In our previous post and the first of this series, we explained how big an impact ERP systems can make on an organization and why implementations often under deliver. With that in mind, here are the first five of 10 key steps that will help you realize the desired outcomes of your ERP project.
1. Understand your “why” and communicate it at every opportunity
Before starting an ERP implementation, make sure that it’s rooted in a clear and compelling reason for change. An implementation is a big deal, so you need a strong motive. To give the project a good chance of success, you must also communicate that reason to all stakeholders throughout the organization and beyond.
Driving revenue or an ownership change might be a powerful incentive. But the best reason for change is what we at Illumiti call an Alligator—a threat that’s eroding an organization's ability to survive as a business. It could be legislation that demands a change, loss of market share, inability to accurately report to the market, failures in the current ERP, and so on. Implementing a new ERP can’t be about aspirational change. When it’s a question of survival, employees will do what’s necessary.
To get aligned on a strong “why” for an ERP implementation, clearly define the objectives and align organizational change to communicate and drive the organization to adopt the behaviours that will deliver on the desired outcomes.
No matter how compelling the reason for change is, expect some resistance. People inherently dislike change, and if they don’t understand why it’s happening, they will push back. Constantly communicating and reinforcing why the change matters, identifying how it will impact each stakeholder, and showing what the organization is doing to enable the impacted people will help secure buy-in from your team and maximize their alignment and adoption, which is fundamental to the success of any major project.
2. Understand what you are getting into
Moving to a new ERP is one of the biggest single changes your organization can undertake. Everyone should know what they’re signing up for, especially if it’s been years or even decades since the company made such a shift.
Although resistance to change, inadequate sponsorship, and unrealistic expectations are the top three reasons projects fail, most companies don’t spend nearly enough effort and money on the OCM activities needed to combat them.
ERP implementations aren’t simply about installing a new software system—they’re huge, complex projects that involve change to processes, roles, and people. One way to keep an ERP implementation affordable is to choose a solution that delivers best practice processes right out of the box and to target 75-percent adoption of the vendor’s best practices.
The bottom line: after an ERP implementation, under such a model, 75 percent of your processes will be changed or new, and the organization needs to actively manage and measure change and the adoption of processes. That much change will affect all of your people and their ability to deliver on your desired outcomes, so don’t underestimate the effort!
3. Know what you are going to measure
During an ERP implementation, monitoring and measuring the adoption of change encompasses everything from executive and manager engagement to user proficiency (trained, tested, and validated) and communication to all impacted stakeholders (clients, vendors, and other stakeholders outside the organization).
Without taking this step, you can’t gauge your progress to determine if you're ready to go live and are delivering on the desired objectives and outcomes for the solution. It’s tough to track progress and success, if you don’t know where things stood before the new ERP launched.
4. Manage expectations around time to value
Because ERP implementations involve so much change, performance will dip afterward, no matter how good your OCM is. The software may be up and running, and your team may be trained, but it takes time for them to adapt to new processes and to become as proficient as they were with a legacy solution that people might have used for 10-plus years.
Also, modern ERPs typically require the collection of materially more data than older systems gather. This is a key incremental activity, because it provides more information to manage your business, but it is new and unfamiliar work, which impacts efficiency and effectiveness.
In complex manufacturing environments, the performance dip can last anywhere from six months to a year, depending on the amount of change. Many organizations also experience some disruption to their operations as employees adjust to the new solution and processes.
In a 2018 survey, two-thirds of organizations said that implementing a new ERP led to some operational disruption.
You must anticipate this performance dip and take steps to mitigate it as much as possible, such as completing robust training, and encouraging and monitoring practice exercises with metrics on employees’ ability to complete them accurately before the ERP goes live.
During the post-go-live dip, it’s also important that you continue to communicate, train, reinforce and monitor user performance to build adoption and capability. Doing this will give you a way to see and actively manage users, making it less likely that they will work outside the new solution and/or revert to old processes, which can extend the duration and depth of the performance dip.
Without good organizational change management, there’s a risk of abandoning an ERP project.
Meeting expectations starts with open communication to set the right expectations. Each stakeholder needs to know what impact the ERP implementation will have on them and their processes, so stay in touch with everyone throughout the project.
Key stakeholders in an ERP implementation range from executives and shareholders to vendors, clients and end users.
And don’t forget that communication is a two-way street. Even if you’ve set the scope of the implementation right from the start, every business is in a constant state of change—which is no longer the exception but the new normal. It’s crucial that stakeholders let the project team know about any changes that may affect the implementation.
5. Help your team visualize the implementation and desired end state
As part of your communications strategy, work with your team to create a clear picture of how the implementation will unfold and the desired end state. That includes the project’s objectives and outcomes (better data, greater efficiency, better product or service quality, improved top line, improved bottom line, and so on); the impacted processes and related end users; the data to be pulled in; how systems and interactions will change; and what post go-live will look like on Day 1, Day 90, and Day 365. Another essential: how to support the implementation team and the receiving business units during this transformation.
As you map out the changes that will occur and what they mean for your company, be prepared to challenge assumptions. Don’t be afraid to embrace the new and let go of old crutches. If people are attached to spreadsheets and reports, for example, show them how this information will be readily available in the new model.
This blog post is excerpted from a recent thought leadership paper. You can find the entire paper here.
Part 3 of this series will be available soon, so visit our blog often for an update.