For many companies, ERP, which handles all transactions related to the company’s resources, is what enables the heartbeat of everyday operations. A well-functioning ERP lets you run your logistics, manage your orders, handle your finances, and much more. In other words, for companies that want to be productive and successful, it is critical to run a strong ERP that ensures your daily pulse and ideally also gives you a competitive advantage. At the same time, as technology evolves and enables new capabilities like real-time visibility into all your operations regardless of location, an optimized ERP can really give you a productivity boost and that competitive edge you are seeking for – which is one reason why an increasing amount of companies are looking for ways to renew and modernize their ERP backbone.
Why is it then so, that ERP development is still often seen as a difficult and cumbersome roadblock, and projects are often perceived to be late and over budget? Have you ever heard of a really successful ERP transformation? Many are familiar with the projects that started with high hopes but over time turned into painful stories. It is good to understand that due to its nature of being such a central backbone for the whole company, renewing the ERP is often a major, complex undertaking with many unknowns on the horizon, due to the dynamics of the business.
However, there are a few things that can change everything. Based on our experience, here are some considerations that can help you significantly in making your ERP renewal a success.
1. Define concretely what you want to achieve, and why.
In large ERP renewals that affect most of the company’s business processes, there are often high expectations and hopes from many stakeholders all over the company. At the same time, the reality often is that resources are limited. It is very important to define the boundaries of the project, and set the expectations:
- WHY are we doing this – define a prioritized set of business drivers for the whole thing. Does the company want more speed? Or agility? Cost savings? Specific new business capabilities? A technical version upgrade? All of these may sound equally important, but the fact is that having clear priority between these will greatly help you in steering your whole project in the right direction, and make justified scope-, schedule- and other decisions when needed.
- WHAT are we going to do – make yourself a prioritized set of requirements – what are the must-haves and what is optional? Although scope changes might come up later, it is nonetheless critical to have a clear baseline to start with.
By defining the What and the How, all parties (company leadership, end users, customers, partners, the project team) will understand the purpose of the project, be motivated to do it, know what benefits it will bring, and the project will be much less likely to be impacted by random changes or differing views along the way.
2. Define how you are going to do it in practice – really concretely.
If you fail to plan, you plan to fail. Regardless of whether you prefer traditional waterfall- or agile development methods in your ERP project, you should not forget about the importance of having a solid and realistic plan at all times. On the contrary, the higher quality your plans are, the smaller risk there is for unpleasant surprises and the better odds you have for success. Also remember that plans are nothing, planning is everything – in the real world, things very rarely go as originally planned and you have to adapt, which is why you need to keep evaluating your plans all the time. Ask yourself, does my plan still reflect the current business drivers? Do the priorities continue to be right? Do I really have the right resources lined up for next week / month? How do I deal with that business change that the company leadership announced yesterday? And so on. One might be tempted to just forget about the plans after kick-off, and focus on execution – our advice is, don’t. Rather, make continuous planning one of your important daily routines.
3. Make sure you have the right governance and full commitment.
In order to ensure that all the relevant business- and technical aspects are fully considered and the best decisions made for your ERP renewal, we strongly recommend to establish a Steering Group and a Technical Advisory Group for governing your project. These groups should have the right senior people from in- and outside the company (such as a representative from your ERP solution provider if possible) who have the best business- and technical insight, and are empowered to make decisions. Having a strong business commitment and clear priority program status in IT- and business teams will significantly increase your odds for success. On a more practical level, your project team will benefit greatly from having common ways of working and efficient meeting practices, as well as a continuous focus on clear roles, responsibilities and project structure. Also, don’t be afraid to make changes to any of these structures or roles, if the situation demands it.
4. Get the best possible project management and change management capabilities in place.
It is good to acknowledge that ERP renewals are not your standard IT projects. They are usually far more complex, costly and risky than the average project in your portfolio. ERP is also a specific competence domain of its own, and finding project managers with relevant experience and subject matter expertise can be hard, but at the same time absolutely critical to the success of your project. Invest the needed time and effort in finding the right project management competences. Also, make quality checks to see that the project management is really performing: Is proactive and structured Critical Path-, Dependency-, Risk-, Issue- and Financial management in place? How about continuous Resource Management incl. demand/supply balancing and fast escalation paths? And so on.
Also, due to the nature of ERP being the enabler for so many different processes around the company, you will have a large amount of different stakeholders (and opinions) to manage. Do consider having dedicated resources for continuous and powerful communications- and change management activities, to share visibility and make the audience receptive. Maintain a high focus on communications to all stakeholder groups in- and outside the program. The fact is that no matter how perfectly you have done everything else in your project, it will end up in a major failure if the end-user audience is unable, unaware or unwilling to deploy the renewal in practice.
5. Make sure master data is in shape and leave no holes in your testing.
The bigger and more profound ERP renewal you plan to do, the more important it is to pay attention to the high quality of master data and testing. You will want to be fully certain that your business processes run smoothly on the renewed ERP. In practice this translates into several testing rounds with extensive scope, including functional-, integration-, user acceptance- and performance testing. A key to thorough testing is strong business involvement in the test scoping and -execution, as it is crucial to know which business processes are impacted and how they are impacted. If possible, also consider the usage of test automation to the fullest possible extent, to increase quality, repeatability and speed of testing, and to decrease cost. To make your tests reliable, make sure your master data is always correct. For data selections, -migrations and -conversions, consider several testing rounds to validate the correctness of the data – in case of data errors, the whole project outcome and business continuity will be seriously jeopardized.
6. Focus early on the go-live cutover.
The go-live cutover is the moment of truth in your ERP renewal. This is the moment when the whole project can turn into a disaster or a success in a matter of seconds. Our advice: get mentally prepared for the cutover as if it were a space rocket launch – everything must work right away from the first second onwards. Start the go-live cutover planning and thorough preparations early in the project. Do multiple simulations and dress rehearsals if possible. Arrange comprehensive training and support preparations before the cutover. Ask everyone involved in the project – are you ready? Can you prove that you are ready?
7. Most importantly – build an excellent team, spirit and commitment.
We believe that the single biggest success factor is the actual team that does the renewal in practice. Do invest the needed effort in building the best possible team with the best possible motivation level. The key to this is that the team has a common “purpose”, which is strengthened through empowerment and fostering collaboration. Use the best possible partners in areas where you want help and expertise, and involve the ERP solution provider at least in an advisory role if possible. Aim to build a team that is motivated and genuinely united, working towards a common goal, sharing both the pain along the way, as well as the success in the end!
We in the Sininen Polku team have experienced several ERP renewals of different shapes and sizes, including major failures and great successes. Based on our observations, the above tips can really make a difference. If you want to hear more tips or discuss in more detail on how we could help you in your own upcoming project, don’t hesitate to contact us.
Sininen Kynä (=Finnish for the ‘Blue Pen’), the Sininen Polku team.