Most customers go through a rigorous evaluation and selection process before making an ERP software purchase decision. Of course, it’s important to verify that the purchased software meets or exceeds all of the company’s business requirements and has a proven, successful track record within their industry. However, the ERP software is only a suite of tools that can be configured to meet functional requirements. Obtaining the real benefit to the purchase of a new ERP system is achieved through the implementation. A well planned, managed, and executed ERP implementation project is what will deliver the optimum results, improve overall operational processes, and provide an immediate return in terms of more efficient business procedures and customer satisfaction.

The objective of this article is to discuss different ERP implementation strategies and how realistic resource planning is important to success.

There are several common ERP implementation approaches or strategies. These are:

• Self-Directed:  The Company that purchased the ERP software takes on the overall responsibility of software implementation using internal resources to execute.
• Collaborative: The Company that purchased the ERP software teams with an outside ERP implementation services provider who has the necessary system expertise and business experience. The key to this approach is the partnership and teamwork involved between the Company’s internal team and the Implementation Services provider.
• Turn Key:  The Company that purchased the ERP software turns over all implementation tasks and responsibilities to an outside ERP implementation services provider.  The Company’s personnel and End-Users have minimal to no involvement in the implementation project and typically don’t receive training or interact with the system until it’s been completely configured and ready for production.

Let’s evaluate the Pros, Cons, Risks, and Considerations to each of the above approaches.

Self-Directed:

• Pros:
  • Cost savings involved by not purchasing outside consulting services.
  • Direct control of internal resource planning & scheduling.
• Cons:
  • Workload / responsibilities on internal resources can be burdensome which can cause frustration and schedule slippage.
  • Self-directed application training is usually not as effective as consultant led or assisted training sessions.
  • Opportunities for process improvement are minimized as the internal team will have a tendency to configure the ERP to the same processes they currently use.
  • Data conversion from legacy systems to new ERP can be complicated and time consuming without the proper expertise.
• Risks:
  • Never realizing the full benefit of the new ERP system due to a lack of application expertise and thorough training.
  • Prolonged completion schedules due to lack of a realistic implementation plan and dedicated, internal Project Management.
  • Improper, incomplete data conversion can cause serious issues in the production environment and have a direct impact on shipments, customer satisfaction, and revenue.
  • Overall internal dissatisfaction with the new ERP, a reluctance to use it, and propensity to revert to the previous systems and procedures.
• Considerations:
  • Self-directed ERP implementations do have risks, but can be successful if the Company has the following resources / abilities:
    • Lead / Core implementation team members that have significant experience with ERP implementations AND with the specific purchased ERP applications.
    • A dedicated, internal Project Manager who has the authority to direct the implementation team and has experience with ERP system implementation plans and execution.
    • Team members with the ability to plan and execute data conversion, migration, and validation.
    • An Executive Management team that provides the necessary vision, support, priority, and direction to the internal Core team so that they can focus on the implementation and complete in a timely manner.

Collaborative:

• Pros:
  • The effectiveness of a collaborative team between the Company’s Subject Matter Experts (SMEs) who understand their business and the ERP Implementation / Consulting Services Provider who understand and have solid experience with the ERP applications.  This type of team typically yields the best chance for a successful, on time, and on budget ERP implementation project and promotes Company team “ownership” of the system.
  • Having a dedicated Project Manager from the Implementation Services Provider who can lay out a realistic implementation plan, help manage and control plan execution, coordinate consulting resources to meet schedule, and track project issues / risks.
  • An effective application training program based on Company processes and data.  Users that have better application training typically make better decisions and have more insight on how the software can improve business.
  • Process improvement assistance based on similar industry experience by the Implementation Services Provider.
  • Assistance with data conversion / migration through detailed planning and knowledge of ERP schema.
  • Well-planned and scripted ERP pilot sessions based on proven techniques from the ERP Implementation Services Provider.
  • A well-planned ERP cutover and Go Live activity directed by the ERP Services Provider.
  • An ongoing relationship between the Company team and ERP Services Provider such that effective support, utilization, and evolution of the ERP system can be achieved going forward.
• Cons:
  • The additional project cost of using an ERP Implementation Services / Consulting Provider.  However, the debate can be made that this “additional consulting cost” is actually offset by a more effective, process-based implementation of the ERP system resulting in business improvements and quicker ROI through cost savings and increased revenue.
• Risks:
  • Risks in a collaborative implementation approach are typically minimal if the project plan / scope is well managed and executed and team members on both sides effectively participate in all facets of the project as designed.
• Considerations:
  • Not too dissimilar to the Self-Directed Implementation approach, it is very important to have the right Company team members assigned to the project and ensure this team is provided with the necessary Executive Management support, direction, and time to participate.  ERP projects are successful largely because of the right people being consistently involved and contributing to the design and test of the system in all phases.  These projects can quickly fall apart and miss project goals when Company team members lack the time and motivation to effectively participate.

Turn Key:

• Pros:
  • Minimal time consumed by internal resources.  They can continue their normal day-to-day activity without interruption of project tasks.
  • Typically the ERP implementation timeline can be quicker.
• Cons:
  • Company incurs the significant costs of having an ERP Implementation Service Provider execute all implementation tasks and deliverables.
  • It is typically very difficult for a Company to achieve full (process related) benefit from a Turn Key ERP implementation due to the lack of direct Company resource participation during the Design and Build phases.
  • The Company sacrifices some level of “ownership” of the ERP system and is frequently dependent on the ERP Implementation Services provider for ongoing system maintenance and future enhancements or changes.  This again can be at significant cost to the Company.
• Risks:
  • Essentially outlined in the Cons above.
• Considerations:
  • In general, conducting a Turn Key implementation for an ERP system is typically not a good approach.  The consulting costs, lack of internal team participation, and ongoing dependence on the ERP Implementation Services provider can often outweigh the benefits of the ERP functionality delivered.  However, there can be special circumstances when this makes sense.  These circumstances may include:
    • The Company runs a very lean operation and internal resources must stay dedicated to day-to-day operations to meet business demand.
    • The Company has no or very disjointed business systems to manage current operations and has a critical / immediate need for a more integrated ERP system.
    • The Company has developed a very detailed functional / process requirements specification ahead of the implementation as guidelines for the ERP Services Provider.

This article is intended to provide a high-level overview of erp implementation strategies.  To companies that are thinking about purchasing or who have recently purchased erp software, Godlan recommends they give significant consideration to the implementation approach.  Godlan is a proponent of the collaborative approach as our experience shows that this typically results in the best overall outcome for our customers.

If you wish to discuss this further, please contact Godlan https://www.godlan.com/contact/