It can be amazing to see how manufacturers go from high expectations during their ERP software selection process to merely hoping that their "goes-live” doesn’t fail as the implementation proceeds.
by Vivien Chan, Regional Marketing Lead, Tectura ASEAN
Enterprise Resource Planning (ERP) has truly become a mature business application. It spans over three decades and has become more pervasive in manufacturing that forms the necessary infrastructure for business operational and transactional records needs of all types and sizes.
ERP implementation failures wreak a great deal of pain and bring manufacturers to their knees, with implementation cost overruns, under-deliver business value, project delays, etc. It can be amazing to see how manufacturers go from high expectations during their software selection process to merely hoping that their "goes-live” doesn’t fail as the implementation proceeds.
So what’s should Manufacturers focus in an ERP implementation?
We anticipated that the “most-common” root causes of a poor ERP implementation boil down to the following three key elements:
1. Understanding of End-to-End Business Processes – ERP systems for the manufacturing industry are flexible and have the capability to design for unique needs such as food and beverage, chemical and plastics, pharmaceutical, discrete manufacturing and other verticals; to name a few.
For example, ERP systems allow process manufacturers to operate and manage business activities such as order entry, packaging, shipping, and accounting. They also provide the capability for quoting, work order generation, job tracking, costing, inventory control, attendance, and data collection. However, they require the ability to understand their product capabilities and to incorporate industry-specific functionality that best suit the nature of their operation processes, in order to integrate with their supply chain planning, production scheduling, product lifecycle, asset management, etc.
Hence, it is important for manufacturers to visualize, plan, define and communicate precisely to employees how business processes are going to look like in the new “goes-live” environment. Otherwise, the most perfect ERP implementation can result in failure due to poor understanding of the business processes.
2. Effective Organizational Change Management - Employee are resistant to new processes, even among C-level executives in the same organization. They don’t understand the distinguished benefits and value in return of IT investment to the organization. They need to fully understand these business processes changes and set accountability for critical path and business-focused implementation activities in order to move forward with their business function effectively.
The management team needs to realize that implementations often span several years and involve endless amounts of organization-wide effort and change. ERP system doesn’t end at the software purchase or/and “goes-live”. It requires changes in business practices across the entire organization that always overlooked by the manufacturers, which have resulted in unanticipated additional costs such as employee training, software customization, and/or external consulting assistance for implementation strategies etc. which blow budgets and lengthen project implementation durations.
In this context, professional service and technology providers that have deep verticals knowledge and experience in manufacturing implementation may be able to assist providing a realistic project plan for decision making process; facilitating a robust organizational change management program to help employees better understand the specific differences and needs, such as how the ERP implementation affects their specific jobs and how the end-to-end business processes will appear in the new system environment etc., in addition to the well-versed end-user training.
3. Right Business and Implementation Expectations – From our past ERP implementation experience, a project that didn't have a well-defined/planned, unrealistic budget and/or insufficient allocation of resources always prove harmful to an ERP project and may cause additional problems in the short- and long-term.
Of course, when spending up to hundred or millions dollars on ERP solutions, there are certain things that manufacturers are expected - high quality, on-time delivery, and made-to-order customization to non-standard specifications; to name a few. However, the manufacturers that had experienced the ERP customization didn’t fit with what they wanted it to be; project delayed with additional requirements added during the implementation phases; under-estimated the budget and resource requirements to meet the project scope and implementation timeline etc.
Let us take “software customization” as one of the common requirements in manufacturing. The manufacturers need to be mindful that the more customization, the longer implementation time; the more it’s going to cost and the higher risk they bring into the project. On the other hand, it’s not realistic to completely withdraw from software customization. Hence, they need to decide on the right level of customization that changes allow them to maximize its cutting-edge advantages or differentiators. At the same time, they should to re-evaluate the customization requirements to align back with their business needs and the implementation rollout approach strategically - big bag, phased or a hybrid of the two. Otherwise, it may end up in high implementation cost, project delays etc. without the realization of expected benefits.
It’s vital for manufacturers to realize that an ERP project can easily goes awry without well-defined plan or/and insufficient supporting resources. They need to set a realistic expectation on their business and operational needs, form a tight project governance structure, i.e. project scope, implementation timeline, with the right resources and allocated budget in place. It all starts with their ERP evaluation, selection and implementation planning phases that will help them to have a distinct decision making and buy-in into the way the system will be set up for a successful ERP implementation.
From a technical perspective, ERP software implementation can often be done in as little as a few weeks, but the challenge always falls into aligning the software with the manufacturing business processes and their specific needs. Also, bearing in mind that ERP project “goes-live” will not necessarily gain instant benefits and business value to the organization. The benefits attained as a result of a specific strategic actions and capabilities in order to combat the challenges and achieve the organization’s goals. Thus, manufacturers need to understand the key challenges faced and set priority to align with the business needs; and at the same time, build a strong collaboration with the service and technology provider to form a realistic plan, adopt appropriate methodologies and actions that definitely help the project go a long way toward ensuring successful ERP implementation.
Tectura is a worldwide provider of business consulting services delivering exceptional service and sustainable value through consulting, software and IT implementation. Visit www.sg.tectura.com to learn more.