ERP Implementation Facts
1. Know your goals for your ERP implementation. Choose the product that promises
to meet those goals and put measurement tools and processes in place to gauge
your success, advises Lance Williamson, engineer, Engenio Information
Technologies, Inc., Wichita, Kan. In particular, he said, set goals for
performance, response time and downtime.
2. Don't do any project without a plan, particularly an ERP project which
touches almost every part of your organization, said Bernard Golden, CEO, Navica
Inc., a consulting firm in San Carlos, Calif. Create process with regular
milestones and participation from affected organizations. And be sure to test,
test, test, all the way through. "All of these things seem like 'nice-to-haves'
rather than critical elements in a project, but can make the overall project
much more successful," Golden explained.
3. Involve users in your ERP project planning phase, said Andy Klee, president
of Klee Associates, Inc., a consulting firm in Cedaredge, Colo. "The software is
not going to do you much good if you don't have employee buy-in," he added.
sting company provides cookie cutter solutions or can customize the ERP suite to
fit your needs," he advises. "Many outsourcers don't know enough about ERP to
customize it. Then again, if a cookie cutter solution is okay for you, then
fine, use an outsourcer and you don't have to take care of your ERP."
Don't do the planning and implementation alone if you don't have the in-house
skills to make it happen, said Jorg Janke, president of open source ERP vendor
Compiere Inc. in Portland, Ore. "Determining which options and features to use
requires experience," he said. If the in-house team doesn't have that
experience, Janke advises, find a local ERP expert who is trustworthy and who
collaborates well with your team.
5. Be realistic in your cost projections. Double the consulting firm's estimate,
Klee said. "I hardly ever hear of these projects coming in under the estimate,"
he explained. Also, be realistic about training costs. "Even at the largest
level, companies underestimate the training costs," he said.
6. Don't keep adding to your project. In the planning and evaluation stage,
people see the capabilities of products and want to use each new one they
discover. "Commit to what you want to do initially," said Jon Reed, a Klee
Associates consultant. "Get your return on investment and then expand.
Otherwise, you'll have a never-ending and unsuccessful project."
To host or not to host?
7. If you'd prefer the hosting model for your ERP, then scrutinize your
application service provider (ASP) well, says Janke. First of all, you must be
able to trust this ASP with your data. "Find out if that ho
8. Follow the money. "Hosting should take out a lot of internal costs of labor,"
says Frank Prestipino, vice president of Oracle's global enterprise applications
strategy.. "It should save you money…by spreading payments over a period of
time. You should be paying less over a period of time for hosting than you would
do it yourself." The hoster should provide this analysis. If you're not paying
less, don't use an ASP, he said.
ERP package implementation
Choose an ERP package that is industry-standards based. "You don't want to
find yourself out on a limb with customers who can't interact with your
proprietary, out-of-standard implementation," says Oracle's Prestipino.
1. Know your goals for your ERP implementation. Choose the product that promises
to meet those goals and put measurement tools and processes in place to gauge
your success, advises Lance Williamson, engineer, Engenio Information
Technologies, Inc., Wichita, Kan. In particular, he said, set goals for
performance, response time and downtime.
2. Don't do any project without a plan, particularly an ERP project which
touches almost every part of your organization, said Bernard Golden, CEO, Navica
Inc., a consulting firm in San Carlos, Calif. Create process with regular
milestones and participation from affected organizations. And be sure to test,
test, test, all the way through. "All of these things seem like 'nice-to-haves'
rather than critical elements in a project, but can make the overall project
much more successful," Golden explained.
3. Involve users in your ERP project planning phase, said Andy Klee, president
of Klee Associates, Inc., a consulting firm in Cedaredge, Colo. "The software is
not going to do you much good if you don't have employee buy-in," he added.
4. Don't do the planning and implementation alone if you don't have the in-house
skills to make it happen, said Jorg Janke, president of open source ERP vendor
Compiere Inc. in Portland, Ore. "Determining which options and features to use
requires experience," he said. If the in-house team doesn't have that
experience, Janke advises, find a local ERP expert who is trustworthy and who
collaborates well with your team.
5. Be realistic in your cost projections. Double the consulting firm's estimate,
Klee said. "I hardly ever hear of these projects coming in under the estimate,"
he explained. Also, be realistic about training costs. "Even at the largest
level, companies underestimate the training costs," he said.
6. Don't keep adding to your project. In the planning and evaluation stage,
people see the capabilities of products and want to use each new one they
discover. "Commit to what you want to do initially," said Jon Reed, a Klee
Associates consultant. "Get your return on investment and then expand.
Otherwise, you'll have a never-ending and unsuccessful project."
To host or not to host?
7. If you'd prefer the hosting model for your ERP, then scrutinize your
application service provider (ASP) well, says Janke. First of all, you must be
able to trust this ASP with your data. "Find out if that hosting company
provides cookie cutter solutions or can customize the ERP suite to fit your
needs," he advises. "Many outsourcers don't know enough about ERP to customize
it. Then again, if a cookie cutter solution is okay for you, then fine, use an
outsourcer and you don't have to take care of your ERP."
8. Follow the money. "Hosting should take out a lot of internal costs of labor,"
says Frank Prestipino, vice president of Oracle's global enterprise applications
strategy.. "It should save you money…by spreading payments over a period of
time. You should be paying less over a period of time for hosting than you would
do it yourself." The hoster should provide this analysis. If you're not paying
less, don't use an ASP, he said.
Evaluation
9. Choose an ERP package that is industry-standards based. "You don't want to
find yourself out on a limb with customers who can't interact with your
proprietary, out-of-standard implementation," says Oracle's Prestipino.
ERP Implementation - The Traps
ERP implementations are littered with tales of lost millions and withdrawals
after implementation. Many of the most experienced IT organisations have failed.
So what are the secrets? What are the traps? This question could produce at
least a book, and probably a sequel. Here are a few things the Vendor is not
going to tell you about. They are by no means the most important, but they are
missed in many implementations. Most organisations do not understand the costs
associated with an ERP system when they first commence the implementation. The
benefits are usually well understood. The Vendor will make sure of this. The
costs do not surface until well into the implementation - and why should the
Vendor talk to an organisation about the costs and difficulties when they are
trying to make a sale? On the surface, there are very attractive reasons for
going ERP. Benefits include: A single system to support rather than several
small and different systems A single applications architecture with limited
interfaces Access to management information unavailable across a mix of
applications Access to best practice systems and procedures More integration
hence lower costs More "automation" of tasks Generic Costs and Impacts The costs
and impacts are understandably not played up by the Vendors. Some of those are:
Implementation effort will be bigger then ever talked about or even imagined. We
are yet to hear from an organisation who have implemented ahead of schedule and
under budget. Because of the richness of functionality, the "toybox effect" can
take over. Users see all the functionality available and suddenly they want it
now. The scope can grow out of control. The existing environmental mix between
what is done manually and what is done by the system will swing dramatically
after implementation. Many more tasks will be automated. Automation will
significantly reduce the flexibility of how you operate as a business. Users
need to become more computer literate. Many see this as personally challenging -
even beyond their ability - and will not cope, or leave the company. The word
"Enterprise" in ERP means that whatever happens in one area has a ripple effect
in other areas. Understanding the implications of actions of one area, on other
areas of the company, is not something that happens overnight. Training tends to
focus on how do I do my job. It should also focus on what are the impacts of my
job, in other areas. Near enough is no longer good enough. Data integrity
becomes critical. The computer cannot make human judgments. If stock is moved,
it is no good somebody remembering where they put it. The information needs to
be put into the system or there will be a domino effect. E.g. Stock is moved
from location A to location B and the information is not put into the system.
The system will tell someone to get the material from A and when it is not
there, they have to go looking. At the same time it is telling someone else to
put new material in B, but B is full. The first person finds the original
material in B and logs it into the system. We now have double the quantity in
the system again and it doesn't reorder. And so it goes on and everyone is
blaming the system. ERP systems tend to replace old systems. As such it is a
quantum leap for all areas of the company. It is replacing the trusty Ford with
a high performance Ferrari. This happens at a Technical level as well as a
Business Level. New ways need to be learnt in a very short space of time. Things
have to be done consistently. No longer are we able to do something one way in
one branch and another way in another branch. The system is going to determine
how we do things in all locations. Even within one location, special treatment
may not be possible any more without changing the configuration of the system.
If the system says you can either have 0, 15, 30 or 60 day credit terms, you can
no longer offer 45 day terms without changing configuration. If consistency can
be implemented, there is good potential for cost savings as well as getting rid
of special arrangements that reduce profit |
