ERP Selection – The Key Role of the CEO

August 25th, 2013 by

ERP selection isn’t a project that involves only what we commonly refer to as stakeholders.  The role these stakeholders play, particularly the CEO cannot be limited.  The stakes are just too high.

ERP SelectionIn the immediate past ERP selection projects were driven by a combination of the CFO and the CIO.  The CFO was responsible for defining software functionality while the CIO was responsible for all things related to technology.  The CEO was to some extent a figurehead, responsible for the firm itself and its future, but leaving all significant ERP selection decisions to the CFO and CIO.

That viewpoint has evolved rapidly.  The ERP system is no longer just an accounting or operations planning tool.  It now represents to some extent the heart of the organization, unifying everyone’s efforts to become more efficient and effective and therefore more profitable.  Rather than just “supporting” the ERP selection project, the CEO must now become the principal driver of success.

The CEO as Key Improvement Leader

While there is no doubt that firms need to change over time, force is not an effective motivation.  People fear change if it is thrust upon them and that’s precisely what an ERP selection project can precipitate.  Change must be seen as the path of choice and the CEO must be seen as the chief proponent of change, leading people to a more productive and meaningful future.

This future state of being isn’t something that is described in a company handbook.  People need to “see” that they have a champion who actually cares about them as individuals, not as a cog in some giant corporate mechanism.  The only person who has this vision is the CEO.

The CEO cannot just say “follow me”!  The CEO by their actions has to be seen as key improvement leader to be believed.  People must want to follow the CEO down this path because they know they will profit by doing so.

If you are going to maximize the performance of your ERP system and surrounding business processes, you must constantly search for ways you can improve.  Rather than approaching this on a hit or miss basis or only when you decide to launch an ERP selection project, adopt a concept of continuous improvement.

I realize that the concept of continuous improvement has been around for many years and we all assume that this is part of our business culture, but I don’t believe it’s really true.  Firms might make some improvements when they last completed an ERP selection project, but then change initiatives seem to enter a state of dormancy.

As the key improvement leader (or motivator if you want to use that term) the CEO needs to be continuously involved in looking for opportunities for improvement.  CEOs don’t have time to become involved in the details of improvement, but they certainly need to encourage people to search for these opportunities.

If you are interested, I created a concept called The Annual Business Checkup.  Review your ERP system on a formal basis at least once each year.  You probably will want to involve your software professional (reseller or vendor) in this process.  Identify strengths and weaknesses.  Constantly ask what you need to do to maximize the efficiency and effectiveness of your entire ERP system.  Although this is an annual “audit” of your entire ERP system, the concept can be applied on a workgroup or department level on a regular basis.

The key concept here is that continuous improvement takes place and the CEO is the most logical person to make sure this happens.  If you practice continuous improvement, significant dislocations will not rear their ugly head when you decide to launch an ERP selection process.

ERP Selection – Build a Solid Foundation for Success

Now we can finally circle back to the actual ERP selection process.  The previous section described a state of affairs that should already be in place regardless of whether you are launching an ERP selection project or not.  Presuming that the organization has decided to replace their current ERP product, what role(s) should the CEO play?  Keep in mind the fact that the CEO’s time is limited.  While they should certainly participate actively, other people will have to manage the project.

Project Sponsor

If this ERP selection project is going to stand any chance of success, everyone in the firm must understand its importance.  Managers could do this on a day to day basis, but the CEO needs to let everyone know this as well.  Many people use the term “stakeholder” and that would be appropriate, but I don’t think that goes far enough.  People need to see that the CEO by their actions as well as words will drive this project to a successful conclusion.

Discussion Leader

If people believe that “something” needs to be done to the current ERP system, the most effective first step is getting everyone involved in the discussion.  Since the ERP system is going to play a pivotal role in moving to a more competitive future, the CEO should be one of the earliest contributors.

Visionary

The CEO is the firm’s key visionary and as such needs to lead the discussion to define exactly where the firm should be in the future.  If it’s going to be successful, the ERP selection project has to define today’s requirements as well as facilitate the transition to the future.

In some cases the CEO and senior managers may decide that they should be competing in new industries and/or opening new offices.  The firm’s strategy should reflect this future and the ERP selection project should include requirements that are not yet needed.

Business Intelligence User

While the vision set by the CEO is a state of being, the ERP selection project needs to define what information the CEO needs to measure their progress toward this future.  The CEO cannot just say “this is where we need to be”.  If the CEO is going to set goals, then the ERP selection process must determine exactly what the CEO needs to track the firm’s progress toward this future state.

In some cases the CEOs goals may be somewhat undefined.  Long term business development opportunities cannot be set in stone or even known three years out.  Research certainly can expose opportunities and therefore the ERP selection project needs to set Business Intelligence analysis as one of the system requirements.

Summary

CEOs are not just the keepers of a firm’s vision.  They may have been so in the past, but that’s changing.  If a firm is going to achieve the vision of their CEO, people must want to achieve that vision and the only way they are going to do so is if they have someone to articulate the vision and someone to lead them to that vision.   That’s the unique role of the CEO.

Similarly someone must lead everyone in the firm during an ERP selection project.  The firm itself must be organized for success.  Everyone must want to achieve personal excellence and the person who is going to lead them is the CEO.

Additional Reading

If you are interested in learning more about the CEO’s role in an ERP selection project, you might want to use GoogleBlogSearch to find other articles and blogs that relate to this subject.  In addition you might find the following articles of interest.

Harvard Business Review Blog: The IT Conversation We Should Be Having

Panorama Consulting: The Ever-Changing Role of CIOs, CEOs and ERP Systems

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