By Rich Quin – CEO, Cloudian Inc.
In the 15 years that I have been involved in implementing Enterprise Resource Planning (ERP) systems, initially as Chief Information Officer for a large Engineering, Construction and Design firm and eventually as CEO of several ERP service provider companies, I have been a first-hand witness to successful ERP adoptions and its dreaded opposite.
For the former, the impact of having an ERP has magnified both the efficiencies and effectiveness of their operations while the latter has magnified the inefficiencies and ineffectiveness of their processes and operations.
While ERPs have revolutionized the way businesses operate, streamlining processes and facilitating better decision-making, the journey to successful ERP adoption is fraught with challenges that can hinder progress and jeopardize ROI. Many companies that embark on the ERP journey encounter roadblocks, leading to either slow or failed adoption of their chosen ERP. Here are three common challenges faced by companies in the early stages of ERP adoption:
Lack of executive buy-in: An ERP project is a strategic initiative that requires top-level buy-in and support. Without full executive support, ERP projects are likely to struggle to gain traction, and the lack of resources can derail progress.
Inadequate training: ERP systems are complex, and it's essential for key users to get acquainted, trained and eventually skilled in using and maximizing their ERP systems. However, many underestimate the importance of ERP training and education, leading to user frustration and inefficiencies.
Poor data quality: Data quality is critical for successful ERP adoption. However, many organizations struggle with poor data quality due to fragmented data silos, outdated data, and manual data entry.
(Companies will experience the above challenges in certain degrees. For example, I’ve with worked with clients that had strong executive sponsorship usually from the President, CEO or CFO, great training programs and well managed data. These companies will have better leverage in their adoption plans.)
To overcome these challenges, it will serve a company well to have a structured approach as they launch their new ERP as an integral part of their operations. Here are the 5 steps to a successful ERP adoption;
1. Develop an ERP change management plan
An ERP change management plan is essential for successful ERP project and adoption because it addresses the people, process, and technology aspects of the implementation. One of the key challenges with new technology is often the reluctance of people to embrace it. This challenge could be due to fear of change, fear of failure, or lack of skills or knowledge. It is important for the organization to communicate the benefits of the new technology and provide sufficient training and support to ensure that employees are comfortable with the new system. Employees who fear technology should adopt a growth mindset and change with the times as a means of survival. The change management plan should also outline strategies for addressing resistance to change and ensuring that employees feel supported throughout the implementation process.
2. Ensure strong management support
Strong management support is critical to the success of ERP projects and its adoption by the company because it ensures that the project has the necessary resources and direction. Management support should provide guidance, leadership, and direction to the project team and stakeholders. It should include managers from different functional areas of the organization, such as IT, finance, and operations, to ensure that the ERP system meets the needs of the organization.
3. Appoint an effective ERP project team
An effective ERP project team is critical to the success of ERP projects. The ERP team should include a competent project manager who has the necessary skills, experience, and knowledge to manage the project effectively. The project manager should be a catalyst for change and be able to provide the necessary coaching and support to employees throughout the implementation process. In addition to the project manager, the team should include members from different functional areas of the organization, such as IT, finance, and operations. This approach ensures that the ERP system meets the needs of the organization and that all stakeholders are represented in the project. The project team should work collaboratively to develop a comprehensive project plan and ensure that all tasks are completed on time and within budget. Regular communication and reporting should be established to ensure that everyone is up-to-date on the project's progress.
4. Implement the ERP system in phases
Implementing the ERP system in phases helps minimize disruption to business operations and allows the project team to identify and address any issues before implementing the system across the entire organization. For example, the project team could implement the ERP system first in a single department or business unit before rolling it out to other departments or business unit. This approach allows the team to identify and address any issues before they become widespread. The approach the company should in its roll-out plan depends of course on its goals, priorities and set timeline.
5. Monitor and evaluate
Continuous monitoring and evaluation are critical to the success of ERP adoption. The organization should establish key performance indicators (KPIs) and regularly measure progress against them. The project team should analyze the data and identify areas for improvement. For example, if the KPI is the time it takes to complete a task, the team could identify areas where employees require additional training or where process improvements could be made.
By observing these 5 key steps to a Successful ERP Adoption, organizations can increase the chances of a successful ERP adoption. It is important to note that this is a complex process, and to execute an ERP project that leads to successful adoption requires smart planning, strong leadership and skillful execution (plus a sufficient dose of patience).
However, with the right approach and support, companies can realize the full benefits of the new ERP system and drive business success in this digital age.