Critical success factors for an ERP implementation

An ERP implementation may seem like a daunting task or perhaps you’ve read about various horror stories of projects going way over budget, projects that are ultimately canceled, or don’t deliver on the promises made. Ultimately, there are many factors that contribute to an ERP implementation’s success.  However, over the past 22 years of consulting on many implementations across multiple ERP products, I have identified a few themes that are critical to the success of the implementation.

Management Commitment

A quick google search will often show Management Commitment as a key success factor for ERP implementations but why is this so important? 

  • ERP projects are sometimes considered “IT” projects, but this view is too limiting. Upper management must be involved to ensure the goals of the ERP implementation align with and support the strategic initiatives of the organization.
  • Middle management may be hesitant to commit people to the project for fear of disrupting daily operations; that hesitation can be managed if the project is recognized as a top priority at the corporate level or maybe be making a budget available to backfill those positions.
  • Management needs to select and empower the project team. It is important that people with a deep understanding of company processes are selected to participate on the project team, but it is also important that those people are empowered to make process and system configuration decisions.  Nothing kills project momentum faster than requiring management meetings for every decision that arises during the implementation.  Where empowering the project team simply isn’t feasible then be sure to adjust the plan to take into consideration the additional time and budget that will be required.
  • Management needs to stress that custom development which is not already planned in the project scope should be avoided. When a development is considered unavoidable then an approval process needs to be in place so that management can be sure the development has a significant ROI. Developments that help a single user or provide a fancy solution to a process that occurs once a month may not be worthwhile.

Change Management

An ERP implementation project can represent a major change to the processes and software that users are familiar with; these users need to be prepared and onboard. Change management refers to the different approaches that can be taken to prepare and support individuals, departments, and companies for organizational changes.

  • Identify the project team early and make them part of the software selection process: The project team will be composed of knowledgeable staff from different areas of the business; this knowledge will help make sure the software selected meets the business requirements. Taking part in the selection process will enable these users to become champions for the project and convey excitement, to other employees, about the upcoming changes.
  • Manage employees’ expectations: As outlined later in the project scoping section be sure to have clearly defined goals for the implementation. Explain to all employees how the implementation is beneficial to the continued success and growth of the organization. Be transparent about the impact on employees’ day-to-day operations; a new system can increase productivity but not necessarily for everyone. Some tasks may become slightly longer to ensure the right data is captured and the benefit this provides may only be felt in another department.
  • Training, Training, Training: On typical ERP projects a train-the-trainer methodology is followed. This means the project team’s members are trained and become system experts following the configuration and multiple testing phases that are typical of ERP projects. It’s important that these employees become experts because they are the ones that will train all the other employees that will use the system. Training employees on both the system as well as any new or changed processes is critical for a successful implementation. I’ve actually seen an implementation where the company was selling and shipping but not purchasing to restock the warehouse for over a month; the purchasing users thought by entering a PO the new system automatically placed the order with the vendor which was not the case in their scenario.

Project Scope

Determining an appropriate project scope is also a critical component of a successful ERP implementation. For the organization, there is more to determining a project scope than simply choosing which of the software’s functionality to implement.

  • Process Review: An internal process review will help clearly identify which processes require improvement and which will benefit the most from an ERP implementation. The process review will allow you to present the project team and implementation partner a clear direction for what you want to accomplish.
  • Phased approach: Be reasonable in selecting the number and complexity of processes to implement. The organization must determine how much change its people can successfully adopt; remember you can always consider a phased approach to limit business risks.
  • Clear Goals: The process review can help establish clear goals for the implementation project. Having clear goals will make it easier to measure the success of each phase of the project. These goals also need to be communicated throughout the business and project team; as mentioned in the change management section it is important to manage the users’ expectations. In addition, users that have a clear understanding of the goals may be able to resist “scope creep” with the knowledge that certain software features don’t fall into the organization’s immediate plans.

Implementation Partner

All ERP implementation projects should make use of a qualified implementation partner. What should you look for in an implementation partner?

  • Experience: Your partner should have a proven implementation record. Ask about project successes, project failures, and even project rescues from other partners. Do they have a proven project methodology?
  • Industry Experience: A partner that has experience in your industry can be a benefit but a partner that has experience in multiple industries can be an advantage. A partner that has broad industry experience will have more solutions to draw on to ensure your organization is getting the best solution for its requirements
  • Partner Recognition: Most ERP vendors have some form of partner recognition program and/or awards. Obviously, this on its own does not make a partner good or bad but it’s a good start if they are making the effort to be recognized by the vendor.
  • Reference: Arguably, references can be one of the best sources to vet your implementation partner. Ask for references both within and outside your main industry.