In this multiple part series, we will discuss every step that you will have to take in order to succesfully implement an ERP system. In this article, we will lay out the first step of ERP implementation: the preprations within your organization.
The term “ERP” is used frequently, but many people don’t know what it is. This term means Enterprise Recourse Planning and it was originally used by manufacturing companies, but today it’s used for any product in a business. When this is implemented in the right way, ERP allows a company to break down their traditional organizational silos and replace these with an integrated horizontal structure where process, organization, technology, and strategy are all aligned. Applications used may include manufacturing, distribution, financial, human resources, project casting, and payroll.
It’s not easy to implement an ERP system. In antoher article on this website, you will read about the most important reasons why so many ERP implementations fail. In this article you’ll learn how to begin to setup and ERP system.
You need to first understand the CSFs or Critical Success Factors.
This are essentially the “things you need to do to be successful”. You use the CSFs to determine whether a requirement you have is really needed in order for your business to be successful. If you can’t map this requirement to a CSF, then it’s not a critical requirement. Examples of CSFs are “cut delivery time” or “increase customer satisfaction”.
Define Your Measurements of Success
Before you begin any project, you have to know how to measure your success in terms on money savings. This is done by increasing revenues, streamlining operations, increasing your market share and so on. The measurement of your success is a motivator for you staff prior to starting your project. This motivation helps to keep your project on track and it focuses the effort of staff to meet the important business objectives you have laid out.
Understand Your Existing Business Process
You’re not ready for a project until you have a solid understating of your existing business process. Employees might not understand what they’re doing. You need to talk to the people that will be doing the work. You need to provide the details and you want to look to ways to improve the business process.
Don’t be Ambiguous in the Definition of Your Requirements
You don’t want your ERP supplier to be confused about your requirements, so don’t be ambiguous with those requirements. You want to be as precise as possible with them.
Don’t Waste Time on Your Basic Functions
You don’t want to waste time of things that already work well. You need to focus on things that could vary by vendor or that are unique.
Mange the Timing, Budget, and Scope
The key factor in predicating the success of your project is project management. Timing, scope, and budget are all aspects of project management. You should work with a structured methodology such as those published by PMI or Project Management Institute.
Get the Employees Involved
Employees can contribute and they may have the knowledge that you need. If you get their input you may be able to use this knowledge that they possess.
Make Sure You Assign an Internal Champion
You need someone that will do what it takes to get the job done. This can be thought of as your internal champion. Try to assign this champion at the beginning of the project to ensure you get their agreement and commitment to the project at hand.
Manage Your Risks
You need to seek out the potential risks, analyse their impact, and understand the probability of their occurrence. You need to encourage all the parties to develop strategies to minimise the risks. All organization have one person who’s a naysayer, but also has a lot of knowledge. You need ot include these naysayers in your risk management process. If you get their input early on, you’ll avoid problems and this will limit the negativity these individuals have.
Ensure you have real Management Buy-In
You want to communicate the project to everyone and get their sign-off at the critical steps. Management should ratify or develop the measurements of success for the project.
As you might have realized, the implementation of ERP is very complex. Only when you have carefully prepared all internal stakeholders for the project, you can move on to the next step: selecting the right ERP vendor.