Implementing an ERP System – 10 Things to Consider First
By Susan Mercer-Tumilty, Consultant, ProcurePro Consulting
Congratulations! You have decided to implement a new ERP system and now you’re wondering:
“Where do I begin? How can I make sure we are successful? Who should I get involved? How can I do this and still keep our business moving forward while minimizing disruption?”
In this article, I will try to help answer these questions and more. Based on extensive experience and research, following is a list of 10 important things you and your organization should consider BEFORE you implement a new ERP system. Investing time up front to consider each point and determining how to incorporate them into your plan, should help you and your organization to stay focused and ensure a smoother and successful implementation.
- What do you hope to achieve with a new system?
An ERP system is a big investment for an organization, both financially and in resource time. You should be thinking about the big picture and the future of your organization. You don’t want to choose a system and implement, only to realize in a year it’s not the right one. You should be thinking about things like end-user functionality, out of the box configuration versus customization. How it will affect your customers, suppliers, contractors etc. How and what will this system help your organization to achieve in the coming months, years etc. Can the system grow with your organization, so you don’t have to implement a new system in a few years?
- Secure Buy-In
It is critical to ensure everyone is on board or at least understands why you are undertaking such an initiative. Clearly articulate the benefits anticipated to the team and the organization. If you obtain buy-in from the highest levels that a new system is required, then adoption by subsequent levels should be easier. Top down support and communication is key. If you want stakeholders to adopt change it must be supported and mandated from the top. Fellow executives can be your biggest champions and cheerleaders.
Make sure that you have adequate funding to pay for a system. You never want to get to the end of the project and realize that you don’t have the finances available to fund the new system. Include contingency funding of around twenty five percent (25%) overall to your budget. Software licence fees vary greatly depending on the solution. Consider Software as a Service (SaaS); software that is generally paid monthly or annually and can be less costly, however, consult with your finance expert as it can have an impact on EBITDA as it is generally an expense and cannot be capitalized unless there is a buyout at the end of the licence term. Additionally, the professional services fees to implement should, where possible, be done at a fixed fee. Delays are common and can add substantially to the overall cost. Have a budget and track it bi-weekly as the project progresses to ensure you are on time and on budget.
- Realistic Timelines
Choose timelines that work for your organization … be realistic. Can you source, award, contract and implement a new system in the time-frame you are thinking? Do you have the resources, and do they have the time to invest? Are they ready for such a change and are there areas that are more ready than others? Should you take a big bang approach by implementing the entire organization at once or approach it in waves depending upon readiness? Consider other things which may affect timelines such as year-end, holidays, vacations or other large initiatives or implementations. Allow appropriate time up front and don’t jump to select a solution without appropriate due diligence. Short circuiting this critical up-front effort can end up costing you far more than spending the time to get it right.
- Determine Project Team
It’s important to identify the correct people who need to be involved up front. This governance structure will be made up of many different working teams and levels. Everyone has a role to play and you never want to bring someone to the table too late in the process. To determine your team members, consider who is responsible for certain areas of your organization for example Finance, HR, IT, Legal etc. Invite them all to participate in the first meeting and they can determine if their respective groups need to be involved. You may want to consider the following roles in your governance structure:
- Executive Sponsor – this person is ultimately responsible for the success of the project and will communicate to and influence other executives.
- Project Manager – will be responsible on a day-to-day basis for keeping the project on track, on time and on budget.
- Steering Committee – this team is responsible for making decisions, removing roadblocks, providing resources and determining who the subject matter experts are in their respective departments or functional areas.
- Subject Matter Experts – these are the folks that understand your current systems and processes and who may use the new system once implemented. They will help identify the new system requirements and should be involved in the testing phases.
- Integration with Other Systems
Will you require your ERP system to be integrated to other systems that your organization uses? Ensure you have a complete understanding of the systems you use, who uses them, how do they use them and why? What data will the systems be sharing and how (i.e. will you be pushing data from an existing system into the ERP or pulling from the ERP to an existing system). Perhaps there’s an opportunity for the new ERP to replace a system? Or at the very least you will be able to identify with your supplier that their system needs to integrate.
- Other Systems to be Implemented
Are there other systems that are co-dependant and should be implemented at the same time? An example might be a Payroll and Human Capital Management (HCM) system. Implementing together allows employee data from the HCM system to feed the Payroll system. If you have not yet done so, consider creating a “Technology Roadmap”. This should include ALL systems or modules that will be implemented and when. Prioritize your systems starting with the foundational systems such as Financial (FinSys) which is core to running your business. Assess the benefits of “Best in Suite” (all modules in the ERP are from the same solution provider and offered as an integrated “Suite”) versus “Best in Class” (individual modules are rated best in their class solutions, regardless of provider and would require integration).
Are there other systems that are outdated, up for contract renewal or just non-existent? Would your organization benefit from implementing anything else? This refers to looking at the larger picture … what is it that your organization needs. If you have several systems that you need, it may be beneficial to look at them together and thereby reduce the professional service and project management fees.
- Requirements Gathering
You’ve identified your subject matter experts, which systems you use today and what systems to implement and when. Now you can begin to gather your requirements. What exactly do you need the system to do for you? Do you have specific or customized requirements? Don’t assume you know what the ‘out-of-the-box’ functionality for a system will be. Regardless of the supplier/s you engage, make sure you ask the questions and cover all current and future needs. You would never want to choose a system based on an assumption that it could perform a basic task only to find out when it’s too late that it can’t. This can be as easy as asking for a list of out-of-the-box functionality to review and then adding any additional requirements you have. Larger, more expensive doesn’t mean better. Often, in fact, they are built to cover a wide range of industries and sectors. Consider a solution that is used and can be easily configured to meet your business and industry unique needs.
- Risk Assessment
What things may put this project or your business at risk? It can be any number of things like vacations, other large projects or implementations, upcoming acquisitions or mergers, financial funding, buy-in from the appropriate people throughout the organization, resource constraints etc. Ensure you capture any risks and mitigation plans, proactively, in a log and refer to it frequently to assess if those risks are still valid, have increased or been sufficiently mitigated. Add new risks as your business and project evolves.
- Data Accuracy & Clean-Up
Consider how accurate your data is today. How/where is the data currently being processed and stored i.e. in an existing system, manually or both? Do you require current data to be migrated into the new system? If yes, assess which pieces of data and how much (a quarter, a year etc.). If you’re implementing a shiny new system you don’t want to load it with incorrect or useless data. It is very important to take time to clean-up your existing data first before migration is done.
Considering implementing one or more systems? ProcurePro Consulting helps eliminate the confusion and anxiety by using our 4 Phase Methodology: Source, Competitive Bid, Contract and Implement. Need help sourcing or just implementing? We’ve got you covered. Contact us today for a free, no obligation consultation at firstname.lastname@example.org, 416-505-8698 or for more information on ProcurePro Consulting checkout our website www.ProcurePro.ca