Enterprise Resource Planning (ERP) solutions are one of the most widely used enterprise software solutions in the world, and in recent years vendors have developed scalable solutions for the mid-market as well as for Small to Medium Enterprise (SME), which have become known as ‘flavours’ of ERP.
ERP solutions are undoubtedly powerful and include a host of features and functionality, and yet many organisations fail to leverage significant business value from their investment.
When ERP implementations fail, regardless of the ‘flavour’ or the size of the organisation it is implemented in, several common factors emerge. These include executive leadership and sponsorship, change management and data quality. Technology, no matter how powerful, is nothing but an enabler, and if the building blocks for success are not put into place at the outset, organisations will see their expensive and time-consuming IT projects, including ERP, fail.
ERP solutions including all of its ‘flavours’, delivers core transactional services for any organisation. However, as with any major software implementation, making use of an ERP solution requires an organisation to re-engineer the way people work. People need to work hand in hand with process and technology if these implementations are to be successful. If organisations continue to work in the same way they did before the implementation, the solution will be a wasted investment. ERP solutions requires significant outlay in many instances, and it should help organisations to work more efficiently, optimising processes and embedding best practices, creating a competitive edge and helping to realise a Return on Investment (ROI).
However, people change management is far from the only people-related issue surrounding ERP solutions. Executive leadership and commitment is critical for many reasons, including assisting the change management process. ERP solutions touch every part of a business; therefore the entire organisation needs to be involved in order to derive business benefit. This is best achieved if the changes are visibly supported by the executives.
A significant IT implementation such as an ERP solution requires business sponsorship and buy-in from across the organisation in order to be a success. This cannot be achieved without strong leadership and executive support. Strong leadership is also crucial in ensuring that business requirements are laid out at the outset, to ensure that the implementation will cater to business outcomes. The business outcome should define what the organisation wishes to gain from implementing an ERP solution, and the benefits it should deliver. If organisations do not understand what they would like to achieve from the implementation, the project is doomed to fail from the start.
Commitment from the organisation implementing an ERP solution is a key factor in the success of the organisation. While ERP skills may be scarce, necessitating the outsourcing of an implementation, organisations need to keep in mind that outsourcing a project does not absolve them of all responsibility. Without the organisation themselves driving the project towards a specific business outcome, there is often a lack of clear definition as to what the project should achieve, which leads to scope creep, delays and projects running over budget.
This is not to say that customers are solely to blame for the failure of ERP implementations – consultants often also form part of the problem. As mentioned, ERP skills are in high demand, and as a result individual resources within consultants tend to be highly mobile. If continuity is not created on large-scale projects, and quality is not strictly controlled, this can lead to problems down the line. Developers may leave without conducting a proper handover, which can cause delays or project failure. Consultants need to ensure that this continuity is created, with all relevant project documentation kept up to date, to minimise the risk of these issues.
In addition, the consultant needs to ensure that they understand the needs and requirements of the organisation. This should be done by spending time in the core business of the customer, visiting every aspect of business that the ERP implementation will affect, so that they themselves understand the bigger picture of the business and its processes.
Aside from the people component, data is also an important consideration. Many organisations have legacy data that needs to form a part of the new system, and cleaning this data and ensuring there are no duplications is critical to the success of the project. Many projects are delayed because data is not considered from the start. It is vital to understand who owns the data, and have proper criteria for signing off this data when it needs to be loaded. The data on boarding process also needs to make business sense, in accordance with business outcomes and logic. If this is not done correctly, the result is often delays, unnecessary risk, and added expense.
The starting point for a successful ERP implementation is a clearly defined requirement and project scope, including desired business outcomes and benefits. This requires commitment from both the customer and the consultant. Only once the core ERP solution is successful, can components such as collaboration be added, and tools such as business intelligence, data warehousing and big data be implemented to supplement the core solution – and this is where the true business value lies. The end goal of any ERP implementation should be to connect silos of information to derive new insights on business direction – gaining that all-important competitive edge in today’s information-driven market.
Collin Govender, VP Systems integration at T-Systems in South Africa