Successful ERP Implementation Requires Planning

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2 Today s Agenda Some ERP Implementation Reality ERP Implementation Critical Success Factors Software Selection Managing Expectations ERP Best Practices The Softer Side of ERP Implementation Taking a Managed Approach Copyright 2000 by Robert W. Starinsky. 2

3 ERP Implementation Reality The perfect ERP system does not exist. No two ERP implementations are ever the same. No ERP implementation is ever perfect. No ERP implementation is ever complete. Copyright 2000 by Robert W. Starinsky. 3

4 Why ERP Implementations Fail The wrong software was selected. The software does not work as advertised. Too many changes or interfaces to the software were attempted. Copyright 2000 by Robert W. Starinsky. 4

5 Why ERP Implementations Fail Lack of executive sponsorship. Lack of a project plan. Poor or no training was provided. Lack of business or technical resources committed to the project. Lack of effective change management strategies. A business merger terminates a work in process. Copyright 2000 by Robert W. Starinsky. 5

6 Critical Success Factors in an ERP Implementation Select the right ERP software Manage expectations Exploit the best business practices built into an ERP system Get the softer side of ERP implementation right Mitigate risks Take a managed approach Copyright 2000 by Robert W. Starinsky. 6

7 Why Companies Buy ERP Companies can t be good at everything. Companies must, more than at any previous time, focus on and exploit core competencies. Is your company a software factory? If not, then building sophisticated, integrated information systems is not the core, or main business of your company. Copyright 2000 by Robert W. Starinsky. 7

8 Selecting the Right ERP Software Why does selecting the right ERP software matter to implementation planning? If you select the wrong ERP software you will likely experience disappointment, delays and overruns trying to make the wrong software right for your business, that is, if it can be done. Copyright 2000 by Robert W. Starinsky. 8

9 Selecting the Right ERP Software Every ERP software package represents an out-of-the-box way of doing business that may, or may not be appropriate in every way to your business. Each ERP package considered will impose its own business logic on a company s strategy, organization and culture. Copyright 2000 by Robert W. Starinsky. 9

10 Selecting the Right ERP Software During the evaluation of ERP packages, your company must ask itself: Does this software represent the best way we can do business and is this software the closest fit to how we want to run the business? Copyright 2000 by Robert W. Starinsky. 10

12 Managing your Expectations If it is not already a part of the package s core functionality, make sure it s not going to be a show stopper for your company. Don t assume the functionality can simply be added into the package. Copyright 2000 by Robert W. Starinsky. 12

13 Managing your Expectations As a general rule, companies should limit the customization of their ERP package to the essentials -- functions that are strategically unique or competitively necessary. Copyright 2000 by Robert W. Starinsky. 13

14 Managing your Expectations There is a serious disease that inflicts many ERP implementations. It s call scope creep and it happens a lot. Expectations about what the software will do and to what extent you ll entertain changes to the software must be constantly kept in check. Copyright 2000 by Robert W. Starinsky. 14

15 Best Practices and ERP Software By acquiring an ERP package you may have all but eliminated the need for any radical business process re-engineering why? Generally speaking, most ERP software packages are already based on best business practices. Copyright 2000 by Robert W. Starinsky. 15

16 Best Practices and ERP Software During implementation, your business processes are modified to function within the core ERP software and become, by definition, best practice based. Copyright 2000 by Robert W. Starinsky. 16

17 Best Practices and ERP Software Business process alignment with ERP software functionality is absolutely necessary. Critically assess the steps in an existing process before asserting this won t work for us. Simplification of processes should be the goal. Copyright 2000 by Robert W. Starinsky. 17

19 Project Sponsorship It does not end with simply an authorization for expenditure. Project sponsorship should occur at the highest levels in the organization. The project executive, or steering committee should be comprised of a key executive from each major business function. Copyright 2000 by Robert W. Starinsky. 19

20 Project Team Selection The right working team is a key factor in successfully implementing an ERP system. The team should be comprised of experienced, highly regarded business experts who can effectively leverage your ERP software investment -- the best and brightest you have to offer. Do not select someone simply because they are available. Copyright 2000 by Robert W. Starinsky. 20

22 Project Team Empowerment The project team must be mandated and empowered to leverage their business experience and to use their newfound knowledge of the software in adjusting, changing, eliminating and streamlining business processes around the core software functionality. After all, you have chosen them as the best and brightest you have to offer. Copyright 2000 by Robert W. Starinsky. 22

23 Project Awareness Periodic communications about your ERP selection and implementation prevents rumors, builds excitement and enthusiasm about the project and helps to insure everyone is in tune with the expectations of executive management. Copyright 2000 by Robert W. Starinsky. 23

27 Why Consultants Are Used ERP implementation is not your core business process. Consultants can leverage their experience from prior ERP implementation projects to help you complete your ERP implementation. ERP implementation is time consuming. Copyright 2000 by Robert W. Starinsky. 27

28 Manage Your Consultants Establish early on what roles consultants will play in your project. Make sure you (and your consultant) plan for the eventual transfer of knowledge and task ownership from the consultant to your company. Copyright 2000 by Robert W. Starinsky. 28

31 Project Management The project management process must include mechanisms for tracking progress, keeping everyone informed and on track. This includes: Regularly updated project plans Regularly held project status meetings Regularly produced project status reports Copyright 2000 by Robert W. Starinsky. 31

32 Project Risks Project risks must be mitigated. The appropriate rollout plan, even if most costly or time-consuming should carefully balance the impact of any significant business interruption against the increase in implementation costs. Project management helps to mitigate risk. Copyright 2000 by Robert W. Starinsky. 32

33 Project Risks Long term or multi-year ERP implementations can develop cases of significant scope creep, cost duplications, lost momentum and disappointing returns on investment. Copyright 2000 by Robert W. Starinsky. 33

34 Project Scope Project scope must be determined. For instance, which modules of the software will be implemented? How should the implementation be rolled out to the organization? Copyright 2000 by Robert W. Starinsky. 34

35 Project Phases Should you do a big bang versus a phased roll-out of your ERP system? The selection of the right way to roll out your ERP software is quite circumstantial. If you have a limited number of locations, a big bang approach is very attractive. If you have numerous locations, especially across borders, phased roll-outs are more appropriate. Copyright 2000 by Robert W. Starinsky. 35

36 The Implementation Approach Software vendors and implementation consultants generally formalize their prior project experience into an approach, or methodology that serves as the framework for an ERP implementation. Copyright 2000 by Robert W. Starinsky. 36

37 The Implementation Approach A good ERP implementation approach has these characteristics: It must be efficient. It must be holistic. It must be adaptable. It must manage your expectations. Copyright 2000 by Robert W. Starinsky. 37

38 Change Management A change management process is required. The process must focus on managing how your expectations, project scope, functionality gaps, technology problems and other project risks are identified, prioritized, tracked and resolved. Managing change helps to mitigate risk. Copyright 2000 by Robert W. Starinsky. 38

39 An In Depth Look at a Best Practice Based Approach This approach serves as a framework for the design and development of a project plan specifically tailored to achieve the implementation of any ERP system, breaking the enterprise system implementation into stages that logically divide a complex project into plannable units of work. Copyright 2000 by Robert W. Starinsky. 39

40 A Best Practice Based Approach The stages work together to ensure that the implementation effort is planned controlled and monitored. Within each stage of this approach specific activities, or tasks are defined and there are deliverables, or outcomes associated with each such activity or task. Copyright 2000 by Robert W. Starinsky. 40

41 A Best Practice Based Approach A lower-level, or detailed work breakdown structure, or work package must be developed for each stage of your ERP implementation project. For instance, within the work package you would identify specific configuration steps. You will have a high-level master project plan for all of the stages of your project and multiple sub-projects. Copyright 2000 by Robert W. Starinsky. 41

42 A Best Practice Based Approach Project management must be a formal process. Use a robust computer-based projectplanning tool such as Microsoft Project, or Primavera Systems Primavera Project Planner. Estimate and assign resources. Track resource effort expended. Continuously update your plan. Copyright 2000 by Robert W. Starinsky. 42

44 A Best Practice Based Approach Charter the Project Project working and executive teams will be defined and staffed. The project scope and objectives will be defined. Copyright 2000 by Robert W. Starinsky. 44

45 A Best Practice Based Approach Charter the Project The kick off meeting is held to develop and share a clear understanding of the project scope and objectives as well as the implementation approach, or strategy to be employed. A detailed implementation plan and project timetable is established. Copyright 2000 by Robert W. Starinsky. 45

46 A Best Practice Based Approach Select the Project Team Formal project executive sponsorship is established. A team leader is appointed. A working team of the best and brightest is assembled from representative business areas. Consulting participants are interviewed and added to the team. Copyright 2000 by Robert W. Starinsky. 46

47 A Best Practice Based Approach What is a Project Executive Team The project executive team, or project steering committee will meet to review progress, assess project risks and decide on project scope, budget or schedule changes. The basic agenda for these meetings, usually held monthly, will be to review the overview project status using the project plan, the project budget and the project issues list as guiding documents. Copyright 2000 by Robert W. Starinsky. 47

48 A Best Practice Based Approach What is a Project Working Team The project working team will plan the work and work the plan. This team will meet to review progress, determine project status, identify issues and tasks, identify project risks and project scope changes. The basic agenda for these meetings will be to review the project plan, individual action plans, task status, project issues and to propose resolutions to issues. Copyright 2000 by Robert W. Starinsky. 48

49 A Best Practice Based Approach Educate the Project Team The project team receives overview and specialized education in the base ERP software functionality. The base ERP software environment is defined and the base delivered ERP software is installed into this environment. Any necessary project team hardware is installed and made operational. Copyright 2000 by Robert W. Starinsky. 49

50 A Best Practice Based Approach Model the Business An analysis of current business practices within all affected functional areas will be completed. Best practices contained in the base ERP software product that you will use in your company are identified. Develop transaction processing scenarios. Copyright 2000 by Robert W. Starinsky. 50

51 A Best Practice Based Approach Configure the Software The base delivered ERP software product is configured around the business transaction scenarios. A key tenet of a successful ERP implementation is to avoid customization of the core product where and when possible. Copyright 2000 by Robert W. Starinsky. 51

52 A Best Practice Based Approach Prototype Business Processes Proof of concept occurs as transaction scenarios are tested. A complete understanding of how the base ERP software works is sought and these processes are documented. Any software gaps are identified for further action. Copyright 2000 by Robert W. Starinsky. 52

53 A Best Practice Based Approach Identify Functionality Gaps Further testing of any previously identified transactions containing gaps occur. A full understanding of software gaps is sought and workarounds are devised and modeled. Custom transactions are designed to replace, or extend the functionality of the base delivered ERP software product. Copyright 2000 by Robert W. Starinsky. 53

54 A Best Practice Based Approach Develop Technical Solutions Custom transactions are developed against the previous specifications to replace, or extend the functionality of the base delivered ERP software product. Copyright 2000 by Robert W. Starinsky. 54

55 A Best Practice Based Approach Develop Technical Solutions A data migration or conversion plan is devised and executed. Master data and transaction-related data from existing, legacy systems are identified and analyzed, tools or programs are used to scrub, edit and load this data into the appropriate ERP system data files or data tables. Copyright 2000 by Robert W. Starinsky. 55

56 A Best Practice Based Approach Document Configurations, Customizations, Personalizations and Processes Business policies and procedures are revised and rewritten as needed to support the new ERP system. Training programs, materials, agendas, participant schedules, trainers and facilities are prepared. Copyright 2000 by Robert W. Starinsky. 56

57 A Best Practice Based Approach Establish Production Readiness Final testing is completed. Testing plans should allow for individual component, module, and interface testing and finally end-to-end testing of the entire ERP system. All of the preceding detailed work should make going live, a decision point rather than an additional task to fulfill at the end of a project. Copyright 2000 by Robert W. Starinsky. 57

58 A Best Practice Based Approach Train End Users End user training is delivered. Training should be conducted as near as possible to the go-live date. Use a classroom whiteboard as a parking lot for unresolved questions, problems or issues that arise. Provide written follow up of all parking lot issues not resolved during training. Copyright 2000 by Robert W. Starinsky. 58

59 A Best Practice Based Approach Go Live The management and working teams assess the overall readiness to go live. A go live decision is made and the software launch countdown begins. Load master, configuration, historical and transactional data into the production environment. Your company starts conducting business through the new system. Copyright 2000 by Robert W. Starinsky. 59

60 A Best Practice Based Approach Establish Steady State Support begins coincident with live production. System monitoring should be conducted. The amount of tuning required will depend on initial results in production. There may also be performance or procedural issues encountered that require changing processes, ERP system configurations or additional training. Copyright 2000 by Robert W. Starinsky. 60

61 A Best Practice Based Approach Establish Steady State A smooth and orderly transfer of knowledge to your personnel should occur and implementation consultants should roll off the project. A small contingent of your project team remains in place serving as the ERP help desk to answer questions, provide additional training and to complete system tuning or reconfiguration when needed. Copyright 2000 by Robert W. Starinsky. 61

62 A Best Practice Based Approach Perform Periodic Health Checks Keeping your ERP system healthy is an ongoing process rather than a stage in the project. The process begins after going live and extends throughout the installed life of the ERP system. Copyright 2000 by Robert W. Starinsky. 62

63 A Best Practice Based Approach Perform Periodic Health Checks Periodic health checks should assess both the functional and technical results of the system. A main purpose is to determine if the ERP system is achieving its original objectives and whether its full benefits are being realized. Copyright 2000 by Robert W. Starinsky. 63

64 A Best Practice Based Approach Complete Periodic Software Updates Apply fixes to resolve known software bugs or that enhance software performance. Apply upgrades that provide functionality enhancements to extend the value of your ERP system investment. As a general rule, don t upgrade immediately when a new release is available. Copyright 2000 by Robert W. Starinsky. 64

65 A Best Practice Based Approach Complete Periodic Software Updates Upgrades are more difficult and time consuming if you have made extensive customizations or have significant integration points with other systems. Copyright 2000 by Robert W. Starinsky. 65

66 Epilogue Your business is not static, it is dynamic. Therefore, your business processes and infrastructure, which includes your ERP system, are constantly in need of change to reflect the dynamics of your business. Copyright 2000 by Robert W. Starinsky. 66