According to Gartner, estimates that 55-75% of ERP projects do not achieve their intended goals.
Learn how your business can achieve a successful implementation the first time with these 6 key steps.
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Technology often determines the success or failure of an organization in today’s business environment. Sadly, technology implementation is where many companies encounter challenges. The cost of failure for ERP projects is catastrophic, as more than half fail to deliver the hoped-for results. Business, IT, and external resources have to sacrifice strategic components to meet deadlines due to budgetary and time constraints.
Our experience with failed ERP implementations shows that organizations who do not adopt a comprehensive approach to their technology implementation fail every time.
Despite this, a failed project doesn’t have to be the end result. By following critical pre-implementation activities, you can achieve a successful implementation the first time? Wouldn’t it be great if those activities almost guaranteed success?
As we support businesses with ERP projects, that’s exactly what we’ve seen time and time again. We’re excited to share our lessons learned.
Step 1: Define and align business strategy and expected business benefits with all executive stakeholders.
Strategy planning should be a core component of your request for proposal (RFP) prior to embarking on an ERP project, but most companies don’t complete this step. The result is that they fail to get stakeholder buy-in and support. When you engage leadership on the front end, however, you can manage expectations, budget, timelines, and change implementation. This will boost your odds of success. At this stage, you should:
Secure executive sponsorship from business and/or IT
Create a plan to engage all stakeholders
Clearly articulate the business case
Align implementation with business strategy
Step 2: Clearly understand which elements you need to succeed and which ones are wants or nice-to-haves.
When implementation projects fail, it is typically due to setting unrealistic expectations upfront. This is due to not managing the implementation scope effectively, not making decisions quickly enough, or a combination of all of these.
As you define your project scope and design your implementation, clearly identify the minimum needed to succeed (aka, a Minimum Viable Product). The larger the scope, the more complex and risky your implementation will be. Larger projects also cost more, take longer, and require more decisions. All of these things can derail your implementation if the project gets off track.
You can avoid these pitfalls by prioritizing your desired business benefits and functional scope before and during the project. Be prepared to cut the scope if necessary to improve your chances of delivering a successful implementation not only at go-live, but also for years to come.
Step 3: Assemble an ERP Dream Team.
Your dream team should consist of your top talent and brightest minds. We get it – no one wants to reassign their go-to, high-performance employees to a lengthy system implementation, but that is exactly what you should do. You need people who understand your business goals and your vision for what you hope to accomplish through the implementation. Your ERP Dream Team will interact with your system implementation partner to configure the technology to meet current and future business needs.
Step 4: Assess and refine your business processes.
Technology investment is a perfect opportunity to assess business processes and improve them. Your ERP Dream Team can play a significant role in this process by:
Documenting current, as-is business processes.
Identifying and prioritizing improvement opportunities to drive business benefits.
Create the necessary business processes before engaging your system integration partner.
Most integration partners will say they include this process in their scope, but for a variety of reasons (such as resource constraints, abilities, or time constraints) it often gets condensed. Instead, they may recommend standard ERP processes without considering your company’s unique needs and goals. Sometimes cookie cutter processes work, but sometimes they don’t. That’s why it’s imperative to have visionary, high-performing partners and team members who understand strategy and can help you work more effectively with your ERP consultants. This team can have educated discussions about configuration options without being pressured to make quick decisions to keep the project on track.
Step 5: Understand and improve data health, data hierarchy, and data use/flow.
It is critical to invest time, talent, and tools in assessing your current data details and identifying opportunities and business needs. This is so you can make better business decisions.
Sub-par data frustrates users, impairs decision-making, and negatively impacts business results. The most effective way to make your data work for you in your newly implemented ERP environment is to understand and improve the health of your data before implementation.
Your System Implementation (SI) partners will almost always stress the importance of data quality as part of the project scope, but they often fall short in several key areas:
Data hierarchies (how is your data structured?)
Data flow mapping (where does your data end up?)
Predictive analytics use cases (how is your data used?)
Many companies have cobbled together their application architecture over decades, adding or retiring system A here, retiring system B, implementing a data warehouse/lake there, etc. This can create data silos and inefficiencies that must be addressed before implementation starts.
Step 6: Assess your organization’s change acumen and tolerance.
Gartner says over half of change management initiatives fail. Even if you have done everything else right, failure to properly plan for change can undermine your ERP implementation. This can prevent you from achieving the expected business benefits. That’s why it is critical to carefully assess your organization’s change management strategy and make necessary investments before you launch your implementation. Ask questions like such as:
Do we have strong leaders who understand the need for and intricacies of change?
Do we have established change networks that can be leveraged?
What kind of changes has the organization undergone in the past few years?
What anticipated changes are scheduled in the future in addition to the ERP project