Six fatal mistakes to avoid in ERP implementations

Peter Clarke, IBS Australia

Six fatal mistakes to avoid in ERP implementations

Six fatal mistakes to avoid in ERP implementations

Introduction
It is a well known fact that there are hundreds of horror stories out there of things that have gone wrong with ERP systems implementations and like all bad news it is often exaggerated so as to guarantee a dramatic effect on the recipient audience. The bad news is you cannot turn round and say nobody told you when you also make the same mistakes and it is your organization that is being discussed and fingers pointed or worse still; heads rolled. Just to make the message even more dramatic, it is never the head of the senior sponsor that rolls. Sobering food for thought so that you take just a bit more care in preparing your implementation plan. The good news? Getting it right is a reasonably simple thing to do; infect the keep it simple approach is probably the best piece of advise you could give anyone who is about to embark on a system implementation. Nobody likes talking (or writing) about mistakes so please excuse the poetic license when I approach this by explaining what you should do to avoid the top six most common mistakes.

Fatal mistake number 1

Failing to ensure your implementation consultants fully understand your business and stay for the project duration. You and your people know your business inside out and every day you walk the walk and talk the talk without having to think about it. Your implementation consultants on the other hand do not know your business that well so it is important that you schedule time to bring them up to your level of knowledge. This applies obviously to processes, policies and procedures but most organizations fail to include people and culture in the mix and in some cases that results in consultants with the correct technical skills but the wrong

IBS

www.ibs.net

Six fatal mistakes to avoid in ERP implementations

behavior style. Believe me, it is worth the extra effort to make sure your staff and the consultants are comfortable with each other. While we are on this topic, you should make sure (as best you can) that your consultants are with you for the duration of the project. I have just proposed that you invest time to educate your consultants in the ways of the business and the last thing you need is to find they are part of a consulting pool and you are now faced with explaining everything again to the next consultant who arrives on your doorstep. Best advice 1. Hold your system provider accountable for continuity of project consultants and if necessary make this a contractual obligation with financial penalties each time you have to re-educate or re-orientate a new consultant 2. Ignore your system provider if he tells you they have a formal handover process for new consultants on your project unless: It is an agreed part of your project plan It takes place on your premises Your people are present and part of the process

Fatal mistake number 2

Lack of frequent and realistic milestones throughout the implementation project. Your implementation project will take anything from 6 months to well over a year to complete and it will directly impact changes to the 4 Ps (People, Processes, Policies and Performance). So, in developing your project plan you should always have the ability (at any time) to answer three critical questions: 1. Where are we? 2. Are we there yet? 3. How do we confidently know we are there? By setting frequent milestones at key points along the project timeframe you will be able to quickly measure your progress and more importantly celebrate achievement with the team (and everyone else) as the project evolves on time

IBS

www.ibs.net

Six fatal mistakes to avoid in ERP implementations

and on budget. Of course, this is also the time to make adjustments if for whatever reason the project is not going to plan. The main thing to remember in setting such milestones is the KISS principle, to make sure the milestones you choose are simple to measure and better still obvious even to blind Freddy. That way your project team and your staff will be able to see the progress and they will maintain high moral (confidence) even during difficult phases of the project. Best advice If you do not set simple and realistic milestones then measuring progress will be similar to plotting a ships forward course by studying its wake!

Fatal mistake number 3

No dedicated, high quality people in your implementation team and no compensation scheme in place for them. It is an unfortunate reality that the people you really need in your implementation team are undoubtedly your best people and it is pretty much guaranteed that they are also the busiest and least able to find additional time for the project. The best thing you can do is find ways to offload some of their daily workload onto junior staff so they do have time to focus their expertise on the implementation project. Better still, by giving junior staff the chance to prove themselves at a higher level you also gain wider spread of skill in the business and identify potential promotions at the same time. One thing for certain is that both the junior people and you are newly found project team will learn from their experiences and be a more valuable asset to you in the future so if I can offer some very simple advice: be ready to compensate them for their increased efforts and new skill sets. I have seen many different ways of rewarding project staff ranging from revised job descriptions and salary scales to higher duty payments but by far the most effective is the double whammy bonus. For a major European pharmaceutical company this meant putting a cash bonus against achievement of each major milestone event in the project and making each achievement a very public celebration with the appropriate drinks and nibbles

IBS

www.ibs.net

Six fatal mistakes to avoid in ERP implementations

included. A final well done bonus at the end of the project together with a long weekend break (an extension to their normal annual leave) made sure that everyone realized they were respected for their efforts. Best advice 1. In the overall scope and cost of your project the additional bonus and public recognition will pay dividends well past the life of the project and in ROI terms the results are priceless. 2. Make sure any bonus has a WOW factor, for example, it includes an amount that makes the recipient proud to have been part of the team and that they are being respected for the long hours and hard work. Note: there is no guide to the dollar reward but a recent company ensured each member of its key project team a USD 20,000 bonus across the 16 month project.

Fatal mistake number 4

Have an inadequate budget for training users on the new system. The best way to offer this advice is by way of quoting from experience. Almost every organization approaching systems implementation fails to budget sufficient dollars and time for training and the end result is that uptake on new systems, processes, policies is slow and the immediate effect is longer time to benefit. I remember attending several client project meetings with a former colleague (we will call him Chris) who as a project manager had an impressive record of implementations under his belt. His first advice every time was whatever figure you have budgeted for trainingdouble it! and in almost every single case he was spot on. The one where he was proved wrong? The CFO had previously worked for another company where Chris had implemented systems and he had already learned from Chris advice and budgeted accordingly.

IBS

www.ibs.net

Six fatal mistakes to avoid in ERP implementations

Best advice As soon as you have finished reading this article, go and have a look at your implementation budget and pay particular attention to training, just in case your project manager turns up and says HiI am Chris..

Fatal mistake number 5

Making modifications to the standard system without carefully weighing benefits against risks. There is a wonderful tendency in many organizations to quickly modify the system in areas where it does not match present business processes and the end result is a system where future upgrades become extremely difficult to apply and any help desk support you may have is always compromised because help desk have to know about your modifications before they can help you. So the rule of The Three Ys approach is one I saw adopted by a wise CEO that I had the pleasure of working with. His general approach to any request was to see if it satisfied the three Ys: 1. Y are we considering this request and what is the proven measurable benefit? 2. Y have we not looked at all the alternatives and their risk / benefit first before choosing to modify? 3. Y do we not see what other companies have done in this areaunless we are the first there must be lessons out there that we can learn from. Best advice 1. Keep the three Ys as an integral part of your decision making on anything that is a deviation away from the agreed project plan 2. Make a point of engaging with other companies in your industry who may have gone before you and listen and learn from their experiences Note: I remember one organization where the CEO personally invited key people from another company to attend their project milestone meetings. The purpose was for those invited to bring their knowledge and expertise to the table but more importantly they were not constrained by internal politics so

IBS

www.ibs.net

Six fatal mistakes to avoid in ERP implementations

were inclined to ask the questions that everyone else wanted to ask but for various reasons could not.

Fatal mistake number 6

Failing to protect and insure the most critical parts of your business. Theres a story with this one and like good stories, it is set in Paris. The Managing Director of a large pharmaceutical firm is about to sign a contract for new systems and he pauses before signing to seek three guarantees from his software vendor: 1. A guarantee that his new system will never, never put him in a position where he could not take orders from his customers 2. A guarantee that his new systems would never, never prevent him from dispatching customer orders from his warehouse 3. A guarantee that his new systems would never, never put him in a position where he could not accept his customers payments and put their money in his bank account His requests were straight forward - selling products, delivering them to customers and getting paid for it was the absolute core of his business and he wanted guaranteed back up systems in each of these critical areas to ensure he was covered in the event of any unplanned system failures. What he was also saying was that other non critical areas could manage with alternative processes at least for 12-24 hours without any major disruption.

Best advice The lesson to learn is to take a long hard look at your business and identify the critical areas that you need to have available 24/7 and then talk to your hardware and software vendors to make sure they can provide adequate backup / recovery options to keep you operational when sods law strikes.

Conclusion
Even with so many catastrophic examples of companies going bankrupt due to failed software implementations, many companies still do not pay enough attention to the risks involved. Adequate planning and preparation is essential

IBS

www.ibs.net

Six fatal mistakes to avoid in ERP implementations

to help you identify and manage the potential risks. A good implementation consultant can help review your current business practices, goals, risks and articulate a solid implementation plan. One of the most important things you can do before commencing the project is to select the right software package and vendor. An ERP system is a longterm investment, so finding a vendor with the right fit for your business requirements, and with whom you can build a partnership for the next 5-10 years is essential. Talk to other companies who are currently using the package you are considering and look into their experience of the implementation. With some careful research and planning, you can avoid making the six fatal mistakes!

Peter Clarke: With more than 20 years of experience in product and applications development, project management, and customer support management roles, Peter Clarke has led ERP and SCM projects for customers such as The Laminex Group (Australia & New Zealand), Sigma Pharmaceuticals (Australia), Miele and Hino (Australia & Asia). As such, Peter can offer insights into supply chain collaboration and visibility, demand planning and forecasting (inventory optimisation), e-Commerce, enterprise applications integration, as well as business performance management. As Chief Technology Officer at IBS Asia Pacific, Peter directs the development of integrated ERP solutions for optimising the supply chains of customers in Asia, Australia and New Zealand, across industries such as automotive, electrical, consumer durables, and paper & packaging.

Would you like to know more? Contact IBS today: info@ibs.net www.ibs.net

IBS

www.ibs.net