Disclaimer: The articles in this blog post are those that I
found interesting and relevant to the topic of ERP and technology in
general. I have no commercial association with any of the entities
mentioned in this article. I may be following a few of these entities on
LinkedIn and even some of these entities may be on my LinkedIn or
Social Media network. These articles are selected purely based on their
relevance to the objective of this blog, to promote ERP. Finally, the
summary is mine. While I stay close to the points in the articles, I
also elaborate a few of them based on my understanding.
The Short URL for this post is http://bit.ly/ERP_Success_Factors
The articles that we have so far covered in this series in Year 2019 are:
11. Week 2019-13: ERP Implementation: ERP Project Management
12. Week 2019-14: ERP Implementation: Requirements Gathering
13. Week 2019-15: ERP Implementation: Solution Design
14. Week 2019-16: ERP Implementation: Solution Testing
15. Week 2019-17: ERP Implementation: End user training
16. Week 2019-18: ERP Implementation: RICE
17. Week 2019-19: ERP Implementation: Integration
18. Week 2019-20: ERP Implementation: Data Migration / Conversion
12. Week 2019-14: ERP Implementation: Requirements Gathering
13. Week 2019-15: ERP Implementation: Solution Design
14. Week 2019-16: ERP Implementation: Solution Testing
15. Week 2019-17: ERP Implementation: End user training
16. Week 2019-18: ERP Implementation: RICE
17. Week 2019-19: ERP Implementation: Integration
18. Week 2019-20: ERP Implementation: Data Migration / Conversion
22. Week 2019-23: ERP Critical Success Factors
21. Week 2019-24: ERP and Business Continuity Planing
22. Week 2019-25: ERP and Block Chain
23 .Week 2019-26: ERP On Cloud
The topic of this week is Critical Success Factors in ERP Implementation. The first article from Panorama Consulting discusses five success factors in your ERP implementation. One of them is to choose the right ERP application that meets your future business requirements. The second article, a study by researchers from Korea, emphasizes the role of Organizational Fit as a key success factors. Reading both the articles together, it is clear that the selection of an ERP application should not only meet the core requirements now, but also should meet the expected critical requirements in future. The third article mentions ten critical success factors, most of which we have discussed extensively in this blog post series. I have linked the points to relevant posts in this blog as well.
The fourth article provides a list of 15 best practices including identification of KPIs, focusing on Organizational Change, holding regular meetings etc. It also talks of setting up a PMO to monitor the progress of the implementation.
While reading these articles, I had a hazy feeling that something was missing. The fifth article pointed it out. Reports. Most of the ERP implementations follow a bottom up approach starting from the processes and building it up. However, good implementation start from Top Down, identifying the critical information and designing the solution to meet these core requirements. A bottom up approach without understanding the information requirements is like starting the construction of Channel Tunnel from Folkestone and hoping that it will end up in Calais, where you want it to. That also explains why many in Top Management complain that 'ERP is of no use to them'.
Top Five Articles
1. Five critical success factors of ERP Implementation: Panorama Consulting Blog
https://www.panorama-consulting.com/five-critical-success-factors-for-erp-implementations/
The five success factors are:
- Choose the ERP application that can meet your future business requirements. Ideally you should have a visibility into the next three years and ensure the ERP you select meet the requirements.
- Make sure ERP vendors demo their product against your organization's unique and specific needs. If you are in construction industry, the application should handle EPC requirements, if you are in Process Manufacturing, the application should handle dual unit of measure and process costing for example.
- Alignment of purpose within the executive team: This is a top management activity. All members of the board as well as Senior Management must be aligned of the need for ERP
- Know what you don't know and get the right help to figure it out: Seek help from Third Party Consultants to handle Implementation oversight, training, business value realization etc.
- Don't forget people: Do not lose patience with your people as they ask questions. When it comes to ERP implementation there is nothing called 'Over Communication'. Keep talking to people and allay their concerns on a regular basis.
Nice and crisp article.
2. Critical Success Factors for ERP Implementation: An Organizational Fit Perspective: Kyung-Kwon Hong, Young-Gul Kim (PDF Download)
http://celesteng.mis.yzu.edu.tw/im434/ERP%20stuff/ERP%20implementation%20success%20Korean%20Experience.pdf
This study conducted by the Korean Duo, looks at the impact of two groups of factors on the success of ERP Implementation. One group is the Organizational Fit of the ERP application. Organizational fit was defined in terms of the degree of alignment between ERP and Organization needs in terms of Data, Process and User Interface. The other group are contingent factors including ERP Adaptation, Organizational Adaptation and Organizational Resistance. ERP Adaptation is defined as the extent of time and effort spent in ERP alteration to align with Organizational Process needs without customization. Organizational Adaptation is defined as the extent of time and effort spend in process change to align with ERP. Organizational resistance is defined as strength of negative organizational response to ERP Implementation. Implementation Success is defined as the degree of deviation from project goals in terms of expected cost, time, system performance and benefits.
Now that it is behind us....
Results indicate that 24% of Implementation success was attributed to Organizational Fit of ERP. This means that Organizations should understand their core requirements before selecting an ERP and choose only that application that will meet the requirements. Another implication is that the customers should insist on a Proof of Concept of their core processes before they make a procurement decision.
The study also found that to a level, what authors called 'Inflection Point', both ERP Adaptation and Organizational Adaptation had a positive influence on Implementation success, and beyond a point they were detrimental. Organizational resistance did not have any impact on the success once the other two variables were taken care of.
So, in summary, ensure that the product fits your core processes, be ready for some level of compromise on process change and your implementation will be successful.
Easier said than done....
This study conducted by the Korean Duo, looks at the impact of two groups of factors on the success of ERP Implementation. One group is the Organizational Fit of the ERP application. Organizational fit was defined in terms of the degree of alignment between ERP and Organization needs in terms of Data, Process and User Interface. The other group are contingent factors including ERP Adaptation, Organizational Adaptation and Organizational Resistance. ERP Adaptation is defined as the extent of time and effort spent in ERP alteration to align with Organizational Process needs without customization. Organizational Adaptation is defined as the extent of time and effort spend in process change to align with ERP. Organizational resistance is defined as strength of negative organizational response to ERP Implementation. Implementation Success is defined as the degree of deviation from project goals in terms of expected cost, time, system performance and benefits.
Now that it is behind us....
Results indicate that 24% of Implementation success was attributed to Organizational Fit of ERP. This means that Organizations should understand their core requirements before selecting an ERP and choose only that application that will meet the requirements. Another implication is that the customers should insist on a Proof of Concept of their core processes before they make a procurement decision.
The study also found that to a level, what authors called 'Inflection Point', both ERP Adaptation and Organizational Adaptation had a positive influence on Implementation success, and beyond a point they were detrimental. Organizational resistance did not have any impact on the success once the other two variables were taken care of.
So, in summary, ensure that the product fits your core processes, be ready for some level of compromise on process change and your implementation will be successful.
Easier said than done....
3. Top ten success factors for a successful ERP Implementation: Altivate.com Blog
https://www.altivate.com/blog/the-top-10-success-factors-for-a-successful-erp-implementation/
This is a well thought out list of success factors for an ERP Implementation. The ten success factors are:
- Clear objectives
- Thorough project planning:
- Rigorous budgeting: Be aware of all the cost elements at the time of budgeting
- Right ERP Implementation Partner
- Stakeholder Identification and alignment
- Beware of customizaations
- Consider a staged approach: Design for big bang, but execute in stages. This will ensure that the lessons learned in one stage can be applied in the next stage.
- Test as you progress Test regularly rather than wait for the completion of the design to start the testing. Have measurable criteria for each testing.
- Focus on training: Training is one area which suffer budget cuts. This is a self-defeating process.
- Ongoing tweaking and maintenance: No ERP implementation is perfect at the time of go live. Eking benefits out of the application is an ongoing process. Ensure that sufficient time, money and resources are devoted to this activity.
4. Top 15 best practices in Enterprise Resource Planning: Predictiveanalyticstoday.com blog
https://www.predictiveanalyticstoday.com/top-best-practices-in-enterprise-resource-planning/
- Clearly define the desired outcomes: Have a clear answer to the question 'Why do you want to implement ERP?'
- Full support and commitment by all stakeholders: Ensure that all stakeholders are identified and their concerns are addressed. Ensure that project is not 'starved' of funds. Seek external help if required.
- Smooth adaptation of new roles: Focus on Organizational Change Management
- Modifying the implementation process: As the project progresses, the key requirements and priorities will undergo changes. It is important to be flexible.
- Prioritizing data migration: This is the key to a successful ERP Implementation. This is one area that is in control of the customer.
- Using a proven methodology: Use tools and methods that has worked well in other implementations.
- Holding regular strategic meetings: Ensure that all stakeholders are a part of these meetings.
- Planning early: This starts from the product evaluation stage. Ensure that your critical requirements are identified and clearly communicated to the product vendor. Ensure systems and processes are in place from day one (Refer point 14 below)
- Having end-users in mind all the time: Ensure regular feedback from power users and end users.
- Establishing Key performance indicators (KPIs): This ties in with point 1 above. Identify what you want and the related metrics.
- Appointing project ambassadors: A project ambassador should be a person well versed in ERP Implementation who can explain the benefits of ERP to the stakeholders.
- Conducting pilot projects: Product vendor and Implementation partner should be asked to demo the critical processes in the application using company data.
- Involvement of Top Management:
- Establishing a Program Management Office: This will help co-ordinate the implementation. A PMO with sufficient authority can ensure that many of the critical decisions are taken quickly.
- Effecting a security governance plan: Due to the urgency and load of ERP activities, it is possible that security issues take a backseat. This could have major ramifications including statutory ramifications. This should not be neglected.
http://cdn2.hubspot.net/hub/142655/file-607752433-pdf/eBooks/ebook_Best_Practices_for_ERP_Implementation.pdf
This is a very good eBook with five best practices in ERP implementation explained very cogently. For each of the best practice, different action items are provided that logically elaborate the best practice.
The five best practices are: Prepare, Manage resources and project timelines, Test, Train and Think beyond implementation. Let us look at each of them in detail.
Best Practice One: Prepare.
This is a very good eBook with five best practices in ERP implementation explained very cogently. For each of the best practice, different action items are provided that logically elaborate the best practice.
The five best practices are: Prepare, Manage resources and project timelines, Test, Train and Think beyond implementation. Let us look at each of them in detail.
Best Practice One: Prepare.
- Document existing and proposed processes: Ensure to prepare the 'AS IS' document before preparing the 'TO BE' document. This will provide clarity on the BPR requirements. Most important, do not try to replicate your current process in the new ERP system.
- Perform Data Cleansing: This has to go in parallel with ERP Selection continue thru the project. This will ensure that project do not get stuck due to bad data.
- Dedicate the right resources: Select smart and experienced team and give them time to deliver. Ensure a dedicated project manager.
- Manage your ERP implementation to both Schedule and Budget: Prioritize ERP implementation over regular work. Factor in the load on the resources while making a project plan.
- Utilize Workflow: Workflow create visibility and ensures that the project adheres to schedule. Workflow ensures communication among the key participants in the project.
- Run a conference room pilot
- Test the reports and documents: If you print paper invoices, ensure that the invoices are printed correctly Test the standard reports as well as reports that are regularly used. Ensure that people are familiar with the new formats.
- Don't skimp on training: Ensure that sufficient budget and time is available.
- Offer project team training and end-user classroom training. Divide training into two types. Project team training is a top level training given to the project leads and power users. It provides an overview of the application and the expected challenges. This should happen at the beginning of the project. End-user classroom training deals with hands on working on the application.
- Use vendor's resources as much as possible: Ensure that as many people as possible attend the training provided by the vendor resources
- Refresh training at least annually
- Train as close to go live date as possible.
- Ensure that power users have access to the entire system.
- Use as realistic a data as possible for training.
- Train on company time: Dedicate time for training. Training is not an 'after hour' activity.
- Use training teams: Provide flow training. For example do not train on just purchasing, train on Procure to Pay cycle. People should understand the inter-relationships between various modules.
- Eliminate dependence on tribal knowledge: Over time people develop personalized systems and practices that deviate from the existing processes. These could include:
- Personal spreadsheet stored in PCs
- Sticky notes that explain process changes
- Notes on easier ways to accomplish tasks
- Hidden caches of inventory to be used in 'emergencies' etc
- Setup or configuration changes that are undocumented
- Focus on continuous improvement.
Additional Reading
1. A critical success factor model for ERP Implementation: Christopher P. Holland and Ben Light,Manchester Business School (PDF Download)
http://bit.ly/2JOZlRp
2 comments:
Went through you blogs.. it was a excellent write-up and aptly said about the ERP success factors...
Have got couple of questions ...
1. What Key Performance Indicators we commonly use to measure the success of an ERP system implementation
2. As a ERP implementing vendor, how will we define and measure the success of a particular client's ERP implementation..
Any thoughts on the above question
Check out this blogpost of mine of some of the matrics that can be used to measure the success of ERP Implementation.
http://erp-consultancy.blogspot.com/2007/04/key-expected-business-benefits-from-erp.html
Post a Comment