Implementing a Brighter Future with ERP: Tips and Insights on Making Your ERP Implementation as Painless as Possible

This report looks at recent survey results and includes industry insights and tips on what to expect during an ERP implementation including: a brief overview of today’s ERP systems; preparing for an implementation; misconceptions, mistakes and best practices concerning the implementation process; and where the industry is headed.

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M A R K E T M O N I T O R R E S E A R C H S E R I E S Implementing a Brighter Future with ERP Tips and Insights on Making Your ERP Implementation as Painless as Possible PRESENTED BY: SPONSORED BY: M A R K E T M O N I T O R R E S E A R C H S E R I E S 2 Table of Contents INTRODUCTION ...................................................................................................3 SECTION 1: Today’s ERP Systems ......................................................................5 Analytics ..........................................................................................................5 Millennial and Mobile Workforce .....................................................................6 Company Collaboration ..................................................................................6 The Cloud and Hybrid Systems ......................................................................7 Considerations ................................................................................................7 Staying Up-to-Date .........................................................................................8 SECTION 2: Preparing For Implementation ........................................................9 Implementation Plan .......................................................................................9 Implementation Team .................................................................................... 11 SECTION 3: Misconceptions, Mistakes and Best Practices ............................ 13 Misconceptions ............................................................................................. 13 Pain Points & Mistakes .................................................................................. 14 Best Practices ............................................................................................... 16 SECTION 4: Moving Forward ............................................................................. 17 Judging Implementation Success ................................................................. 17 Evolution of the Machine ............................................................................... 18 M A R K E T M O N I T O R R E S E A R C H S E R I E S 3 INTRODUCTION It was 1990 when Gartner Co. first coined the term ERP, in reference to the emerging Enterprise Resource Planning systems of the time. These systems evolved from traditional Manufacturing Resource Planning (MRP)-type systems used in the 70s and 80s to centralize and integrate business information in a manner that would foster production line decision making and increase over- all efficiency. As time went on, manufacturers saw the need to integrate their data on the manufacturing side with data coming in through the business side like accounting, payroll and customer relationship management systems — creating the need for ERP. Once conceived, it was thought that all-inclusive ERP software suites running manufacturing businesses were going to be the way of the future. Although manufacturers and software vendors have changed the way they use, deploy and interact with ERP, they continue to evolve with the needs of modern business. "When I got out of college, I headed right to the manufacturing shop floor," explains Lee Filbert, vice president of services with software vendor IQMS. "It was a somewhat chaotic environment of spreadsheets, paper and whiteboards — and hard to maintain it all. I volunteered to search for the company's first ERP system. During ERP implementation you really understand that shop floor connectivity is critical because it allows you to set a solid foundation for you to grow your organization and build a thriving manufacturing business." Was the ERP Implementation an Upgrade to a Previous System or a New Installation? Upgrade to an existing system 43.3% New installation with no previous system in place 28.4% New installation of ERP from new vendor 28.4% M A R K E T M O N I T O R R E S E A R C H S E R I E S 4 Manufacturing Business Technology (MBT) recently surveyed its readers to understand their experience with implementing an ERP system for their business. According to respondents of the survey, 63.4% are currently using or implementing an ERP system, while 36.6% still are not utilizing the technology. Out of the respondents who have been part of an ERP implementation at their organization, 71.7% were part of an upgrade of an existing system or an installation from a new vendor. Only 28.4% implemented an ERP system with no previous system in place. This report looks at those results and includes industry insights and tips on what to expect during an ERP implementation including: a brief overview of today’s ERP systems; preparing for an implementation; misconceptions, mistakes and best practices concerning the implementation process; and where ERP is headed. The Top Reasons Companies Don't Implement an ERP System 1. Company too small for ERP 2. Current systems are good enough 3. Don't feel we'd use it 4. Don't have the manpower/ resoures to run it. 5. Too busy to implement a new system 6. Don't feel we could afford it 5 SECTION 1: Today’s ERP Systems Modern ERP systems have capabilities that extend far beyond the abilities of traditional MRP/ERP systems of the past. For instance, since the early 90s, Enterprise IQ has reached out to the shop floor and ingrained into production equipment to monitor cycle times and more Manufacturing Execution Systems (MES)-type applications that slowly became embedded into ERP systems. One of the value propositions a modern ERP brings to the table allows a company to see how assets are performing and how quickly the organization is able to produce products for customers from the back office. With production equipment becoming smarter, and the advent of the Internet of Things (IoT), it's easier to pull information out of machinery and report that data back to the main ERP system. There are quite a few trends currently happening in ERP systems and how companies are utilizing them. These trends include everything from how a company deploys their system to how these systems are evolv- ing for a changing workforce. Before a company begins an ERP imple- mentation process, they need to know what’s driving modern systems. Analytics By creating a more connected organization, companies are able to gather large amounts of data about their production, processes and overall business. But it doesn’t do a manufacturer any good if they don’t know what all the Big Data they’re collecting is telling them. That’s why managing analytics is one of the biggest trends happening with ERP systems. “Analytics allows you to get into the information,” says Kathie Poindexter, manager of product marketing at software vendor Epicor. “System dashboards and visuals helps employees drill down into the data rather than have to go look up an order. Modern systems even have Google-like searches that ensure that you can get to your information quickly without having to know how to maneuver through the ERP system.” M A R K E T M O N I T O R R E S E A R C H S E R I E S Wait Time to Upgrade Existing System or to a New Vendor < 1 year 5.6% 1 year 11.1% 2 to 3 years 22.2% 4 to 5 years 13.0% 6 to 7 years 9.3% 8 to 9 years 11.1% 10+ years 27.8% M A R K E T M O N I T O R R E S E A R C H S E R I E S 6 Millennial and Mobile Workforce There is a generational change currently happening in the workforce. The industry is taking a hit as Baby Boomers begin retiring and a younger labor market moves in to take their place. Millennials have grown-up with technology and have a different way of interacting with the world around them, which is why ERP systems are changing to include more mobile and social aspects to their software. ERP vendors also have been working to make sure that their solutions can be deployed on multiple devices. It's no longer about the system sitting in an office desktop computer. Companies want a solution that can be accessed on mobile phones and tablets. Even on the shop floor, employees might be given tablets to get information instead of standing at a workstation. “It's about mobility and a workforce that's more dispersed,” adds Poindexter. “Employees can monitor and work when they need to — at the office, in a meeting, at home, on the shop floor or at the airport. Everything is very fluid and can be seen easily on different devices. It's not just displaying a big ERP screen on a 24-inch monitor. You have the capability to size everything properly with the right information if you have to do something on your smart phone or your other smart device.” Company Collaboration Another trend happening in ERP is the ability for more collaboration. System designers are integrating social tools for sharing information that a younger workforce is more comfortable using. There is a move away from communicating everything through email or an alert and instead toward a social board where everyone can interact with each other and see what's going on. “One of our customers deployed that social capability with large touchscreen monitors out on the shop floor,” says Poindexter. “They can actually write their comments about what's going on and see what other people are doing, including engineering changes happening or when a new order comes in.” Beyond internal efficiency, collaboration with a manufacturer's customers and supply chain, is becoming popular with companies. Organizations are deploying secure portals so that customers or suppliers can interact directly with the ERP systems. Gone are the days of scanning, emailing and faxing hard copies back and forth. Everything is becoming paperless. M A R K E T M O N I T O R R E S E A R C H S E R I E S 7 The Cloud and Hybrid Systems “If you look at the rate of cloud adoption in the past five or 10 years, it is absolutely staggering,” says Forrest Burnson, a market research associate for Software Advice, a Gartner company. “It's really interesting because traditionally companies felt very strongly about housing all their data on premise or in-house and not outsourcing to a third party — mostly due to security concerns. But a lot of people are starting to realize that the security concerns really aren't as serious as they once thought they were, and it can actually be very safe. There are ways to audit vendors and to make sure that they are doing everything that they should be doing on their end.” Burnson also mentions that with the adoption of cloud computing and the implementation of sophisticated software that is more compatible, he sees more companies using a hybrid strategy for hosting their applications. He indicates that manufacturers are more carefully scrutinizing which data and applications can be hosted on premise and which can be hosted in the Cloud. “Now it's very much a hybrid strategy that is becoming very popular for companies,” says Burnson. Implementing a Cloud-based or SaaS system is probably going to be easier for a company than on premise, but it really depends on what a company is currently using now, where their data is being stored and how easy it is to migrate that data to the new system. By hosting applications in the Cloud, companies generally don’t have to worry as much about hardware or a team member ensuring the system is up and running 24/7. Organizations are finding it less labor intensive and time consuming to host everything in the Cloud. “The Cloud infrastructure is a much easier solution to manage going forward as long as the connectivity is there,” says Filbert. “Connectivity is obviously the biggest component of that infrastructure, so making sure that the organization has solid connectivity is imperative.” Considerations “ERP software can easily run a company 6-, 7- or 8-figures depending on how big the company is,” says Burnson. “With any sort of business decision like that, a company needs to put a lot of thought into it. Implementing a new ERP system isn’t like installing Microsoft Word onto your computer. It can be a really long, drawn-out process. You have to consider customizations that you need, how to migrate your data over to the new system, how to train your employees on the new system and how and to gain their acceptance to use the new system.” The ERP market has been traditionally dominated by a handful of big vendors, but there's been an explosion of vendors targeting SMBs and focusing on specific industry niches. These vendors are coming out with really affordable cloud-based solutions to make the software a little more accessible for businesses of all sizes. M A R K E T M O N I T O R R E S E A R C H S E R I E S 8 “It’s really a buyer’s market right now, because of the competitiveness driving the prices of purchase down,” explains Rachel Hansen, director of professional services at Exact Software North America. “We’re also seeing customers becoming price conscience at the same token. Because of that, companies are not buying the full robust solution that is required to become successful with ERP. Meaning that they not only need to invest in the product, but also the services that are required for long-term success.” When considering an ERP system, an organization has to look at not only the company providing the software but also at what the infrastructure of the software is, what is it based on and what its full capabilities are. More and more manufacturers are reducing their IT staff and trying to outsource most of that work if possible. Having a fully embedded solution makes maintaining the software much easier than having separate systems bolted on together. When going out to select an ERP system, manufacturers should understand how all those different capabilities are being brought together by that ERP provider. “First and foremost, consider what your current business pain points are,” adds Hansen. “That way, when you’re evaluating every vendor, you can focus on the solution that vendor is really going to provide you. It’s easy to get overwhelmed with all the bells and whistles, but at the end of the day you need to ask: Does the ERP solution eliminate those pain points you currently have?” Staying Up-to-Date Industry experts generally agree that the traditional lifecycle of an ERP system is about a decade. According to the survey respondents, 38.9% of organizations waited eight or more years to upgrade their ERP system. But there is a growing trend not to wait as long, as 38.9% of companies surveyed upgraded in three years or less. “We certainly recommend that company's stay current with their software vendor and not get version locked, which happened quite often in the past,” explains Poindexter. “You know it was just the way the technology was. It was harder to move your customized systems and data into the technology of today. By staying current with your system, you can make use of the new capabilities your ERP vendor is putting into the system. “There isn’t a hard-and-fast rule that you need to look at a new ERP system every X amount years. But you should look at them if your business changes and your current system is no longer giving you the capabilities that you need to run your company.” M A R K E T M O N I T O R R E S E A R C H S E R I E S 9 SECTION 2: Preparing For Implementation According to responses to the survey, almost half of the companies (47.7%) completed their ERP implementation in the five to 12 month timeframe. But not every company will have that experience. A number of companies (26.8%) took a year or more to implement their ERP system. The benchmark average for ERP implementation is generally around 18 months. “We’re currently seeing a 4 to 6 months per facility implementation time, which is very favorable in the marketplace,” says Filbert. “But understand that that your team is going to be involved during that implementation for those 4 to 6 months. The implementation can go longer or shorter, but having that time commitment put aside before you start the project is definitely required.” Implementation Plan The first steps in putting together an implementation plan is to set realistic expectations, have a practical timeframe and list all of the pain points that the new ERP system needs to address. Companies then need to figure out if they are going to outsource the implementation process to a vendor or third-party, or if they’re are going to try to do it all on their own. If a company tries to implement a whole ERP system in-house, with little support from the vendor or a third-party service, it's probably not going to end well for an organization. Companies obviously have to set a budget, but they should also be cognizant of how quickly and easily that budget can overrun. Plan for the worst-case scenario. “Make sure that if you’re implementing a new system that your company has the hardware that can support it all,” advises Burnson. “A lot of companies don't consider that when they're upgrading their entire ERP system that they will probably have to do some hardware updates as well. That's always something to keep in mind.” Key Goals for ERP Implementation Since an ERP implementation can drain company resources, it’s important to get the most out of the process. Not every implementation is successful. That’s why starting with the right objectives is imper- ative. Your company goals should: • Minimally disrupt business operations • Improve the efficiency of the organization • Reduce overall operation costs • Help increase sales or revenue • Include a reasonable implementation timeframe — don’t rush it! • Have a realistic budget — make sure to include labor and equipment costs needed for the implementation M A R K E T M O N I T O R R E S E A R C H S E R I E S 10 Organizations should also nail down the cost implications and what the value proposition is, including ROI, heading into the implementation process. That is highly critical because it reinforces to everyone why they’re going through the process. Reminding the team on the business value of the process and what’s in the new ERP system for them helps to keep a team motivated. Companies should certify that everyone in their organization understands that the new ERP system’s tools and insights is what will drive company revenue moving forward — and ultimately, their paycheck. “Companies shouldn’t plan for the entire system to go live on one specific day,” adds Burnson. “You want to stagger it. Maybe you'll implement one aspect of the ERP system and then test it, making sure that there is no bugs or glitches in the system. Get whatever team that needs to be using that part of the system trained on it. Then you can continue that process on within each functional area of the new system.” In general, companies should spell out their goals, set firm but flexible timelines, contingency plans and areas of responsibility. Several project managers should cover different aspects of the implementation — from data migration, to training, to installation and go live. Depending on the scope of each, a project manager could cover more than one area. It's also not a bad idea to ask the vendor for previous implementation plans to gain a better understanding of how other companies have done it in the past. Why Has Your Company Decided to Implement an ERP System? Improve customer service 46.3% Make employees' jobs easier 40.3% Standardize global business operations 29.9% Keep up with other companies/ competition using ERP Reduce working capital 10.4% Improve business performance/take advantage of new software/analytics Better integrate systems across multiple locations 59.7% Position the company for growth 55.2% Ensure reporting/regulatory compliance 47.8% Replace an old ERP or legacy system 47.8% 67.2% 14.9% M A R K E T M O N I T O R R E S E A R C H S E R I E S 11 Implementation Team For the implementation to be successful, a company needs to understand who the core people will be that should drive the implementation process. It shouldn’t reside on one person, because then it’s either make or break with that one person. It should be a team of people, and it’s good to have them involved in the selection process of ERP before the purchase is even made — then they’ve already bought into the solution. Getting top-level management support to push implementation down throughout the organization can be highly critical and contribute greatly to the success of the project. That support gets the whole organization into the right mindset to do an ERP project. Length of Time to Fully Implement the New ERP System 1.5% <1 month 9.0% 1 to 2 months 7.5% 3 to 4 months 13.4% 5 to 6 months 16.4% 7 to 9 months 17.9% 10 to 12 months 6.0% 13 to 15 months 10.4% 16 to 18 months 10.4% >1 1/2 years 7.5% Still in the process M A R K E T M O N I T O R R E S E A R C H S E R I E S 12 “One thing that really surprises me is that some companies don't involve their IT teams in the decision-making process,” says Burnson. “Senior management just shows up and says the company is switching to a new ERP system, and the IT team has no idea that it was going to happen. They weren't given any opportunity to provide input or given the chance to point out different functional requirements. “Involve all of your IT decision-makers, department heads or anyone that the change will impact. Let them know what you’re looking to do with the new system and find out what sort of features each department or area would like to see in the new system. Find out what everyone’s pain points are using the software they have now. I think just opening that dialogue internally with your company is really critical.” Organizations definitely need different parties involved in the implementation process. They need to ensure that whatever department the new system is going to touch that someone from that part of the business is involved, knows what’s going on and is able to gradually introduce changes to their department team. Companies should make sure to put their best people on the implementation, not just the employees that have time on their hands. Having the best resources on the ERP implementation are critical to make it successful. “We like to have senior management as part of the steering committee,” explains Filbert. “Then we have the implementation team that would be broken down into the business process owners in the various areas of the company. That includes folks from the supply chain, engineering, manufacturing, accounting and finance sides of the business. As you get more into the details of the process, bring in subject matter experts from those specific areas. The folks that are going to be the champions of the software from each of the major functional areas.” M A R K E T M O N I T O R R E S E A R C H S E R I E S 13 SECTION 3: Misconceptions, Mistakes and Best Practices According to those surveyed by MBT, the top obstacle faced during implementation is users’ resistance to change. Beauty and cosmetics company Avon had a painful experience in this area. When Avon decided to implement a new order management system into their ERP, the process didn’t pan out the way the compa- ny expected. Avon relies on their salespeople who go door-to-door to sell the products and who traditionally phone in their orders. The decision-makers at Avon thought they could save a lot of money by eliminating its phone order department and instead substitute that process with mobile devices. What the company failed to factor in was the older age of their sales force who didn’t always have access to smart mobile devices, were not technology inclined and that a lot of them lived in rural areas with poor Internet connections. Avon completely ignored that human element during the implementation process when they really needed to train their employees, so that they understand why the changes were coming and how it could benefit them. In the end, Avon’s modernization was supposed to save the company over $10 million per year, but instead, sales representatives left the company in droves because of the change in their daily working routine. Salespeople didn’t understand the change, saw the new system in a negative light and decided the job wasn’t worth it for them anymore. Avon failed to adequately think through their process and became an example of poor change management in action. Misconceptions One of the most obvious misconceptions about ERP implementation is that the process fails because the software is buggy. That's very rarely the problem. Usually, the business implementing the software is at fault. Somewhere along the line, something went wrong. It can be anything from not having a realistic timeframe, to not having or accounting for everything that needs to be in the budget, to not training employees adequately. Top Obstacles Encountered During the Implementation Process 1. Users’ resistance to change 37.3% 2. Functionality problems with the system 34.3% 3. Cost over runs 29.9% 4. Unclear concept of the nature and use of the ERP system from the users perspective 26.9% 5. Only part-time dedication by employees to the implementation process 26.9% 6. Too tight of a project schedule 20.9% 7. Unrealistic expectations from top management concerning the ERP systems 20.9% 8. Too much software modification 19.4% 9. Over-reliance on heavy customization 17.9% 10. Poor knowledge transfer 16.4% BONUS 11. Poor quality of business process reengineering 13.4% M A R K E T M O N I T O R R E S E A R C H S E R I E S 14 “That's not to say that vendors are never at fault,” advises Burnson. “Obviously salesmen can make promises that they can't end up keeping. So, make sure to get in writing any sort of promise or guarantee the vendor tells you.” Another big misconception is that an ERP system is easy to implement. Companies figure they can do it on their own and don’t require any supporting services. “When we do demonstrations, we always want to sell it as the most easy-to-use package, and it should be,” says Hansen. “It’s very intuitive, but not intuitive enough that an organization is able to apply its business directly to the new ERP system, understand how to set it up and that you understand what the outcome is going to be.” “Companies need guidance because there’s always four ways to do something. There’s the perfect way, an okay way, a not-so-good way and then the worst way to do it. Helping the customer get to that best way the first time, is invaluable to any company — to realize their true value of investment quicker.” Implementing ERP is not equivalent to installing off-the-shelf software onto a desktop computer. ERP touches every aspect of a business, and its designed to help run a business more efficiently. Companies need to be open to process changes and understand the impact of the implementation and the resources required to avoid failure. Pain Points & Mistakes “Quite often I see implementations stalled by focusing on the nice-to-haves that maybe should happen during a second phase implementation process,” says Poindexter. “It causes a company to lose sight of those core requirements and those existing pain points that they need to solve. They’ve got to put up very clear expectations and give it some time for the people to use it before looking at all the bells and whistles.” One of the keys to a successful implementation is a solid ERP systems design that gives an organization the capabilities they need but also has a lot of flexibility. Businesses need to go through and document their key business scenarios for use cases and then run through those in the new system to make sure they’re working. Companies can see issues up front then and determine where they might change that process to better fit the capabilities of the new system. “Companies will customize the new system to do things the way they’ve always done them,” adds Poindexter. “That's a very common thing that will happen during implementation. Someone will be fixated on a report or screen they’ve always had, instead of looking at how they can do that better in the new system. They don’t realize that an interactive dashboard might be easier and M A R K E T M O N I T O R R E S E A R C H S E R I E S 15 simpler than a static report or screen. Companies need to give the new capabilities a chance to solve their problems and not get stuck on how they’ve always done something. It’s that typical resistance to change that they’ve got to overcome.” Another pain point companies face is making sure that users are adopting the new system. The resistance to change can be strong, so every organization should make sure employees have been properly trained, that they understand what the system does and how it plays into other areas of the business. “Maybe there is a piece of information that a user needs to enter, but they don't use that information themselves and don't see why it's important,” explains Poindexter. “If they don’t understand how their work in the ERP system affects the business, they might end up not adopting the process and now downstream functions begin braking down. Companies need to make sure that everyone understands the workflow to the system and how what they do or don't do affects the next person down the line.” The more an organization adjusts or enhances ERP software with specific requirements (versus changing a business process), tends to elongate the implementation time. The reason to proceed with an ERP implementation is to address those pain points — those processes being done internally. “Don’t recreate those same processes within the new ERP,” says Hansen. “Before you implement an ERP system or start imput- ing data, analyze what you’re currently doing. Are there any negative implications on what you’re doing today or are there any pains with that today that we should be addressing before we start imputing that same process within the system?” Among the biggest mistakes companies make during implementation are not managing expectations, having unrealistic deadlines, not adequately training employees and probably worst of all, not ensuring the vendor will be able to deliver on the key requirements the company needs out of the product. To avoid these things, organizations have to know what they’re getting into by reading about other companies’ implementations and the mistakes they've made. Companies should do their homework while ensuring that their employees are on board with the change and that they are getting the resources they need to be fluent with the system once it goes live. When in doubt, defer to in-house experts and take their advice and considerations seriously. Another mistake companies make is thinking they can implement ERP themselves — so they’re essentially guessing. While that might be okay for today, it paralyzes them when they look to grow in the long-term. For example, a company today buy’s one type of sheet aluminum, adding it into their ERP system. What happens when they get a customer order six months to a year from now that uses aluminum as well, but it’s a different alloy of materials? Because the company was so generic the first time, they now have to find a way to call out the new material differently, so that it’s intuitive to M A R K E T M O N I T O R R E S E A R C H S E R I E S 16 employees which is which. “They look at their business, they look at the software and they try to make key business decisions on their own without having expertise of what would really work for them and support growth long term,” adds Hansen. Another misstep for companies is not ensuring that the implementation is done in a concentrated timeframe. Time is not an organization’s friend with it comes to ERP implementation. As time goes on in an implementation, companies find it more difficult to bring that system live. Having a focused effort avoids the implementation from rolling on over several extra months or years. Best Practices First of all, businesses should know what they're buying and have a realistic understanding of what that product will be able to accomplish for their organization. Vet the vendor, and make sure they will be able to deliver. Companies should verify that their employees are on board with the changes and keep their departmental heads and other decision makers in the loop. Businesses need to get their IT team involved on day one. A business should understand that their organization will have to adapt to the software — the software can't always adapt to every single one of their processes. Businesses have to manage their expectations. If there are problems within their business, a new ERP system alone will not fix those problems. They have to adapt new business processes with what the new ERP system is telling them to do. Companies have to be comfortable with the fact that a lot of their internal processes are going to change. They also have to embrace, plan for and communicate those changes to employees. A new ERP system won’t do anything for an organization if their processes don’t change. That's just the bottom line. Organizations can never have enough training. Training should be integrated into the daily processes. Whether its vendor-supplied services, video tutorials or hands-on training specific to positions, make sure the documentation is available company-wide. Periodically, every year or two, companies should do a review to make sure that they’re getting the most out of their ERP system, not falling back into old habits and continue to help employees be more productive. “Right before you deploy, make sure you do that final end-user training,” says Poindexter. “You don’t want to do that end-user training months before the deployment, because they’re not going to remember all that training. You want to do it right before go live.” In the end, companies need to do their homework vetting vendors or anyone they’re going to sign a contract with. If they’re outsourcing any of the implementation to a consultancy firm or third-party implementation service, they need to review them as well. Businesses need to make sure that they have every single detail sorted out before they begin. M A R K E T M O N I T O R R E S E A R C H S E R I E S 17 SECTION 4: Moving Forward According to the survey, 94% of respondents would describe their ERP implementation as successful, but things aren’t done yet for them. Implementing an ERP system should be a process of continuous improvement for a company. Once everything is in place, it’s important for a company to widen the reach. “Even if you've gone through an ERP implementation, in my mind it's never done,” explains Filbert. “You should be constantly trying to increase the adoption of that software with employees and across your enterprise, continually improving its use and how far it reaches into your organization.” Judging Implementation Success Not every ERP implementation will be a victory. So, how does a company determine if its was successful? Companies should determine how long certain tasks took under an old system and then determine how long they should take under the new system. Tracking those little individual adjustments to businesses processes allows companies to see where they’re saving man hours, reducing redundancies and reworking inefficiencies. “Companies need to go back to the beginning and look at why they're doing this project,” explains Filbert. “Was it to get away from legacy software that's no longer supported? Are we growing by leaps and bounds, and our existing system just can't handle it? Did we address all of those pain points we listed in the beginning? Then, make sure that after the new systems are live that you’re reevaluating constantly every couple of months to guarantee that you achieved what you wanted to and received the value from this project that you expected.” A company can use a number of different metrics to judge the success of their ERP implementation. For instance, an organiza- tion can use a simple ROI calculation that looks at how much it cost to implement, how much it is going to cost over its lifetime and then a year-over-year analysis to determine any returns. In some cases, a business might even end up spending less on its new ERP system when it's all said and done than what they are paying for their current system. “Obviously there are a lot of investment tools out there to look at, but it's more about looking to see how you accomplished what you set out to do,” says Poindexter. “What were the pain points that you wanted to solve. Look at them, and determine if you now have a better process in place. M A R K E T M O N I T O R R E S E A R C H S E R I E S 18 “Let's say one of your goals was to process your customer orders in one day instead of four days. Go back and validate that what you said you needed to accomplish, you've accomplished. If you only went from four days to two, go back and see where you can do better — as you only accomplished part of your goal. Make sure to get customer feedback, too. Customer satisfaction is really key. If you're running your company better, you should have happy customers.” Evolution of the Machine For some ERP implementations, the reason why the process takes so long is that companies are just dealing with the baggage of their old system. With a greater movement to establish that different systems can communicate well with each other, migrating data from one system to another should become smoother and more flexible. “I would hope that the implementation process over time becomes less tedious,” says Burnson. “One of the reasons why it's still such a pain for a lot of companies is because they're using a 10- or 20-year-old legacy system. They now have to pay their dues for maintaining that legacy system for so long.” What respondents said they would have done differently during the ERP implementation process: • “Wouldn’t have waited so long to upgrade.” • “Our scope was too large. Would have preferred a business versus a regional deployment. We started deployment in Asia, but design team was in the U.S.” • “Better and more extensive end-to-end testing.” • "Invest in services." • “Clearer definition of process owners for new process review and lead adoption.” • “Look to all departments for input.” • “More education and training for users before go live date, particularly on the plant floor.” • “Better process documentation.” M A R K E T M O N I T O R R E S E A R C H S E R I E S 19 For the ERP implementation process to evolve, it will be important to figure out ways to do some of the manual work in a more automated way for data extraction capabilities of legacy software and data. Then implementation becomes more of a technical implementation versus throwing man hours at manually loading data into the new system. That will speed the rate of implementation. Other ideas for better implementation include looking at rapid implementations where it's a highly concentrated effort for a shorter period of time; a services team approach where the ERP vendors go in and actually do the majority of the heavy lifting on the implementation; and the capability to do the implementation remotely and avoid a lot of travel time. “I believe that there’s a huge shift coming in the way that people learn to navigate their ERP systems,” says Hansen. “People don’t want to read textbooks or travel for a three-day training class. They want something that is going to lead them through quickly.” Hansen adds that system users want to know that they can get the information they need when they want it and how they want it. Moving forward, she feels that systems will have more videos, kits and tools built into the software to automate things and make it very intuitive for a user. “ERP is truly the neural system of business,” concludes Hansen. “It’s the foundation. It’s what allows a company to have insight on their processes and organize it in such a way that they can successfully support their customers and grow. It’s more of a necessity today than it ever has been — in order to stay competitive.” M A R K E T M O N I T O R R E S E A R C H S E R I E S 20 Market Monitor Research Series: Advantage Business Media’s Market Monitor Research Series presents fresh research and analysis on compelling and timely industry topics. “Implementing a Brighter Future with ERP: Tips and Insights on Making Your ERP Implementation as Painless as Possible” was prepared by Manufacturing Business Technology Editor Jon Minnick. The data presented in this report is based on the results of a survey of Manufacturing Business Technology subscribers, comprising of CEOs, presidents, owners, engineers, managers and directors across the manufacturing industries. About Manufacturing Business Technology: For nearly 30 years, Manufacturing Business Technology has been a prime information source for decision-makers in operations, information technology, automation and the supply chain. This group of professionals is responsible for the purchase of software, IT infrastructure, automation platforms, mobile technology and other high-tech equipment for manufacturing enterprises. About Advantage Business Media: Advantage Business Media (www.advantagemedia.com) is a data-driven marketing solutions company leveraging content, technology and business intelligence to match its audience’s job performance needs with its clients’ solutions. With a diversified portfolio of highly focused websites, e-newsletters, print publications, specialized directories, vertical search databases, conferences, ancillary media vehicles and associated web-based services. Advantage serves more than one million industry professionals in the manufacturing, science and design engineering markets. For more information visit www.advantagemedia.com. ©Copyright 2016, Advantage Business Media. All rights reserved.
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