COMPUTER BUSINESS REVIEW

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Issue Date: February 2008

Secrets of ERP success

14 February 2008

HansaWorld implements enterprise resource planning (ERP) systems for companies around the world, from 10-person local businesses to large enterprises with hundreds of users. Time after time, we hear the same story from our prospective clients: they have been through two or three ERP implementations already, they have spent more money than they would like to think about and they still are not getting what they want. Sometimes ERP systems cause more problems than they were meant to fix; in the very worst cases, they have brought companies to the brink of collapse.
How can things be going so wrong? Weak software, contrary to what some of our clients believe, is not the problem: most of these companies have done their homework and selected good software from reputable vendors.
The real problem, we have come to believe, is poor information and over-ambition. Implementing anything as complex and fundamental to the organisation as an integrated ERP system is a demanding and delicate task. If companies do not completely understand their own requirements - or if their suppliers do a poor job of helping them do that - the implementation will be done incorrectly. If they attempt to implement all at once or too quickly without proper testing, things get even worse.
ERP systems, once a client knows exactly what is required, should always be implemented in phases, starting with the core business and financial systems. Once those are safely in place, all the kinks have been ironed out and everyone is comfortable using the new functionality - which will typically take anything from six to 12 months - only then should a company move on to other important but more peripheral elements like customer relationship management or remote access modules.
Properly training all users and giving them time to become comfortable with new systems, is absolutely critical. We estimate that a good 70% of ERP failures can be put down to end users lacking confidence and competence. When that is the case, errors multiply and quite often people end up simply refusing to use new systems.
Blaming 'user resistance to change', as if this is a strange and irrational phenomenon, is a cop-out. If you have spent five or 10 years becoming incredibly competent at using your old tools, of course you are not going to give them up just because some slick salesman waves shiny new gadgets at your boss. All the more so if you have heard from friends what disasters ensued in their own organisations when the bosses bought the snake-oil.
User consultation and education before, during and after software implementations should do away with most resistance, but expect the process to cause some tension. Learning to use new tools, even if they are better than your old ones, is a stressful undertaking - made even more stressful if you have to keep on doing your normal daily job as well as helping to shape the tools at the same time.
This is hardly news - so why do people carry on doing things in a way that is doomed to fail? Usually, tight deadlines and tighter budgets carry much of the blame. In an attempt to save time and money, some clients rush to go live with systems before they are completely ready, courting disaster in the process. It is always better to spend a couple of weeks and a small amount of money on some final testing than to rush into live mode, lose the goodwill of your users through a series of glitches and then spend months of consulting time trying to patch it all together after the fact.
Good project managers never promise miracles; rather, they should help their clients frame realistic expectations of what can be achieved, how long it will take and what it is likely to cost. At HansaWorld, we structure our budgets to allocate 20% to initial analysis and solution design, 20% to actual building, setup and configuration, 40% to education and testing and 20% to fixing snags and holding hands through the go-live. The education and testing component may seem too large, but skimping in these areas are the main reasons for IT project failures.
Also, expect to spend at least three hours of your own time for every hour of the consultant's. An integrated ERP system is not something you can walk in on at the last moment to push the 'go live' button: without the full commitment and involvement of those who will actually use their system, and their executives, you can expect problems.
Finally, before you select an implementation partner for an ERP system, do your homework carefully. Ask for reference sites in your industry and then actually go to visit them: check what functionality is being used, make sure the system could handle your volumes and that it is appropriate for your industry. Check the company's reputation as well as the backgrounds of the individuals allocated to do the actual work - especially the project manager.
If you choose your software and your vendor carefully, plan your implementation for success and fully engage all your users right from the start, you can expect to reap major benefits from an integrated ERP system: lower costs, much greater ease of use than anything you had before and all the information your organisation will ever need, at your fingertips.


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