10 Simple Rules for Successful ERP Projects

META GROUP said that much as 75 percent of all CRM projects fail to meet their objectives and that 70 percent of ERP and SCM projects are just as appalling if not outrageous. This is because of price tags that each of these engagements can cost an enterprise.

ERP carries with it the burden of integrating the business process with IT and thus requires considerable amount of planning, customization and fine-tuning.

Below we highlight TEN rules that will help guide you through the intricacies of implementing an ERP system and hopefully see you through a successful engagement process.

Geoff Squires, Solutions Director for Asia Pacific at Intentia provides field insight into each rule.

RULE ONE: Develop a strategic vision

An ERP implementation is a business transformation process. It is therefore important to have a strategic vision for the future and develop a high-level roadmap to achieve it. The vision should have achievable targets and that the team must comprise of process and technology experts.

Geoff Squires: The key to the success of any project -- particular the highly complex, multi-site, multi-function deployments, is to continually focus on 'why' this is being done -- whether to mitigate future risk to the business, whether it is to engender improvements based on increase in revenue. All these factors need to be understood and supported from the top board level management down through the organization to ensure all buy into, and keep focused on those goals.

RULE TWO: Align project goals with organizational goals

Project goals must be aligned with the overall goals of the business. Clear project goals must be developed, articulated and used to drive the project decision-making and ultimately measure project success.

GS: The first point to note is that such projects are seldom just technology implementations. Most projects form a significant initiative that impacts the business at a management level, and also and the organization's future operational processes. As such, it's vital that the project is strictly aligned with the company's business and is properly prioritized.

RULE THREE: Establish realistic timelines

A successful, integrated ERP implementation relies on a realistic project timeline. Gathering requirements, designing and configuring the applications, testing, training, and acceptance are standard activities of a technology implementation.

GS: Although people tend to want to get things completed as fast as possible, shortcuts often create significant tensions and issues. It is critical that from the outset, realistic expectations are set -- and managed throughout -- to ensure that the business sees the project running on schedule and succeeding from beginning to end.

RULE FOUR: Staff your project with the right resources

A successful ERP project is manned by a team that represents the various business units that will be impacted by the solution. They work closely with the application specialists who will then customize the application to match the business process.

GS: This is a fundamental issue for many implementation projects. Many project teams have two tasks: to represent the real needs of the business so that the project is built around the right processes for that business; and to build 'respect' for allocated resources, by the business. If process owners are not respected, then it is hard to build respect for the project itself and the outcomes will potentially become tainted by those personal resource attributes.

RULE FIVE: Organize resources as a joint project team

An ERP project is a transformational exercise designed to improve how a company creates, builds and delivers value to its customers. As such, each member of the project team will need to work very closely with each other. To ensure the group stays focused on its goals, members should report to the project manager for the duration of the project.

GS: Once again, this is all about focusing on the ultimate goal(s). That the project is aligned towards that goal, and that people involved are prepared to unite and understand the necessary compromises that may be required across cross-functional areas -- because they are all working to that ultimate end game.

RULE SIX: Utilize cross-functional teams

Business process often cuts across functional departments within the organization. Solutions to process problems are not completely isolated to a specific department. Having a cross functional team approach to problem solving brings together people with specific knowledge, skills, objectivity and fresh perspective necessary to achieve desired improvements.

Gs: This is critical! The danger of working in 'silos' without any crossovers or integration across the team is that the business will likely find itself having to resolve functional issues down the track because the team hasn't worked together properly at the front end of a project. Ensuring project teams understand the entire configuration of a system based on cross-interaction at the start, can be pivotal in mitigating such risks.

RULE SEVEN: Let process drive system design

Successful ERP implementations are projects that are driven by the business process, and not the technology that the company purchased. Conversely, ERP projects fail because technology is allowed to rule the implementation thereby forcing organizations to completely change the way they design, manufacture or deliver products to meet the strengths and weaknesses of the ERP system being introduced into the organization.

GS: This is all about focusing on the ultimate goal(s). That the project is aligned towards that goal, and that people involved are prepared to unite and understand the necessary compromises that may be required across cross-functional areas - because they are all working to that ultimate end game."

RULE EIGHT: Eliminate substitute processes

As the name implies, a substitute process is created to cover up a weakness in the primary process. Substitutes are, by nature, temporary and meant as stop-gap measures to allow for correcting a faulty primary process. Because these are often inadequate by design, their root cause should be identified and fixed to bring back normal processes in line.

GS: Over time, businesses develop numerous processes that essentially are doing very similar or identical things. This is generally the result of organizations working within the constraints of old systems and or old cultures resistant to changes in working practices. It often occurs due to lack of understanding of what is possible at a strategic level, because the process owners are working at an operational level. In these instances, collapsing these multiple systems into one process -- but one that incorporates different variants to cope with any site-specific or unique requirements -- simplifies operations and ultimately the business.

RULE NINE: Use metrics to measure success

A successful ERP implementation will yield measurable results. These can then be used to further improve upon the processes creating a continuous improvement model. The goal of measurement is therefore to improve performance. A successful metric process needs to measure one of three different aspects of a process: cycle time, cost and first pass yield (the percent of acceptable products produced during one cycle).

GS: Quite often, a basic failure of a project can come down to a team's inability to measure the outcomes of the implementation. The most common cause of this is a failure to set benchmarks at the beginning of a project -- a baseline from which to work and compare end results to. Critical to measuring a project's value is to set high and lower KPI's at the beginning and on completion, refer back to these in order to assess realization of those expected benefits.

RULE TEN: Manage the change

The most overlooked and undervalued aspect of a technology initiative is managing the impact of organizational change. Successful ERP projects include a change management program that educate, prepare and motivate those impacted by the change so they can adapt to and succeed in the new environment. Change is always difficult but a committed leadership that is able to effectively communicate and motivate the workforce is primed to achieve the goals it has set at the onset of the ERP project.

GS: Significant changes can touch every part of an organization as the result of such projects. The response will generally fall into categories of those that will embrace change, and those that will resist it. If expectations, concerns or and difficult user acceptance are not managed adequately, it can affect the entire outcome of a project, irrespective of how successful the deployment is.

Conclusion

Organizations increasingly recognize that ERP technology provides the necessary support for efficient business processes. Only when these processes are designed to accommodate the software's functionality can the capabilities of the technology be realized.