Education or more specifically the lack of education can lead to an ill chosen ERP system, the gross underutilization of an ERP product’s capabilities and unfortunately in some instances ERP implementation failure.
If you don’t understand how to select ERP software or you don’t understand how you can use ERP software to operate more effectively and efficiently then it really makes no difference which ERP product you select because the foundation for your success as a business could be fatally weakened.
Rather than thinking in terms of ERP implementation failure, let’s create a foundation that leads to ERP implementation success and to do so we need to go back to the very beginning when a critical mass of key people say “We need to so something about our current system!”
Build a quiet consensus.
One of the most critical issues that negatively impacts ERP implementation is the notion of buy-in. Buy-in from key stakeholders is fully understood, but that’s just one interest group out of many. Every person in an organization needs to contribute their knowledge and support and this includes users who will be tasked with transaction entry (e.g. enter a sales order). If people are “told” that they must use a new ERP system in which they had no significant selection input, they will resist the change and that can be fatal.
Rather than forcing people to change, include them in the conversation from the very beginning. Ask them what they need to do their jobs more effectively. Get them involved and by doing so show them that their good opinion matters. If people feel as though they matter, they will contribute to the discussion and ultimately to ERP implementation success.
Answer the tough question.
To put it somewhat bluntly, there are people who know they know how to effectively select and implement ERP software; those that know they don’t know and finally those that don’t know they don’t know. The real danger is thinking you know what you are doing when in fact you don’t. To avoid this first and perhaps most critical impediment to ERP implementation success you must ask and answer this question honestly.
If you truly don’t know how to successfully organize and manage an ERP software selection project, bring in an unbiased professional or put the project on hold until you acquire the knowledge you need.
There are any number of articles and white papers, webinars and seminars and other knowledge sources you can access to improve your ERP software selection IQ. Steve Phillips in IT Toolbox has written an article that should serve as a good source of suggestions. There are many others. All you have to do is look and learn.
Let resellers and vendors educate you.
Actually there is one additional knowledge source you should consider. Many ERP vendors and resellers can provide the knowledge you need. While their primary objective is selling you their product, some firms may be willing to help you understand how to select ERP software. This doesn’t mean that all vendors and resellers offer this level of unbiased assistance so you have to be careful.
Keep in mind the fact that at this point in the project you are not creating requirements documents or selecting products. You need to organize the project and understand how to select ERP software before you can actually make any form of purchase decision.
Build a solid foundation.
In many cases the problems that plague people have nothing to do with software. Regardless of whether you select a new ERP system or not, improve how your business operates. If a company is not organized for success (culture, leadership style, business processes and finally business management software) launching a new ERP implementation project will accomplish little if anything.
Understand what’s possible.
Meet with vendors and resellers to learn what functionality and reporting options are available in today’s ERP systems. You are not evaluating their products (and make sure they understand this) at this point in time. Instead you are trying to understand what you could do differently, and if these new functionality options makes sense for your firm.
Build a vision of your future.
Once you have identified key functionality and reporting deficiencies, create a precise definition of what you want your new ERP system to look like. ERP software selection and subsequently ERP implementation is really a process that firms undertake to become more efficient, competitive and profitable. Don’t duplicate what you are doing today. Base your selection on what you want to become tomorrow.
Don’t assume you have to be the best of the best.
The fact that your firm is growing and your current business management system might need to be replaced in the not too distant future doesn’t require that you spend $250,000 or $500,000 or more to acquire a top of the line ERP system. Maybe you don’t need all of the bells and whistles. Maybe a top of the line ERP system may be too complex. You need a system that fits within your budget, meets your reasonable functional and reporting requirements and does not exceed the capabilities of the people who will be asked to use the system.
Build an information system that helps you make sound business decisions.
Software transaction functionality helps you complete tasks efficiently and effectively (e.g. enter sales orders). The information in your ERP system will help you understand what’s happening, take action when action is required, and make effective decisions.
I take a point of view that some may say is a bit radical. If any report (except regulatory reports) does not lead to a decision, then it’s not needed. Row and column reports (unless you are trying to understand customer buying habits), bar charts and pie charts give you but a single snapshot of your business taken at a single point in time. People cannot and certainly should not make decisions based on a single piece of information. That’s why you need to spend whatever time is required to understand how information can help you acquire decision making knowledge. Given this I am a big fan of key performance indicators.
Key performance indicators (KPIs) are graphical representations of key business drivers over a period of time. This allows decision makers to “see” at a glance the pattern of a KPI. This requires some form of line chart. While the KPI line chart of inventory turns will let decision makers see the pattern, something’s missing. The graph doesn’t tell decision makers whether the pattern displayed is acceptable. A second line needs to be displayed and that’s the target value for inventory turns. Now the decision maker can see at a glance whether they need to do anything. If the pattern of the “actual” compares favorably against the “target”, nothing needs to be done. A brief glance is all that’s necessary.
You need to figure out what’s important to you and you need to determine exactly what questions you need to ask of your business data. Then you need to determine how this information should be displayed so that you understand where you need to invest your precious time.
To be honest there is no magic formula when it comes to selecting ERP software. You have to get everyone on board. You have to invest heavily in knowledge acquisition to make sure you know what needs to be done to launch and control the ERP implementation project and lead it to a successful conclusion.
You have to define your functional and reporting requirements in detail so that vendors understand precisely what you need. You have to make vendors prove to you that they do what they say they do. Finally you have to ask your employees whether they see the systems you are evaluating as a friend or a foe. Not doing any of these things invites ERP implementation failure. Doing all of these things (and much more) doesn’t guarantee success, but it does increase your chances of success.
People make an organization profitable. ERP software gives people the tools and information they need to excel. ERP systems do not do anything. They help people do their jobs more efficiently and more effectively and they help people make sound business decisions. If people are left out of the software selection process (because only a limited number of “key” employees participate), how can managers know what people need to do their jobs well?
People must understand what is required of them in this new environment, must be given the tools and the training to carry out these new tasks, and must see the system as a friend rather than an adversary. In the end, the people side of the equation is perhaps more important than you might have first imagined.