ERP System Selection & Implementation: It’s Not a Shiny Bauble: It is a TOOL.
Far too often, owners and top management are willing to toss money at big investments like an Enterprise Resource Planning (ERP) system without a thorough understanding of what it takes to achieve a fully successful implementation. If an ERP integration is undertaken because it’s “what the successful manufacturers do,” as a means of showing partners, vendors and customers how modern, efficient and technologically advanced your company is, then your ERP implementation is destined to become a costly failure – a mere shiny bauble whose shine is more enticing than its intrinsic value.
The Right Reasons for ERP.
When properly implemented, ERP will transform the way you do business by integrating reliable data into your decision-making processes for day-to-day activities ranging from accounting to procurement, project management, risk management, compliance and perhaps most importantly, your Supply Chain management. The proper ERP transformation is much more than just a more efficient way of doing things – it gives your company capabilities you never had before. ERP at its best translates into operational efficiencies that drive sustainable, profitable growth.
Know Your Needs & Get Buy-In Before You Pay-Out for an ERP System.
The biggest ERP mistake: Leadership decides the company needs an ERP system and goes out and buys one, then tells their people how wonderful they are for making such a big investment for them – “See how shiny it is?! Now go and make it work: We’ve paid a lot for it you know.” Think of it like buying a set of tires without knowing the specifications you need. You buy an expensive one of course because tires are important, only to find they don’t fit the vehicle you bought them for. Try as you might, those tires simply won’t work – money down the drain. It’s the same with an ERP system, you need to understand what you need before you buy it, and the only way to do that is to talk to the people who know the requirements and will actually be using the system. Know your needs first and get buy-in from critical team members before you pay out for an ERP software system. Never forget that an ERP system is simply a tool to help you improve your business and service your Customer. To quote the great Eli Goldratt – “If it doesn’t make you money, don’t do it!”
Steps for ERP System Selection & Implementation.
There are just as many steps before you select and implement an ERP system as there are once you’ve bought one, perhaps more. Here are some basic steps to preparing for a successful ERP implementation:
- Engage an Expert. Don’t go at it alone. Engage the services of an ERP implementation expert (not the software vendor’s!) who has managed successful ERP implementation projects before. The ERP Systems Project Managers at Missouri Enterprise have the “been there done that” experience you need to help you maximize your return on investment.
- Form a Steering Committee. Include multi-disciplined people from all the departments within your organization. These are the people who know what’s needed and will actually have to use the system you procure.
- Create a Value Stream Map. This will help the steering committee get an appreciation of the ‘big picture’ and potential ROI.
- Conduct a Needs Analysis. Work closely with your steering committee to develop a thorough, written assessment of the requirements and capabilities your ERP system must have, and those that would be good to have.
- Create a System Requirements Document. With input from the steering committee, create a very detailed list of system requirements. Require that every person on the steering committee sign off on the document. This ensures a unified decision has been made and prevents future grousing and “I told you so’s.”
- Buy-In: Create a Going to Market Document. Involve the team to produce a detailed written report of what the company is looking for. This is to be shared with potential vendors along with the systems requirements document. This is critical to future buy-in from the team.
- Group Review of Proposals. Involve the team in this all-important step of a detailed and thorough review of each ERP Software vendor’s proposal. Consider factors including system capabilities, other successful rollouts of the product and tech support in your process.
- Select Your ERP System. Involve everyone in this all-important decision. It is the salesperson’s job to sell you a system – be critical at presentations. Iron Pyrite is not gold! At this point a really experienced ERP practioneer will add great value by forcing the truth out of the sales presentation.
- Create Your Implementation Plan. Write up details on the ERP system setup requirement, who needs to provide data, who needs training, how people will be trained and more.
- Pay-Out: Procure Your ERP System.
- Establish a Test Database. Use real data to create a database to use in a separate environment for testing.
- Test the System. Before you put your ERP system into live operation, run tests to simulate functionalities including using the system to mock-manufacture a product. Use the demonstration to look at work in progress and do quality problems.
- Initiate Your Live Implementation. Educate your people with detailed and useful training. Create support teams to assist to keep everyone learning and moving along the same path. Measure implementation step performance and ensure key benchmarks are achieved.
- Do not make the mistake of thinking that your people can take on another complex and important project – remember that people have lives. If you fail in this the really good people will "vote with their feet” and leave you up the creek without the proverbial paddle!
This is merely a rough outline of some of the steps and details required to successfully select and implement an ERP system at your manufacturing company. Talk to a Missouri Enterprise ERP Project Manager to learn all the ways we can help you with ERP System Selection and Implementation and any other manufacturing excellence initiative. Contact your local Area Business Manager to arrange a no-obligation consultation.