ERP is a success

Failure really sucks. Many companies spend a lot of money on ERP software and its implementation, only to find that there is no improvement in business performance. Huge investment and unsatisfactory returns have not only sparked controversy over ERP within the enterprise, but also ignited a fierce corporate political scuffle. Even the company's annual report blames the ERP project for not delivering the expected profits. Many companies are even more afraid to try ERP out of fear of failure.

Too often, the sellers of ERP software are the ones to blame when the results companies expect don't come true. Business performance is not improving, are sellers selling ERP software the culprit? Not always. Of course, there may be times when the ERP system lacks certain functions, its logic will be unreasonable, its function performance will be very poor, etc.; but to a certain extent, the choice of ERP software and the responsibility for implementation are usually On the inside of the company as well as on the team of external consultants.

There is no doubt that picking and implementing a new ERP system, followed by process changes, is a very complex task for a business. Therefore, regardless of the size of the enterprise and the abundance of resources, it is impossible to rashly implement an ERP project without a careful planning. Those companies that implemented less successful ERP projects made the following five mistakes that led to such poor results:

Operational strategy did not drive the design and implementation of business processes.

●Project implementation took longer than expected.

●Even if the preparatory work before the implementation of the project is done, it cannot be done properly.

● Employees are not ready to accept the new system and perform various work tasks within the framework of the new system.

●Project implementation costs are higher than expected.

These are some costly mistakes, and how can organizations avoid making them? The following principles can help you achieve ERP success.

1. Redesigning business processes

Today, corporate management rarely gets the results they want from ERP projects, which is taken for granted, which speaks volumes about how often ERP performance falls short. level. However, many organizations fail to realize that to make sweeping changes in the supply chain, management must redefine their business activities in terms of strategic opportunities. The purpose of ERP technology is to support business processes that capture and realize strategic opportunities.

In the process of implementing ERP, the following ERP-related principles should serve as guides for management's actions and decision-making.

Remember, ERP software is not a magic "silver bullet". Adequate preparation, effective implementation, and proper application are the direct reasons for the achievement of ERP effects. This may seem obvious, but 9 out of 10 companies are not going to be successful in implementing ERP the first time because they are expecting a cure-all solution, which is very dangerous mentality.

Problems such as flawed corporate strategies and poorly performing business processes are difficult to solve even with the most advanced information technology. This is an area in particular where the implementers of ERP software may not be able to address the issues, as it slows down the progress of the business.

Develop a business strategy that will give you a competitive advantage. At the very least, this strategy ensures that you keep pace with your competitors. Then analyze the company's current business processes and formulate your goals. After completing this step, the following preparations and the selection and implementation of ERP software will provide stronger support for the company's strategic goals and process goals.

The business world is changing rapidly, and companies must purchase flexible ERP software that can adapt to these changes. Getting information to flow at high speeds to support operations up and down the supply chain is a pretty important step for most companies. In the future, this will be a must to compete, let alone win.

The implementation of the ERP project is led by a senior executive who has the authority to initiate and rapidly implement change. Give those involved in the project a sense of urgency and a real sense of responsibility for completing the preparations and ERP implementation on time.

It is not an easy task to go out of the small circle of the department and use the ERP system to create a truly integrated and efficient cross-departmental business process. If the ERP system is not fully integrated with the day-to-day business operations, it is unlikely to bring great benefits to the enterprise.

If an organization can achieve the overall success of enterprise integration or more advanced supply chain management strategies, the major credit should be given to clearing the divisions between departments. This "silo phenomenon" of demarcations within an organization leads to information flow and poor communication. One question you have to ask is: how will we use the ERP system? In your quest for answers, some hidden questions will surface. Focus on your business strategy, not just software selection and implementation. Many problems are exacerbated by conflicting goals and conflicting measures of performance, as they create discordant values and beliefs that harm the company. No amount of information technology can correct these problems. Management must address all of these issues by redesigning business processes.

Second, be fully prepared

Many companies often start projects in a hurry without fully understanding ERP, and they also don't know much about the benefits ERP will bring to the company. Organizations often mistakenly believe that they already have the skills needed to select and implement ERP, but few organizations have the skills needed to effectively implement ERP within a reasonable time frame.

Another neglected area is the utilization of information technology changes. Implementing a new ERP system will inevitably change the company's original IT infrastructure, but this change often does not receive the attention these technical issues should have received. Of course, business issues, not technical issues, drive companies to implement ERP systems. However, it is the company's IT department that provides support for the ERP technology, which in turn improves the business processes of the enterprise.

The implementation of a new technology will inevitably require the enterprise to do adequate preparations and education for its employees. If the enterprise ignores this link, it will be tantamount to asking for trouble. Additionally, IT staff must complete the technology transition as quickly as possible. If the transformation of technology and IT infrastructure is not done well, the project will at least be delayed.

In the process of implementing ERP, one of the biggest problems companies encounter is misunderstanding the meaning of ERP and underestimating the investment required to implement ERP efficiently. The company's top operations must not assign key decision-making tasks to those who lack the relevant background or personality to make such decisions.

Enterprises need a well-designed, comprehensive process to plan, guide, and control their entire ERP implementation. If the ERP implementation action is guided by a baseless implementation policy that does not take into account the actual situation of the company, then the enterprise is tantamount to causing trouble. Even if it is handled best, the implementation process will be long and indefinite.

Whether it is a senior company or an ordinary employee, everyone must be clear about their role and responsibilities in the implementation of the project. Project leaders should encourage dialogue among employees that will draw their attention to business goals and lead them to early identification and resolution of problems. All must know who will be held responsible for the implementation results and when.

If there is always work pending, this indicates a problem with the direction of the project. Over time, schedule problems will begin to affect the quality of project implementation, because at this time companies will almost always make the following inevitable reaction: ignore key business problems and find ways to take shortcuts.

3. Select software carefully

Before embarking on the detailed software selection work, it is best for management to know how the company's strategy, process and support system will be different after the implementation of the new system. . In fact, the company should repeat the above process every few years so that management knows how far the company is now compared to where it was in the past. This is the basis for evaluating business opportunities.

Many people skip the evaluation of strategies and business processes and go directly to the stage of understanding the functions and features of ERP software. Some software sellers urge buyers to do this because they want you to get into their sales cycle as quickly as possible and accept their product as quickly as possible.

You should be especially cautious when a seller proposes a proof-of-concept for your project. A proof-of-concept is when the seller implements its software on the spot at your company and gives you various guarantees. Doing so can make the software selection process even more confusing for buyers, especially buyers who don't know much about ERP. Apparently, the sellers of ERP software are good at selling, and they send the company's elite to form a sales team, guide buyers to accept their best solution, and claim that it will solve all the problems of the other company.

Identify software requirements throughout the OTD process (from order acceptance to shipment) and ultimately the entire supply chain by analyzing the processes the company currently uses to manage the flow of information and raw materials. The general trend right now is that many companies cut corners on this important link, but in the end you'll pay a price in time and money, and sometimes quite a bit, because you've overlooked a fundamental step.

Evaluating and selecting ERP software is a complex task. The entire process should be fact-based, which will help you make the right decisions with a wealth of information. During the selection process, you need to follow an objective, comprehensive methodological guide. This is not to say that you should use a large number of pre-determined questionnaires to decide your options, because they do not take into account your specific needs. It means that the evaluation and selection of software should be based on its own strategy and business process model. A comprehensive methodology for planning, directing, and controlling the ERP software evaluation and selection process can save companies a lot of money, not to mention help them avoid big mistakes, which is the most important thing.

In some companies, executives are overwhelmed with other seemingly more important matters, leaving ERP projects to the IT department. If you think this is an uncompromising technical project because there are software issues involved in the project, you are wrong. In fact, this kind of thinking is one of the main reasons why companies fail to implement ERP. Whether it's evaluating the business impact of various trade-off decisions or determining their impact on day-to-day operational results and strategic intent, IT is not the right department. Of course, this is not to say that operational decisions are the responsibility of the senior operations manager, and nothing to do with the IT department.

Once a certain ERP system has been identified, even if it does not contribute to the business, many companies stop the project after many years to avoid further losses. Career scruples are often the biggest obstacle. No one wants to tell the executives that their huge investment in ERP projects has gone to waste and everything has to start over. If the business has silently suffered the consequences of this poor ERP decision and its implementation over the years, the cost of the project will continue to increase with no visible results. The cost of lost opportunities can be enormous. Therefore, you must ensure that the enterprise can correctly complete the ERP software search, evaluation and selection process, to minimize the risk of lost opportunities.

Conceptually, a "scratch-and-scratch" approach may seem appealing, but it's a big mistake many companies make. If the business process redesign and subsequent ERP system configuration are carried out according to this method, the enterprise will face many complicated procedures, and will have to invest a high cost and a considerable time. As a result, most companies have to accept compromises and make trade-offs in order to select industry-specific, best-practice software modules. If pre-configured modules are used, not only the configuration process of the entire system will be accelerated, but also the days when the enterprise obtains ERP results will be advanced. The work on optimizing the process can be done at a later date. This is not to say that you just need to push the pre-determined process to work, instead, you want to verify that the selected module process is suitable for the needs of the enterprise, at least in the short term, before moving forward with the project.

There is a strong demand from businesses to implement ERP quickly. This became the main motivating factor driving software sellers to develop ready-made ERP modules. Off-the-shelf ERP modules can accelerate and simplify the process of personalizing software, but by their very nature, these modules are a combination of specific best practices that support business processes across departments. On the surface, this may be ideal, but few businesses rethink how they should and can operate their business. By taking shortcuts, these companies can obtain industry-specific ERP functions, but these functions are very common.

4. Plan for success

For ERP implementation to be a one-time success, companies must have a strategy-, people-, and process-centric, systematic approach. This is the only way to effectively manage risk. A well-established methodology will take into account all the fundamentals of project implementation, but if the unexpected happens suddenly, you will be prepared to not let it have serious consequences. A common mistake companies make when implementing projects is not adequately preparing employees to operate new processes and support new systems. This can lead to various undesirable consequences, or even the failure of the entire project. But these problems are avoidable.

Enterprises should evaluate their business strategy and ERP plan before they start purchasing and installing software. A successful first-time implementation is the only way to ensure a company is cost-effective. Many people who fail to implement ERP regret that they didn't stop to assess whether the project was going in the right direction.

Enterprises will encounter many unexpected situations in the process of implementing ERP. Although the following problems cannot be taken into account one by one, they will help stimulate the thinking of project implementers and lead to discussions in the organization.

●How do we want to run our business?

●What business problems need to be solved?

● Do we know what our priorities should be?

●How does our current process perform compared to the process after installing the ERP?

●Have we drawn up a detailed action plan for the pre-implementation preparations?

●When do we accomplish what tasks?

●What links are missing in our existing systems and software?

●What is the true cost of the project? What benefits will it bring to the business? What is the specific timetable?

●Is there an ERP advocate at the top who provides the project with the necessary connections to the top?

● Who will implement and operate the ERP software?

In fact, the implementation of ERP and supply chain management systems is a project that can never be finished. After all, the supply chain is part of the lifeline of an enterprise. For well-prepared companies, a new supply chain management system based on ERP will help them gain a significant competitive advantage.

For those involved in the implementation of ERP projects, they have experienced a process of thinking. If companies can follow the guidelines of a correct set of methods, the probability of first-time success in the implementation of ERP will be greatly increased. However, this does not guarantee the success of your project, only you and your employees can guarantee the final victory of the project.

Original text adapted from Successful ERP Implementation the First Time by R. Michael Donovan with permission of R. Michael Donovan & Co. Translated by Liu Yanqun.

R. Michael Donovan is a management consultant based in Massachusetts, USA.