It is essential to understand the whys and how forces of ERP projects in order to make them successful. Before you can get started, what questions should be asked? What are the best implementation strategies to ensure that an ERP implementation achieves its objectives?
These are the top four questions you need to answer before an ERP implementation. It is crucial to answer these questions in today’s business environment and understand the scope and goals of your ERP implementation.
Get ready for ERP implementation
1. Are your executives, project managers, and all employees able to understand the business case?
Business cases refer to the driving factors that will be used for ERP implementation. These business cases should be understood by everyone in the organization as well as the project team. By business case, we mean the reason for the project and the expected benefits. Project managers and executives often create a project charter to outline all the benefits and cost savings that the project will bring. As the project moves through its phases, these goals, opportunities, or cost savings often don’t materialize. As the project moves through the phases, it is important to keep an eye on the business cases and make sure the project remains on track to reach those goals when the project is completed.
This is a great example of cost savings through workforce reductions in your plants. Automation is often used in plants to reduce headcount and labor costs. Sometimes, however, the workforce reduction can lead to a workforce increase in other areas. As you work through each phase, it is important to make sure that you are achieving the business case benefits you have outlined in the charter.
Understanding the benefits to the organization is an important part of the business case’s initial setup. Many functional areas of an organization could provide the inspiration or source of the idea for ERP implementation. It could be from finance or operations. The benefits are broad-based and can be attributed to various functional groups. It is important to see it all and not just one functional group. There is a natural exchange. Some areas will require more work. The idea is to make sure that everyone in your organization understands why the new technology is being implemented and how to track them throughout its lifecycle.
2. Are you ready to transform your organization and processes?
In multi-location environments, it is crucial to have a clear budget and scope before you start to implement the areas in which phases. It is important to have a realistic view of the technology changes that will be occurring and to consider headcount reductions. This type of calculation can lead to a decrease in engagement. It is best not to publish it. Sometimes there are increases and decreases in one area. It is important to weigh hard and quantifiable benefits against the soft benefits when considering operations. It’s important to include all possible opportunities in the process, and ensure that it is widely communicated.
Master data is something you should consider. Master data is your vendors, customers, items, and any other miscellaneous information. Master data is typically a problem or constraint that is more difficult than anticipated during an implementation. It is a great idea to establish master data governance before the implementation begins. It’s as easy as understanding who controls specific functions. You can establish an approval structure to help your organization get in the habit of controlling data flowing into your ERP system. This will allow you to have user-based permissions within the ERP implementation process.
It’s rare for me to encounter master data that isn’t a problem or that takes more time than people usually estimate. It’s never too late to think about this. It is a good idea to start developing master data governance before any implementations begin. It could be as simple as deciding who has access to the key or who controls the entry of a new item. Also, put in an approval system so your organization can get into the habit of controlling data flowing into your ERP systems. This will allow you to establish those good habits when you go into user-based permissions.
It is crucial to do any data cleansing before you begin the transition. It is important to understand your company’s data retention policies. You don’t want all data to be transferred when you are moving data from an older system to the new ERP system. This is especially true for older data with data integrity issues.
To avoid any confusion or disruptions, it is best to make any departmental restructuring plans before your ERP implementation project. It’s also a good idea to reduce the number of large projects you have. To ensure smooth ERP implementation, you need to get rid of any other projects that might cause confusion or conflict with it.
3. Are you able to hire the right people to manage and execute the project successfully? Are they able to dedicate the necessary time?
It is common to believe that ERP implementation projects will cause minor disruptions to the normal work of a project team. It is often underestimated the amount of work that consultants must do (if they are hired to assist with implementation), as well as the involvement of the internal team. It is crucial that the project has enough bandwidth. You should ensure that you have the bandwidth to complete your ERP project if you intend to hire third-party consultants.
The project team should be representative of all functions within your organization. An organizational chart that mirrors your existing organizational structure can help with this. It is important to ensure that your team has a diverse mix of people who are willing to contribute to the project. This doesn’t necessarily mean that everyone reports to whom in each department.
ERP implementations are almost impossible to do in a vacuum. It is important to know how the resources will be allocated to the project. There are many other projects and companies going on. You need to understand the time requirements of your resources throughout the project’s life and make sure you have the right resources.
4. Is your timeline realistic? Is it realistic to work at a fast pace?
This area requires a little bit of experience and a crystal ball to really understand the ERP implementation. Although it might seem tempting to do everything 100% before going live, that is not always the goal. You need to be prepared for changes. Restructuring your chart of accounts is a common example. If you are coming from an accounting environment that isn’t dimensional, it’s common to have problems with restructuring your chart of accounts. You can now organize and slice the data based on dimension, which is a good thing. This realization is often made during implementation. However, we recommend that you get this sorted before you start to think about the impact of dimensional accounting on your organization and how it could streamline your business.
Sometimes, there is a very short window for going live. Be mindful not to get too focused on the details. Take a look at all components of the project and create a realistic timeline that will allow for unexpected setbacks. To account for any delays, it is important to allow some buffer time. These delays can be taken into consideration in your overall timeframe to help you determine the business’s impact.
It is possible to take shortcuts in testing and other functional aspects if you don’t include a buffer in your timeline. You can make mistakes during go-live by not doing enough testing to ensure you meet a strict timeline.
BONUS – Many companies don’t bother to build a business case. They see it as justification for a project that everyone knows is needed.
What’s the value of a complete business case?
There are many different types of business cases. There’s the full-blown return on investment. This is usually something required to approve the project budget. The solution to this is a case of change. This is a slightly different take on the business case. This is not as quantitative and asks questions such as “What does this new technology allow us to match our strategic goals?” An example of this would be if your current technology hinders you from opening a new channel, but it’s possible. Although it may not be easy to quantify this in the form of a business case, the fact that the transformation will now allow for a new channel, whether that be e-commerce or other mechanisms, will make it possible. Although it is not necessary to calculate a return on investment, understanding the potential of a new system can be very valuable.
Companies are often embarking on these types of projects with clear benefits in mind. It’s important to clearly state your expectations. You should share this information with your project team. Also, keep an eye on the business cases to ensure that all benefits and opportunities are realized by the end of the project. They’re often not because they lose sight or lose sight of the original purpose of starting this project.
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