Implementing a new Enterprise Resource Planning (ERP) System is a major business initiative, not just a technology project. It will not only transform the way your business operates internally, but it will also impact your interactions with your customers and vendors. Your ERP System vendor’s job is to deliver the promised software on time and on budget. However, your organization will be responsible for several functions not typically within your ERP vendor’s scope. Prior to discussing these functions, it is helpful to understand the ERP System Implementation process and some challenges your organization may face.
What is the ERP Implementation Process?
After conducting an ERP System Selection, you can expect an ERP System Implementation process beginning with a Discovery and Design Phase, moving to a Build and Configure Phase, followed by a Phase that includes User Testing and Training, and ending with Data Migration and “Go Live” and Post-Implementation Support.
- Discovery and Design. Your vendor(s) will work with your business units to develop detailed requirements and obtain alignment on the system architecture and user interfaces. This is where the Business will be asked to make major decisions about what your System will ultimately look like and what ‘to be’ processes will be automated. The Discovery and Design Phase can be one of the most demanding phases in terms of management, Subject Matter Expert (SME) involvement, and time investment.
- Build and Configure. Once the Design is finalized, your vendor(s) will work to configure the software, build the integrations, write any custom code, plan for data migration, and develop test scripts and training materials. This is the most technical phase of the project and will involve specialized resources from your vendor(s) preparing your new system for deployment.
- User Testing and Training. Vendors vary in their preferences on when User Testing and Training happens. Some prefer an Agile approach where user testing occurs following every Sprint or series of Sprints. Others prefer an approach where user testing occurs following a major milestone or delivery of a module. Whichever approach is used, the Business Unit sign-off following User Acceptance Testing (UAT) is a major milestone for your vendor. Training for end users and super users can happen in parallel or following UAT.
- Data Migration and “Go Live”. Data Migration involves moving information from legacy systems to your new system. Planning for, and testing of, Data Migration takes place early in the implementation process, while Cutover (the movement of data) typically happens just prior to “Go Live”. “Go Live” is when your new system becomes the active system of record, and all new data and transactions flow through the new system. Some vendors choose to conduct a “Go Live” following the completion of individual modules to decrease risk.
- Post-Implementation Support. Following “Go Live”, most vendors will include some type of period where the vendor will rapidly address any problems that surface immediately following “Go Live”. Depending on your ERP System and the vendor’s business model, the vendor may also provide longer term post-implementation support.
What are the challenges in ERP Implementations?
You have heard the horror stories where an ERP Implementation ends up costing much more than expected, taking a lot longer than planned, and failing to deliver on the promised results. Interestingly, we rarely hear these problems arise from technical issues with the software being deployed. Instead, problems usually center around people and process issues.
- Insufficient Resourcing. Leaders often assume (or are “sold” by an ERP Sales Rep) the vendor(s) will manage the implementation and the burden on internal resources will be minimal. They underestimate the time and effort required from their own business resources, and fail to budget appropriately for extra resources to support the implementation. Unfortunately, business does not stop when you decide to undergo an ERP Implementation, and there is often a tug-of-war between implementing ERP and dealing with the regular day-to-day activities. Failing to plan for this surge in resource requirements often results in delays and cost overruns.
- Inattention to Change Management. Implementing ERP will have a major impact on your people. It will impact how they perform their day-to-day work and how they interact with your customers and vendors. Failure to adequately manage the “people side of change” can quickly lead to your own employees undermining the business changes you are seeking. We have seen these “people issues” range from low knowledge levels and incorrect usage of the ERP, to reverting to old processes. We also have seen poor accountability and ownership of the new system, and active resistance of the implementation itself.
- Process Problems. We often see bad process getting automated. This happens because it is difficult for an organization to see its own inefficiencies and because organizations do not perform enough process rigor during the Discovery and Design Phase. Employees become entrenched in a way of doing things and have limited insight into industry best practices. There is also a significant demand on business resources during the initial phase of Implementation. When organizations lack this perspective and insight, and do not plan for this surge in resource demand, good “to be” processes do not get fully developed or defined. This can manifest in “re-work” or the ERP System failing to live up to the promised return.
- Lack of Vendor Oversight. It is easy to fall into the trap where your vendor(s) manages you and not the other way around. An organization’s internal resources usually do not have the skill, capacity, insight, and tools to provide good governance for the vendor(s). They are unable to hold both the vendor and internal resources accountable for their respective roles and responsibilities in the ERP Implementation process. This lack of oversight and governance can lead to a lot of finger pointing when uncertainty raises its ugly head, and ultimately can result in delays, costly change orders, and a mismatch between expectations and the delivered results.
- Data Migration is an Afterthought. The time to start planning for data migration from legacy systems is during the initial phases of the implementation. Often, we see leaders fail to think through what data needs to be moved, how it will be cleansed, how it will be moved, who will move it, and when will it be moved. Most organizations going through an ERP Implementation have enormous amounts of data and information about its customers, vendors, employees, and previous transactions. Poor Data migration planning can result in delays, change orders, or lost data.
What won’t my ERP vendor(s) do?
Your ERP product vendor(s), or Systems Integrator, will typically perform the tasks related to Infrastructure Set-up and Configuration, Applications Set-up and Configuration, and Applications Training and Support. Some questions you should be asking yourself include: “What won’t my ERP vendor(s) do?” and “What functions will my organization need to perform during ERP Implementation?”
- ERP Organization Definition. Although your ERP vendor(s) may suggest some roles to fill, your ERP vendor will not identify which people in your organization will perform which role and what specific responsibilities and accountabilities they will have. Your ERP vendor will also not likely advise you to have a dedicated, independent, resource team to provide Oversight and Governance over themselves. This is an important role and you will need to push the issue.
- ERP Business Process Blueprinting. Your ERP vendor(s) will likely ask you for the processes that you want to automate, but they will not help you map the processes or make sure that your processes leverage best practices. You will likely need to dedicate some resources to the business process mapping effort early in the Discovery and Design Phase.
- ERP User Adoption / Change Management. Your ERP vendor(s) will be focused primarily on the technology side of change and will typically not apply the same rigor to the people side of change. Functions such as gaining leadership alignment, determining end user impact, communications planning to stakeholders, creating training plans, determining “Go Live” readiness will be the Business’s responsibility.
- ERP Vendor Management / Quality Assurance. Your ERP vendor(s) will provide you with a proposed work plan. Your organization will need to validate this work plan, formalize a quality assurance plan, provide leadership and governance to the vendor(s) during execution, make timely decisions, and resolve issues that will certainly arise during the implementation.
- User Acceptance Test Management. Your ERP vendor(s) will want to get you through User Acceptance Testing (UAT) as soon as they can, as this is a major milestone (and pay point). UAT should be equally important to you, as you are signing off for the contracted tasks the vendor(s) is to perform. You will want to develop your own UAT organization, develop your own UAT plan, manage the UAT process, and coordinate issue resolution.
What ERP Implementation Services does MSS Business Transformation Advisory provide?
Each of our client engagements are unique, and we do not offer ‘cookie-cutter’ ERP Implementation services. Our Client Engagement Team will work with your leadership to customize our approach and services to your needs and requirements. Some general categories of services that we offer include:
- Digital Transformation Strategy. Are your technology initiatives aligned with your business objectives? MSS Business Transformation Advisory can provide tailored assessments to ensure your technology initiatives are driving expected business outcomes. We help you define your technology roadmap using best practice approaches, frameworks, and tools. Learn More
- ERP System Selection. Have you selected the right ERP System? Choosing an ERP System may seem like an overwhelming task for those who have never gone through the ERP System Selection process. It is a big decision your organization will be living with for the next ten or more years. MSS Business Transformation Advisory has unparalleled experience in ERP System Selection. Learn More
- Transformation Oversight. What will your governance processes and vendor QA program look like? Transformation Oversight goes beyond what typically falls under the realm of Project Management. It involves developing good governance processes to provide visibility of project execution and enable quality decision making while simultaneously holding your vendor(s) accountable. Learn More
- Enterprise Change Management. What is the impact of change on your people? Change is hard. An ERP Implementation is a huge change for any organization. We understand large technology initiatives do not typically fail for technical reasons; instead, they often fail because the people side of change is not managed well. MSS Business Transformation Advisory has unparalleled experience in Enterprise Change Management. Learn More
- Business Process Management. Are you automating good processes? An ERP Implementation is one of the best opportunities you will ever have to improve your processes and gain efficiencies. MSS Business Transformation Advisory can help address any gaps in skill, knowledge, or capacity while simultaneously providing third-party perspective and insight to ensure you will collect good requirements and design for success. Learn More
What are the advantages of hiring an ERP System Implementation Consultant?
#1 Acquire expertise you do not have. By hiring an ERP Consultant, you can bridge your internal gaps in knowledge and skill. Implementing ERP is not your core competency and there is a steep learning curve.
#2 Address temporary capacity issues. Implementing ERP will require a temporary increased demand on your internal resource requirements. Hiring permanent new employees is significantly more expensive than contracting a third party to address temporary capacity issues.
#3 Leverage implementation accelerators. Your implementation will certainly benefit from a proven and structured methodology, tools, and templates. By leveraging these accelerators, you can implement faster, obtain the benefits sooner, and release internal capacity to continue to grow your business.
#4 The third-party factor. An independent third party will be in a much better position to hold your vendor(s) AND your internal resources accountable. A third party can come in, do the job, and exit without having to worry about damaging long-term working relationships.
#5 Think of it like an insurance policy. You are making a significant investment. You want to get it right. The potential cost of delays, change orders, and re-work can easily derail the business outcomes you are trying to achieve.
Can we help?
We would love to discuss your business. Please send us a quick note and we will get back to you shortly! Advisory@mssbta.com