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Six fatal mistakes to avoid in ERPimplementations
Peter Clarke, IBS Australia
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Six fatal mistakes to avoid in ERP implementations
Six fatal mistakes to avoid in ERPimplementations
Introduction
It is a well known fact that there are hundreds of horror stories out there of
things that have gone wrong with ERP systems implementations and like all
bad news it is often exaggerated so as to guarantee a dramatic effect on the
recipient audience.
The bad news is you cannot turn round and say nobody told you when you
also make the same mistakes and it is yourorganization that is being
discussed and fingers pointed or worse still; heads rolled. Just to make the
message even more dramatic, it is never the head of the senior sponsor that
rolls. Sobering food for thought so that you take just a bit more care in
preparing your implementation plan.
The good news? Getting it right is a reasonably simple thing to do; infect the
keep it simple approach is probably the best piece of advise you could give
anyone who is about to embark on a system implementation.
Nobody likes talking (or writing) about mistakes so please excuse the poetic
license when I approach this by explaining what you should do to avoid the
top six most common mistakes.
Fatal mistake number 1
Failing to ensure your implementation consultants fully understand your
business and stay for the project duration.
You and your people know your business inside out and every day you walk
the walk and talk the talk without having to think about it. Your implementation
consultants on the other hand do not know your business that well so it is
important that you schedule time to bring them up to your level of knowledge.
This applies obviously to processes, policies and procedures but most
organizations fail to include people and culture in the mix and in some cases
that results in consultants with the correct technical skills but the wrong
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Six fatal mistakes to avoid in ERP implementations
behavior style. Believe me, it is worth the extra effort to make sure your staff
and the consultants are comfortable with each other.
While we are on this topic, you should make sure (as best you can) that your
consultants are with you for the duration of the project. I have just proposed
that you invest time to educate your consultants in the ways of the business
and the last thing you need is to find they are part of a consulting pool and you
are now faced with explaining everything again to the next consultant who
arrives on your doorstep.
Best advice
1. Hold your system provider accountable for continuity of project
consultants and if necessary make this a contractual obligation with
financial penalties each time you have to re-educate or re-orientate a
new consultant
2. Ignore your system provider if he tells you they have a formal handover
process for new consultants on your project unless:
It is an agreed part of your project plan
It takes place on your premises
Your people are present and part of the process
Fatal mistake number 2
Lack of frequent and realistic milestones throughout the implementation
project.
Your implementation project will take anything from 6 months to well over a
year to complete and it will directly impact changes to the 4 Ps (People,
Processes, Policies and Performance). So, in developing your project plan
you should always have the ability (at any time) to answer three critical
questions:
1. Where are we?
2. Are we there yet?
3. How do we confidently know we are there?
By setting frequent milestones at key points along the project timeframe you
will be able to quickly measure your progress and more importantly celebrate
achievement with the team (and everyone else) as the project evolves on time
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Six fatal mistakes to avoid in ERP implementations
and on budget. Of course, this is also the time to make adjustments if for
whatever reason the project is not going to plan.
The main thing to remember in setting such milestones is the KISS principle,
to make sure the milestones you choose are simple to measure and better still
obvious even to blind Freddy. That way your project team and your staff will
be able to see the progress and they will maintain high moral (confidence)
even during difficult phases of the project.
Best advice
If you do not set simple and realistic milestones then measuring progress will
be similar to plotting a ships forward course by studying its wake!
Fatal mistake number 3
No dedicated, high quality people in your implementation team and no
compensation scheme in place for them.
It is an unfortunate reality that the people you really need in your
implementation team are undoubtedly your best people and it is pretty much
guaranteed that they are also the busiest and least able to find additional time
for the project. The best thing you can do is find ways to offload some of their
daily workload onto junior staff so they do have time to focus their expertise
on the implementation project. Better still, by giving junior staff the chance to
prove themselves at a higher level you also gain wider spread of skill in the
business and identify potential promotions at the same time.
One thing for certain is that both the junior people and you are newly found
project team will learn from their experiences and be a more valuable asset to
you in the future so if I can offer some very simple advice: be ready to
compensate them for their increased efforts and new skill sets.
I have seen many different ways of rewarding project staff ranging from
revised job descriptions and salary scales to higher duty payments but by far
the most effective is the double whammy bonus. For a major European
pharmaceutical company this meant putting a cash bonus against
achievement of each major milestone event in the project and making each
achievement a very public celebration with the appropriate drinks and nibbles
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Six fatal mistakes to avoid in ERP implementations
included. A final well done bonus at the end of the project together with a
long weekend break (an extension to their normal annual leave) made sure
that everyone realized they were respected for their efforts.
Best advice
1. In the overall scope and cost of your project the additional bonus and
public recognition will pay dividends well past the life of the project and
in ROI terms the results are priceless.
2. Make sure any bonus has a WOW factor, for example, it includes an
amount that makes the recipient proud to have been part of the team
and that they are being respected for the long hours and hard work.
Note: there is no guide to the dollar reward but a recent company ensured
each member of its key project team a USD 20,000 bonus across the 16
month project.
Fatal mistake number 4
Have an inadequate budget for training users on the new system.
The best way to offer this advice is by way of quoting from experience. Almost
every organization approaching systems implementation fails to budget
sufficient dollars and time for training and the end result is that uptake on new
systems, processes, policies is slow and the immediate effect is longer time to
benefit.
I remember attending several client project meetings with a former colleague
(we will call him Chris) who as a project manager had an impressive record of
implementations under his belt. His first advice every time was whatever
figure you have budgeted for trainingdouble it! and in almost every single
case he was spot on. The one where he was proved wrong? The CFO had
previously worked for another company where Chris had implemented
systems and he had already learned from Chris advice and budgeted
accordingly.
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Six fatal mistakes to avoid in ERP implementations
Best advice
As soon as you have finished reading this article, go and have a look at your
implementation budget and pay particular attention to training, just in case
your project manager turns up and says HiI am Chris..
Fatal mistake number 5
Making modifications to the standard system without carefully weighing
benefits against risks.
There is a wonderful tendency in many organizations to quickly modify the
system in areas where it does not match present business processes and the
end result is a system where future upgrades become extremely difficult to
apply and any help desk support you may have is always compromised
because help desk have to know about your modifications before they can
help you.
So the rule ofThe Three Ys approach is one I saw adopted by a wise CEO
that I had the pleasure of working with. His general approach to any request
was to see if it satisfied the three Ys:
1. Y are we considering this request and what is the proven measurable
benefit?
2. Y have we not looked at all the alternatives and their risk / benefit first
before choosing to modify?
3. Y do we not see what other companies have done in this areaunless
we are the first there must be lessons out there that we can learn from.
Best advice
1. Keep the three Ys as an integral part of your decision making on
anything that is a deviation away from the agreed project plan
2. Make a point of engaging with other companies in your industry who
may have gone before you and listen and learn from their experiences
Note: I remember one organization where the CEO personally invited key
people from another company to attend their project milestone meetings. The
purpose was for those invited to bring their knowledge and expertise to the
table but more importantly they were not constrained by internal politics so
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Six fatal mistakes to avoid in ERP implementations
were inclined to ask the questions that everyone else wanted to ask but for
various reasons could not.
Fatal mistake number 6
Failing to protect and insure the most critical parts of your business.
Theres a story with this one and like good stories, it is set in Paris. The
Managing Director of a large pharmaceutical firm is about to sign a contract
for new systems and he pauses before signing to seek three guarantees from
his software vendor:
1. A guarantee that his new system will never, neverput him in a position
where he could not take orders from his customers
2. A guarantee that his new systems would never, neverprevent him
from dispatching customer orders from his warehouse
3. A guarantee that his new systems would never, neverput him in a
position where he could not accept his customers payments and put
their money in his bank account
His requests were straight forward - selling products, delivering them to
customers and getting paid for it was the absolute core of his business and
he wanted guaranteed back up systems in each of these critical areas to
ensure he was covered in the event of any unplanned system failures. What
he was also saying was that other non critical areas could manage with
alternative processes at least for 12-24 hours without any major disruption.
Best advice
The lesson to learn is to take a long hard look at your business and identify
the critical areas that you need to have available 24/7 and then talk to your
hardware and software vendors to make sure they can provide adequate
backup / recovery options to keep you operational when sods law strikes.
Conclusion
Even with so many catastrophic examples of companies going bankrupt due
to failed software implementations, many companies still do not pay enough
attention to the risks involved. Adequate planning and preparation is essential
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Six fatal mistakes to avoid in ERP implementations
to help you identify and manage the potential risks. A good implementation
consultant can help review your current business practices, goals, risks and
articulate a solid implementation plan.
One of the most important things you can do before commencing the project
is to select the right software package and vendor. An ERP system is a long-
term investment, so finding a vendor with the right fit for your business
requirements, and with whom you can build a partnership for the next
5-10 years is essential. Talk to other companies who are currently using the
package you are considering and look into their experience of theimplementation.
With some careful research and planning, you can avoid making the six fatal
mistakes!
Peter Clarke: With more than 20 years of experience in product and
applications development, project management, and customer support
management roles, Peter Clarke has led ERP and SCM projects for
customers such as The Laminex Group (Australia & New Zealand), Sigma
Pharmaceuticals (Australia), Miele and Hino (Australia & Asia). As such, Peter
can offer insights into supply chain collaboration and visibility, demand
planning and forecasting (inventory optimisation), e-Commerce, enterprise
applications integration, as well as business performance management. AsChief Technology Officer at IBS Asia Pacific, Peter directs the development of
integrated ERP solutions for optimising the supply chains of customers in
Asia, Australia and New Zealand, across industries such as automotive,
electrical, consumer durables, and paper & packaging.
Would you like to know more?
Contact IBS today:
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