By Martin Craze, founder and managing director, Applied Business Computers
Your business management and accounting system, commonly known as an ERP (enterprise resource planning) system, is pivotal to the efficient operation of your business, from routine transaction processing through to the generation of informative management information.
Most ERP systems have an expected life of between five and ten years, however your business’s development and expansion may necessitate a change in ERP software inside this timeframe.
If you are embarking on a project to change your ERP system here are ten best practices to help you have a smooth transition:
1. Supplier selection
Your choice of ERP software and supplier is going to have the most influence on the outcome of your ERP project. Selecting an ERP product which is a comfortable fit for your business and that represents a marked improvement on the previous legacy system, will create a positive and enabling atmosphere throughout your business.
As important to the choice of software is developing a strong and trusting relationship with your ERP supplier, especially if the supplier is going to provide key members of the project team. It is essential that you can trust your supplier to roll up their sleeves and help to make sure the project is rolled out on time.
2. ERP consulting
It may be necessary for you to recruit a dedicated ERP consultant on a short-term contract, or use a consulting team to help manage the project.
This will depend on the in-house resources you have at your disposal, plus the scale of your ERP project in terms of its overall scope, and the number of users being implemented at one time.
Factors such as the availability of a dedicated project manager and previous ERP implementation experience will govern whether external resources are required. If external resources are necessary then as much care should be taken in their selection, as was the case with the ERP supplier.
The success of the ERP implementation depends on a cooperative and seamless working relationship.
3. Project management plan
Benjamin Franklin’s old adage, “If you fail to plan, you are planning to fail,” is never truer than in ERP implementation projects. It is crucially important to create a detailed project plan that documents your team’s roles and responsibilities so that everyone knows what is expected of them.
The project plan should include a breakdown of the main milestones with a detailed list of the tasks to be completed. The plan should be kept as up to date as possible by recording the progress made on each task.
This information should be routinely communicated to all team members so everyone knows what’s going on and issues can be resolved in a timely manner.
4. Business process mapping
At the outset you should carry out a detailed analysis of your current business processes, and then map them against the new ERP system.
The success of the ERP implementation depends on a cooperative and seamless working relationship
Should streamlining or efficiencies be possible, or if changes to processes are necessary, then these should be approved by management well beforehand.
5. Change management
Effective change management is essential to the success of this type of project. Enlighten those who will be affected by explaining the importance of the project, how they will be affected by it, and what you expect them to contribute towards the project’s success.
Lastly, you must regularly update everyone on the project’s progress, and repeatedly remind them of their roles and responsibilities.
6. Data migration
Data migration is a critical part of ERP implementation projects. It is important to be sensible and realistic about the amount of transaction history you need to carry forward into the new ERP system.
A good recommendation is to migrate the minimum amount of transaction history required to deliver congruent data comparisons or practical data enquiries.
An ERP implementation project often involves the merging of multiple disparate management systems with their own silos of data into a single integrated solution, so avoid underestimating the level of difficulty and the amount of work required to clean and merge duplicated data records.
It is suggested that at least two complete data migrations should be undertaken to create pilot systems for data review, system checking and staff training purposes.
7. Commitment to the project
The chances of your ERP implementation project being successful are greatly improved when everybody sees the project is being enthusiastically supported from the directors downwards.
The fear of change within an organisation is the main cause of problems for an ERP implementation project. Typically, this will be most prevalent within departments who have developed personalised management systems and who are very blinkered, meaning they might be less likely to buy into the new integrated enterprise vision.
Assembling the most talented and respected team possible will give the project the best chance of being a success.
8. Training and testing
Having created a pilot ERP system using data migrated from the incumbent business management systems, a detailed staff training timetable should be defined based upon user roles and responsibilities.
Ensure users are trained on their daily operating processes and they have time to practice on the pilot system prior to going live.
An ERP implementation project often involves the merging of multiple disparate management systems with their own silos of data into a single integrated solution
It is helpful if each department has a designated ‘super user’ who has a much more in-depth understanding of how the system works; these users will be responsible for assisting others within their department, helping with system testing and monitoring fault resolution.
9. Monitor the budget
ERP implementation projects are notorious for chronic project creep and serious cost overruns, which can inevitably be off-putting. To avoid cost increases, be clear about what is within the scope of the project and any additional out of scope tasks.
Manage out of scope tasks as separate sub-projects and apply for their funding discretely so they do not contribute to cost overruns on the main project.
Make sure you routinely monitor the actual project costs against the original budget and keep project sponsors informed of the on-going financial position.
10. Define project success
Before going live it is important to capture the project sponsors’ expectations of what is deemed project success. This might include simple statements such as: “ERP goes live without any significant business disruption or adverse impact on customers” or “No production downtime due to material supply” or other more complex metrics relevant to your organisation.
ERP implementation projects are incredibly challenging and generally quite stressful for all concerned. Thankfully, by adhering to these best practices during your ERP implementation, you can greatly mitigate the associated risks, resulting in a successful project.
About the blogger
Martin Craze is founder and managing director of Applied Business Computers, a business management and accounting ERP system consultancy.
Martin is passionate about helping business owners and directors improve their businesses through the imaginative use of business management ERP systems.