lead to lots of activity going on but very little being accomplished. Good project planning starts with defining the deliverables. Define what must be created then define the tasks it takes to create them. This focuses the activity toward accomplishing tangible results.

At the most basic level, there are two major deliverables in every successful ERP implementation: getting the solution ready for the business, and getting the business ready for the solution. Only by producing both deliverables does an ERP implementation have a chance for success.

Obviously these two deliverables are too intangible to be actionable. Both deliverables must be broken down into specific, tangible deliverables. This break down of deliverables into various levels is called a work break down structure.  The table below shows the work break down structure for a typical ERP implementation.

Getting the solution ready for the business is most obvious focus of ERP implementations. The hardware and software are normally what people think of when they think about and ERP implementation. They are the tangible deliverables, the things you can see and touch. Hardware and software are indeed the critical basics but they, in themselves, are not the goal of an ERP implementation. They are the tools that allow you to accomplish the goal, and the goal is the processes used execute the business.

Business processes are how you run the company. Entering customer orders is a business process, as is ordering materials, building the product and shipping it to the customer. The ROI most companies are looking for is achieved by improving those business processes. Beginning with the business process in mind will lead you to discover what software you need. That software will consist of functionality, interfaces, data and forms. Discovering what software you need will lead you to discover what hardware you need.

Getting the business ready for the solution is the second half of a successful ERP implementation, and yet far too often it is overlooked or neglected entirely. People will talk about the importance of change management then do little or nothing address the issue. Everyone professes to know how important user training is but if there have been challenges in other parts of the project, they will reduce the training to make up cost and schedule. The ownership, knowledge and support deliverables must be included when planning for getting the business ready for the solution. The successful ERP project manager learns as much as possible about each one of these. Jim Twerdahl’s article, “Smooth System Implementations by Marketing Benefits Internally,” addresses the communication deliverable. Click here to read Jim’s article. To learn more about the education deliverable, read Jim’s Strong’s article, “MRP/ERP Education – A key to Success.” Click here to read about ERP education.

Successful planning starts with defining the work break down structure then determining what tasks, resources, and schedule are required to create those deliverables.

To restate, an ERP implementation is a complex undertaking. The only way to ensure successful ERP implementation is to define success by defining the return on investment, then to plan, execute, and manage for success. Planning for success means defining the deliverables, and then planning the tasks, resources and schedule needed to create those deliverables. Ensuring a Successful ERP Implementation - Part 2 will describe how to execute and manage for success. Click here to read part 2.

For the other side of the coin, Lisa Anderson’s companion article, “Lessons Learned: ERP Failure,” describes lessons learned from other people’s failures.  Click here to read Lisa’s article.

To learn more details about how to ensure your ERP implementation project is successful, contact Doug Howardell at DH@theACAgroup.com or 626-836-9261