When an organization implements an ERP system, the role of the executive decision-maker is critical in the way the project runs. If you have been involved with several ERP projects, you can tell a well-run project. There is a sense of excitement and optimism, people have a positive outlook about the new system, there is active participation in discussions, and as decisions are made by the decision-makers, people quickly move on to the next topic on the list.
Then there are poorly managed projects. The implementation hugely over runs target dates, costs exceed budget by staggering percentages, there is no end in sight and people may not even know what the end looks like. Ownership moves around, people don’t know what’s going on and have no say in anything.
The executive decision-maker makes the difference between these two implementation scenarios. That person has a well-thought-out strategy of what the ERP project will deliver and then controls the implementation phase to ensure the strategy is followed.
Why is implementing different to selecting?
In the previous two blogs in this series, I covered how the executive decision-maker should handle the selection phase of an ERP system. The reason for a separate section on the implementation is that sometimes different executive decision-makers are involved.
In the implementation phase, the decision-makers focus should be on four factors:
- The overall objective
- Controlling the timeline
- Allocating resources
- Managing the risks
As I mentioned in part 2 of this series , an ERP system brings about discontinuous change, therefore change management is also the responsibility of the executive decision-maker.
When a new ERP system is introduced the individuals impacted typically focus on several outcomes including fear of the new technology, being unable to perform the duties required, or being forced to transition to new work they don’t know how to do. Subsequently, their behavior can be seen as resistance to change.
Executives need to have a change management approach that is as rigorous as their ERP selection and implementation project. It should focus on managing the people side of change, helping employees to be ready, willing, and able to make the shift and adopt the new way of working.
1. The objective
The reason a business decides to go for an ERP system is that it should be a complete change from any previous systems. The way this is achieved is in the implementation phase.
It is up to the executive decision-maker to ensure that everyone has absolute clarity upfront about what the objective of the ERP project is. Then as the project progresses, that objective is kept in focus. The danger is when people start losing sight of the business objective that was the reason for the project and shift to self-centered project goals.
2. The timeline
In determining the timeline of the implementation, the magnitude of the changes that will happen needs to be considered. The decision-maker’s job is to highlight the critical aspects of the implementation and prevent lesser issues from hijacking the progress towards the objective.
3. The resources
The executive decision-maker must ensure that adequate resources are made available for the implementation project to achieve the objective and match the change that you are trying to accomplish. Often executives raise the problem of not having enough time to dedicate to the ERP implementation. Therefore, responsibilities must be delegated.
There are three groups to whom accountability is delegated during the implementation.
- Steering committee
- Project manager
- Process owners
The Steering Committee should take full responsibility for the following elements of the project:
- Commitment of project resources in terms of money and personnel
- Monitor the project’s progress and its impact on the organization
- Empower the project team, and specifically the project manager, to make decisions
- Resolve issues that have been escalated
- Confirm major decisions such as go-live and the completion of project deliverables at the end of the implementation project
Organizations do not necessarily have the management with the skills and experience to manage an ERP project. You need maturity in delivering on large projects and to manage an ERP project internally. Delegating the running of the implementation project to an external project manager is often the best way to ensure the implementation goes according to plan.
The project manager should be someone with gravitas who works full-time on the implementation project. A good project manager will reduce the time the top-level executives spend on the implementation and will increase the chance of success. An independent external project manager will watch out for the interests of the organization and oversee the activities of the team on behalf of the executive decision-maker.
The role of the project manager is to:
- manage the implementation project
- maintain communication at all levels inside and outside the project team
- manage any scope issues
- manage conflicts that may arise
- make the decisions delegated to them and escalate those that require Steering Committee resolution
Process owners are the representatives of the functional areas. They are accountable for and authorized to sign off on the business process blueprint for each of their areas. Their role is to:
- provide the knowledge and skills of their functional areas
- contribute to the design of the To-Be business process blueprint
- assist in the compilation of documentation
- ensure different functional areas work together
- assure the quality of work undertaken
- provide some training to others in their functional area
4. The Risks
If you have followed the strategies set out so far in this series, you will have avoided some of the risks of an ERP project – there is executive support, business processes have been designed, a full-time project manager is on board, and change management has been incorporated. There are some technical things to be aware of.
- Data migration: this involves moving data from older systems into the ERP database. This is challenging and often takes longer than expected.
- Technical infrastructure: this can include insufficient system resources to cater for the higher demand an ERP system will make.
There are three important milestones where significant risks can occur:
An ERP system will rarely fit organizational requirements exactly. The gap-fit stage of the implementation is a milestone where any shortcomings are identified. While there will be debates on how the system or business processes should be customized, any workarounds or customizations carry risks. Refer to the customization matrix covered in a previous blog and make sure this doesn’t drift towards the bottom right-hand quadrant of the matrix where risks increase significantly.
This is where your team stress tests the solution – the business processes and roles, responsibilities, system settings, preferably using actual data to show what you are going to get at the end of the implementation. The risk here is that a solution is approved that may work but does not achieve the business objective and will not bring business benefits. If these are not obvious then people need to go back and work on the implementation some more.
The final risk is to decide if and when the implementation is ready to go-live – when you cut over from the old systems to the new ERP system. Once this happens any previous systems will be terminated, previous business processes will no longer work, and everything will only be available on the new solution. If there are serious unexpected problems, you cannot simply switch back. You will have to start a new project to revert to the old system and way of working.
Implementing your ERP system
The appropriate strategy for implementing an ERP system should depend on the Degrees of Freedom. For a One Degree of Freedom ERP project, the strategy is to focus on speed and cost. For a Two Degrees of Freedom: ERP and Business Processes project, the strategy is to ensure consensus on the business process blueprint and then base the project on this document. For a Two Degrees of Freedom: ERP and People Organizations project, the strategy is to focus on people management. For a Three Degrees of Freedom ERP project, speed is important, but cost is not – money should be spent to save time.
Going live isn’t the end of the ERP project. It is when the business benefits start to be realized. Go-live merely starts a new phase, which will be covered in the next blog.