ERP implementation. Two words that make even the most seasoned business leaders sweat. And it is completely understandable ”” the stakes are high and the fear of failure is natural. Thirty-three percent of businesses go over budget when implementing their ERP system and fifty-eight percent go beyond the planned timeline.
With an undertaking this complex and daunting, it is imperative to break the process into smaller pieces. If you can get ahead of challenging obstacles with a thoughtful planning process, you can tackle each piece calmly and methodically, saving yourself substantial headaches later. In this article, we will share the five-step methodology that will allow you to complete your ERP implementation on time and within budget.
What is an ERP implementation?
Enterprise resource planning (ERP) implementation is the process of planning and deploying ERP software to improve a company”™s operations. You can think of an ERP like the central nervous system of a business, connecting all of its most important functions. Essentially, an ERP combines financial management software with other core tools ”” like customer relationship management (CRM), marketing automation platforms (MAP), and inventory management ”” into one tidy package.
Our 5-step process for successful ERP implementation
1. Want to nail your ERP implementation?
Start with value planning.
Before you can get to implementing your ERP, it is important to make sure that you have done the groundwork to make it a smooth process. It may be tempting to skip ahead for the sake of speed, but you will want to measure twice and cut once when it comes to ERP systems. We strongly recommend you begin with value-planning and selection, by which we mean uncovering the high-level requirements you will use to select your software.
By making a clear link between the strategic direction you want to take your business and the technology that can enable those changes, you will avoid an ERP mishap that happens all too often ”” an unexpected mismatch between the functionality you need and the software you are about to implement.
2. Selection ”” how to pick the right technology to set your team on the right track.
During the ERP selection process, you will want to document your business and your requirements in greater detail than in the value-planning phase. This will allow you to express your important requirements to software vendors when you are doing product demos, so vendors will show you the features and capabilities that are most important to your organization. If you are not careful about briefing vendors about what problems you are trying to solve, you may receive very generic product demos. Though on the surface, a product may look enticing, once you peel away the layers of detail, you might find it cannot handle certain processes as well as you assumed.
The more specificity you have in your requirements during your selection phase, the more certainty you will have that your ERP system will meet your requirements upon purchase. You will also go into implementation knowing what functionality gaps you will have to cover through customizations.
3. Budgeting ”” beware of hidden costs.
It is important to understand exactly what your ERP implementation project will cost at the outset. And it is not enough to assume that the quote from your vendor covers all of it. Your quote will include software costs and base implementation costs, but there are often hidden costs to your organization that you need to think about. For example, you may need to backfill key roles to release your people so they can focus on the implementation ”” this means you need to add the cost of additional headcount to your ERP project. You may also need to invest in new infrastructure if you need to upgrade the specs on your computers because you did not have the minimum requirements to host or run your new ERP product.
Take the time to think through the life cycle of the implementation and note any potential costs upfront. That way, you can be deliberate about managing any trade-offs and prioritize the most important costs.
4. Program implementation ”” measure twice and cut once.
You have officially signed on the dotted line. What comes next? It is important to realize that a lot of vendors”™ implementation methodologies are focused on standing up the technology platform, not necessarily navigating you through the organizational transformation you are about to enact.
Some vendors will provide guidance for process redesign, but these materials usually assume that you are going to adopt the standard process in the system. If you deviate from the standard process with your own customizations, your team has to come up with that process design. Ask yourself if you can accept the standard process as the system performs it, or if you need to truly make a change so that it works for your organization.
In addition to a design process, you will also need governance structures to prioritize and approve whether proposed changes are going to be handled by the project or not. The right project management techniques (and criteria for scoping and de-scoping aspects of the project) will make these decisions a lot quicker and simpler to make. Be sure to plan and document a work breakdown structure, what and who the resources are, and effort estimates.
5. Governance and sustainability ”” planning for tomorrow and beyond.
ERP implementation is only the beginning of your journey. You are not necessarily going to have it perfected on day one, but the project will grow with you as your business evolves.
Here is a list of questions to revisit regularly as your business evolves:
How are you going to keep the software growing with your business changes over time?
Do you need to have a maintenance contract with your vendors?
How will you measure your ongoing return on investment (ROI)?
Do you have enough internal capacity, or do you need to hire outside help?
Do you need a system administrator?
Will you need ERP upgrades over time?
How Citrin Cooperman can help
Want to be part of the forty-two percent who stick to their budget while implementing a new ERP? While it may be tricky to pull off, this group is proof that it is possible. It is easy to get overwhelmed by a project as large and complex as an ERP implementation, but with a thoughtful planning process and steadfast follow-through, you can make yours a success. And remember you do not have to go it alone ”” if you are planning an ERP implementation, Citrin Cooperman can help.
About the Author
Smija Simon is a director in Citrin Cooperman”™s Strategy and Business Transformation Practice. She is passionate about helping organizations drive long-term business success.
About Citrin Cooperman
“Citrin Cooperman” is the brand under which Citrin Cooperman & Company, LLP, a licensed independent CPA firm, and Citrin Cooperman Advisors LLC serve clients”™ business needs. The two firms operate as separate legal entities in an alternative practice structure. Citrin Cooperman is one of the nation”™s largest professional services firms. Clients are in all business sectors and leverage a complete menu of service offerings. The entities include more than 340 partners and over 1,900 employees across the U.S.
