Implementing ERP: 12 Tips For Success

Preventing Repeat Surgeries: Assisting an Implant’s Battery with Wireless Charging and/or Energy Harvesting Produced by: i-Report 12 Tips For Success Sponsored by: 2Implementing ERP: 12 Tips For Success #1 ERP systems are vital to today’s manufacturing industry. Companies of all sizes have generally implemented some form of an ERP system, even if it’s just a combination of different software and systems used to plan and execute manufacturing operations. As the world becomes more technologically focused, everyone expects to be able to do things electronically. “Whether you’re a manufacturer or distributor, you have to have systems in place that will support your business from end to end,” says Chris Turner, director of professional services at ERP software vendor Epicor. “While that’s the tradi- tional function of ERP, today’s systems support e-commerce and increased acces- sibility to business information in dashboards and apps that give better insights than the old green bar printouts of the past. Those are the kinds of things that today’s employees expect of their systems and they’re disappointed when their system doesn’t provide those kinds of things.” That’s why finding and implementing a modern ERP system is a necessity for manufacturers looking to stay competitive. When companies have a bad ERP implementation experience, the problem isn’t in the software, it’s in the way companies implement and adapt to that software. The following is a look at some of the things companies can do to ensure implementation of their ERP system goes smoothly. GOALS AND LEADERSHIP Set Your Goals Typically companies look to upgrade their ERP system every seven to 12 years, according to Turner. Once a manufacturer has made the decision to move forward with implementing a new ERP system, they need to assess where they’re current- ly at, while defining and prioritizing the news system’s key business requirements. For example, maybe the company has expanded internationally and has some poor quality processes they’re trying to address. Or maybe the organization is looking to incorporate social enterprise and e-commerce into their business. Is the company just trying to replace what it currently has or does it have growth plans in mind and needs the capability to expand? Where is the business head- ing in the next five to 10 years? Companies should document their existing pain points and clearly identify what they’re trying to solve with a new system. #2 3Implementing ERP: 12 Tips For Success Have a Project Cheerleader It’s important to have an executive sponsor the implementation project — typically the CEO, owner or someone at the highest level in the company. This spokesperson will be the voice of the project, charged with communicating expectations to all those affected by the new system. “You have to have that drive from somebody with the respect within the organization to push the project forward,” says Turner. “IT and finance projects don’t typically get the same kind of traction across the company as when the spiritual leader of the business says ‘this is what we’re doing and this is why — charge!’” The project sponsor should make it clear to everyone why the company is doing this. Either the company has outgrown its current system, the system is outdat- ed, it can’t handle an increasing customer base, the company wants to grow or acquire new business, or maybe the company wants to expand into a new prod- uct line. Clear communication to all those involved helps ensure better adoption of the new system. “The project sponsor needs to justify and prepare everyone for the upheaval the company is about to be put through,” adds Turner. “Because it is an upheaval. There’s no way around that, and it does consume a lot of time.” 4Implementing ERP: 12 Tips For Success Establish an Executive Level Committee and Review Process “We would typically recommend that there be an executive steering commit- tee,” says Turner. “The executive committee doesn’t get into the day-to-day activities of the implementation, except for maybe once a month to review where they’re at, where they need to go, where they might need more resourc- es and find out where they might have issues.” The executive committee is typically made up of C-level officers and shouldn’t get into the nuts and bolts of how to implement the software, but should be there to listen to those working on the implementation to provide advice and resources that will continue to drive the project forward. The committee should plan to meet with everyone involved in the implementation at least once a month to identify surprises, budget issues, risks, or anything else that has come up, and review where things are at — especially at the end of each phase. #3 “The executive committee doesn’t get into the day-to-day activities of the implementation, except for maybe once a month to review where they’re at, where they need to go, where they might need more resources and find out where they might have issues.” 5Implementing ERP: 12 Tips For Success #4Put Together a Cross-Department Steering Committee Another best practice for ERP implemen- tation success is designating an internal project manager. That internal project manager also needs to have respect within the company and the drive to push things forward. They don’t necessarily need to make executive-level decisions, but they should be enthusiastic about the change. After an internal project manager is identi- fied, that person should be backed up with a cross-department steering committee that meets weekly to discuss the project. Pulling together individuals from different areas of the company, with different expe- riences and expertise, is crucial for getting the input needed for the new system to function properly for each area. Whether it’s from finance, engineering, manufac- turing or sales, every department needs to have input. They should be subject matter experts that can speak to the weak spots in the current system and explain where they’d like to see improvement. “You need to have a core team of seven to 12, but nothing more than that because it becomes unwieldy,” explains Turner. “Those are the ones that will really drive the project from start to finish. People also need to understand that that’s basically a full-time job for the committee members for the span of time that the implementa- tion is happening. The company needs to be ready to deal with that additional work- load and have the right people on hand to drive it forward.” TOP OBSTACLES ENCOUNTERED DURING THE IMPLEMENTATION PROCESS* 1. Users’ resistance to change 2. Functionality problems with the system 3. Cost over runs 4. Unclear concept of the nature and use of the ERP system from the users’ perspective 5. Only part-time dedication by employees to the implementation process 6. Too tight of a project schedule 7. Unrealistic expectations from top management concerning the ERP systems 8. Too much software modification 9. Over-reliance on heavy customization 10. Poor knowledge transfer BONUS 11. Poor quality of business process reengineering *Data based on research conducted by Advantage Business Media, January 2016. 6Implementing ERP: 12 Tips For Success SYSTEM AND PROCESSES Most ERP vendors will provide their customers with at least the template of an implementation plan and strategy. Epicor provides what it calls a “Signature Methodology” which includes six phases: Prepare, Plan, Analyze, Design, Con- struct and Deploy. At the end of each phase of the implementation plan, Epicor ensures that there will be a review to make sure that everything’s on the right track. This allows time to identify risks and other issues that need to be addressed as the project goes on, because surprises inevitably arise as a system changes. “There does need to be an implementation plan, but it’s not necessarily the ERP customer who has to have it ready to go,” explains Turner. “Companies do, however, need to be ready to take some input and expect to mesh their plan together with the vendors plan.” Take the Time to Clean Up Your Data Most companies spend a great deal of time and storage space gathering and filing data on their processes, vendors, goods, customers and anything else they need to keep things moving. But over time, some of that data has become obsolete as customers move on, parts are discontinued and vendors go out of business. Yet companies hold onto that information because of some transac- tion that happened 10 years ago. Moving to a new ERP system is an opportuni- ty for manufacturers to clean up that data and purge anything irrelevant to the business of today. “It’s like moving a household and cleaning out the attic,” says Turner. “You have the opportunity when you’re changing systems to take the time and go through the master data of your customers, manufactured items, vendors and whatev- er, and clean them up rather than stuff them into a new system. That’s a huge opportunity that’s often wasted because people don’t want to take the time.” Companies might think data cleanup is done by the vendor during the ERP implementation process, but it’s not something a consultant can do. Only the customer knows which of their vendors they’re no longer doing business with. Manufacturers should take the time to expunge the old data to increase their efficiency in the long term. #5 7Implementing ERP: 12 Tips For Success Don’t Get Carried Away With Customization Manufacturers should avoid getting carried away with overly customizing their new ERP software. Often times, companies try to replicate something they have in their current or legacy system rather than look at the way the new sys- tem handles that particular activity — which tends to be more efficient in many cases. Staying away from heavy customization not only saves time and money during the implementation, but also increases the ability to more seamlessly upgrade the software later. “If you built these massive customizations, you have to take the time to vali- date that it works properly with the rest of your systems and, in turn, the whole upgrade cycle gets lengthened and becomes more costly,” explains Turner. “It’s a better idea to stay close to the software functionality out-of-the-box, and even perhaps adjust your businesses processes to match that functionality, instead of forcing the software to bend to your practices.” Seize the Opportunity to Improve Your Business Processes Because most companies wait somewhere between seven and 12 years to update their ERP systems, manufacturers have a huge opportunity to overhaul their business processes. They should streamline their processes and cut out some of the things that don’t add value or even go through a lean manufactur- ing process as part of the exercise of implementing the new system. #6 #7 8Implementing ERP: 12 Tips For Success “Too often we find that manufacturers and end-users just want their new system to do the same thing it’s doing right now,” Turner said. “They want the same screens, reports and everything else. That’s a wasted opportunity to bring in new technology, new capabilities and maybe there’s been some changes in your business in the last seven to 12 years that you’ve not seized. This is the time to rethink those decisions and improve your business. I think a miscon- ception from a lot of customers is that they believe they can replace their old system with something that is exactly the same but modern.” Consider the Cloud and Secure Your Data The prevalence of e-commerce and the Internet of Things has necessitated a strong cybersecurity strategy. Waiting until after systems have been compromised can be fatal for a company. Who wants to work with a company that isn’t proactive about safe-guarding their own interests? One way that companies are protecting their data is by putting some pieces or all of their systems into the cloud. Manufacturers are not necessarily IT houses and so the largest typ- ical consumer of IT power for a manufacturer is their ERP system or maybe a design CAD system. An ERP system that can run in the cloud and doesn’t require infrastructure in-house or the staff to man that infrastructure in-house is an attractive incentive to modern manufacturers. It also becomes an expense on the books rather than a capital improvement, which makes that a financial incentive as well. By moving more systems to the Cloud, companies can then manage those systems remotely. In this model, the system administrator will have access to the server to do the things they normally would, with the only difference being that the server is sitting off site rather than locked in a closet at the company. #8 One way that companies are protecting their data is by putting some pieces or all of their systems into the cloud. 9Implementing ERP: 12 Tips For Success “I think people get worried about the cloud,” explains Turner. “I think the cloud has really been proven to be secure and it’s actually internal accesses that are more often the problem — that somebody can get to the server and into what- ever they shouldn’t be getting at. Typically Cloud systems are pretty strong and rigorous about passwords and you can set policies for how often you change passwords. I think in general the IT community has security down reasonably well and a good ERP system will mesh with that security through active directo- ry or something else so that only the right people are getting into the system to do the things they need to.” The last piece of security to think about concerns customer data — especially if a company handles credit card transactions for customers, which means they’re taking on a lot of liability. If they don’t have a system that will encrypt the customer’s data and prevent it from being extracted, they open themselves up to problems that could hurt or even cripple the business, much like the recent hacks into companies like Target and Home Depot. If a business does handle credit cards, their ERP system has to have the structure in place to encrypt that data and keep it from falling into the wrong hands. TRAINING AND MEASURING SUCCESS One misconception that companies have about buying and implementing an ERP system is that it can be delivered turnkey. Many believe the vendor will come in, open the system, load in all of the customer’s existing data and then turn it over to the company ready to go. That is very hard to do with no input from the customer. The reality is a consultant will not have the knowledge of the day-to-day business functions in order to set up the system on their own. “Companies have a misconception about the level of effort they’re going to have to put into implementing a new ERP system,” says Turner. “Very often, for whatever reason, companies sign the deal for a new system and now then suddenly realize that they’re just about to go into their busy season and there’s really no way that they can start implementation, but they already budgeted for it. They need to understand how this is going to impact their business and what cycles their business goes through that might be impacted by doing an ERP implementation.” As a rule of thumb, a manufacturer should expect an implementation duration to last a minimum of five to six months, and more likely, given the constraints of company resources, it could be an eight to nine month exercise. 10Implementing ERP: 12 Tips For Success Budget Enough Money and Time to Train Your End-Users One mistake that some companies make is not allocating enough money or time to train end-users to use the new system. The project team becomes very skilled with the software over the course of the im- plementation and understand it very well. Someone will need to impart that knowledge to the people that are going to be using it on a daily ba- sis once it goes live. Oftentimes that’s an area where people think: “Well, we can write a little manual and everyone can read it or we can record some webinars or something and our users can pick it up that way.” “Typically companies cut that end-user training,” explains Turner. “It really harms the adoption of the system by the users because they’re afraid of it. They haven’t had time to get comfortable with it before it’s dropped in their laps, so they fight it.” Manufacturers need to allow enough time for users to get hands-on training with the system to learn about the new features, screens and menus that are available. Businesses should budget for employees to be away from their desks for a couple of days learning how to use the new ERP system. #9 *Data based on research conducted by Advantage Business Media, January 2016. Why Has Your Company Decided to Implement an ERP System?* Improve business performance/take advantage of new software/analytics 67.2% 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% 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 14.9% Reduce working capital 10.4% 11Implementing ERP: 12 Tips For Success Appoint Someone to be an Internal Help Desk Once the implementation of the new system is complete and the vendor or consultant has moved on, employees will still have questions. While software vendors have hotlines and resources that a company can turn to, the vendors can only talk about how the software works. They can’t neces- sarily talk about how the customer does their business in the software. If the company selects a couple of people from the implementation project group who can function as an internal help desk, questions and issues can typically be handled very quickly. Especially for the first three months, these singled-out individuals can be crucial in keeping the momentum moving since they know the business, as well as how the software was implemented. Conduct a Post Go-Live Review After the dust has settled, conducting a review of the system and busi- ness processes is another best practice of new ERP implementation. Very often everyone is exhausted after the system goes live and the fatigue can leave the system neglected. #10 #11 After the dust has settled, conducting a review of the system and business processes is another best practice of new ERP implementation. 12Implementing ERP: 12 Tips For Success #12 Many vendors will come back in four to six months after the initial launch to sit with users and watch how they use the new system. They’re there to reeducate users on some of the features and benefits shown during the implementation that they might have forgotten and to refresh them on tips, tricks and tools they might not be using effectively. This review acts as a sort of optimization or tune up and can facilitate adoption of the new system by the users. This is also a great time for companies to make any tweaks to their system or processes in order to gain better efficiency now that everyone is using the new system. Identify Your Key Performance Indicators and Track Them Early in the ERP implementation process, when companies are setting their goals and scope of work, they should identify key performance in- dicators (KPI). These are the measurable points that help a company determine if the new ERP system and busi- ness processes are moving their company in the right direction, or if they need to make some more adjust- ments. “What we try to do early on, as part of the processes review that we do with the company, is try to under- stand not really so much what their current software does, but what they’re trying to do in their business and what they’re trying to get out of this new system imple- mentation,” says Turner. “We try to help them identify their KPIs.” Early in the ERP implementation process, when companies are setting their goals and scope of work, they should identify key performance indicators (KPI). 13Implementing ERP: 12 Tips For Success For example, if a company has a certain number of inventory turns a month, has that number improved with the new system? Or if a business takes six days to close its months end, is it now down to three days instead? “We try to establish those milestones early on as part of their current process and their struggle,” adds Turner. “Then we set some of those as goals for the company. Obviously somebody thought about them when they went to buy an ERP system — we need to improve this or that — well we identify what this or that is so the customer can compare those measurements pre- and post-implementation.” So companies should set some key KPIs early in the process and then go back and look to see whether they’ve met those KPIs or whether they’re on their way to meeting those KPIs within six weeks after launch. If not, they should take the opportunity to make the necessary adjustments for success. Seize the Opportunity It’s important for companies to be realistic about how much band- width will be required during the implementation, including the number of people that are going to need to be involved and how much of their time is going to be needed. That can be one of the most critical pieces for a successful ERP system implementation. Manufacturers should also use the opportunity of making the switch to optimize and perfect their business processes and potentially make changes for more efficiency. “With as big of an investment as you are making with a new ERP system implementation, those are huge opportunities that allow you to get the most out of it. By allowing your people the right amount of time to implement and adopt the new system and grasping the op- portunity to streamline your business, you’re setting your company up for success,” concludes Turner. ◗ 14Implementing ERP: 12 Tips For Success About i-Report Advantage Business i-Reports present fresh research and analysis on compelling and timely industry topics. “Implementing ERP: 12 Tips For Success” was prepared by Advantage Business Media Manufacturing Group editor Jon Minnick. About the Author Jon Minnick has worked in B2B publishing for more than 10 years and is currently editor of Manufacturing Business Technology and content editor for Advantage Business Media’s Manufacturing Group. 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