ERP Implementation – ERP Planning & Selection Guide
The objective of this ERP Planning and Selection Guide is to become a ready reference for business owners, who are considering ERP implementation and need to know the Best Practices to prepare thoroughly for a successful ERP Implementation.
Why this ERP Implementation – Planning & Selection Guide?
Preparation is the Key to Success. ERP Software journey requires very meticulous and detailed planning at every stage, right from defining the objectives of ERP, to defining the criteria for evaluation and selection of right ERP Software & ERP Vendor & then implementation.
As a company, involved in ERP implementation for more than a decade, we observe that although ERP Software and technology adoption has increased, many companies still struggle with the right preparation for ERP implementation.
What bothers business owners is that they cannot determine how to start, how to define short term & long terms objectives? how to select the right ERP software and ERP vendor and justify the investment in the long run. When they cannot precisely define and articulate their needs, they struggle with the planning & selection of the ERP Software phase.
Our ERP Planning & Selection Guide Best Practices is designed to take the stress away from business owners and provide them an easy to understand & implement, step by step Guide for immaculate planning & preparation of ERP.
What this ERP Planning & Selection Best Practices Guide will cover?
- What changes do you want to achieve with ERP Implementation?
- What is the role of the CEO / Business Owners in ERP Implementation?
- What is the need & importance of a Vision Document for ERP Implementation?
- Do you follow Standard Operating Procedures?
- How to define the criteria to measure the success of ERP implementation?
- What are the steps & parameters in ERP Selection?
- How to Evaluate Different ERP Vendors?
What changes do you want to achieve with ERP Implementation?
What are the problem areas in your business right now? What areas would you like to improve? What changes you would like to achieve with ERP? These are the driving factors why companies decide to implement ERP Software.
In our experience, when ERP Implementation is driven by the changes that companies want to achieve, the chances of implementation being successful are higher.
Few examples of desired changes are as follows:
- Gain access to company-wide information easily & quickly
- Automate business processes & bring speed in business
- Improve productivity & efficiency
- Improve coordination between various departments
- Get complete visibility of company operations
- Provide the right information to the right people at the right time
- Achieve Faster Reporting & improved decision making
- Improve customer services & delivery schedules
- Reduce operating costs
What is the Role of the CEO / Business Owners in ERP Success?
The CEO’s conviction in the value of ERP for the company, his passion & vision will play a crucial role in ERP implementation. The CEO’s active involvement & participation in getting all employees on board becomes a driving force in motivating them to ensure a successful ERP. The CEO’s commitment will influence the outcome of the ERP implementation.
The CEO has to ensure the following:
- Build a Data-Driven Culture
- Define ERP Success Criteria
- Allocate Funds/Finance
- Develop ERP Project Team
- Continued Involvement in ERP implementation
- Create a Vision to leverage ERP for the future
What is the Need & Importance of Vision Document for ERP Implementation?
ERP Vision Document is created to:
- Ensure all teams are aligned with the ERP vision and reach a consensus about their expectations from ERP.
- Help in articulating the company’s ERP vision to the vendor and improve the chances of finding the most appropriate ERP software / ERP vendor.
- Monitor whether ERP implementation is on track in the implementation stage.
ERP Vision Document captures all details of expectations from ERP in a single document
- Purpose or Objectives of ERP Implementation
- Specify Problem areas or Improvement areas to be addressed
- Names of stakeholders, managers, end-users, who will be involved in ERP implementation
- Define Specific Business Needs / Unique Requirements of the company
- How the problems will be resolved by ERP, which modules will be implemented
- What benefits will the company derive from the ERP
When everyone adheres to the ERP vision document, it will pave the way to achieve the desired goals & objectives of ERP implementation.
Do You have Standard Operating Procedures / Standard Practices in your company?
Standard operating procedures are step-by-step instructions to carry out operations. SOPs are important to achieve uniform, efficient, quality performance, every time. Does your company follow Standard Operating Procedures?
You should have standard operating procedures for major functions such as:
- Production Process
- Inventory, Warehousing, Purchase Management
- Plant & Assets Maintenance
- Inspection & Quality Checks
- Sales & Marketing
- Accounts & so on.
If you do not have Standard Operating Procedures in your company right now, start defining or adopting the standard operating procedures in your organization and prepare detailed documents to systemize the processes. This will prepare a very strong foundation for selecting the right ERP software/vendor, defining the right success criteria, and ensuring ERP success.
How to define the criteria to measure the success of ERP implementation?
We recommend you to define & measure ERP implementation success at different levels of your organization in the short term & long term. It should cover not only the tangible results but also the valuable improvements in the organization as a result of ERP.
Define Success Parameters for :
- Organization Level ERP Success – E.g. Reduce Operating Cost by X%
- Department Level ERP Success – E.g. Purchase Order Cycle Time Reduced by XX days
- Short Term ERP Success – E.g. Business Discipline & Standard Operating Processes implemented via ERP
- Long Term ERP Success – E.g. Reduce Inventory Level by X%
Some Examples of Tangible/Measurable Results:
Compare KPI results before & after ERP implementation to verify the amount of improvement in areas such as:
- Does ERP software provide real-time, accurate data & complete visibility?
- Has ERP enabled streamlined processes & standard business operations?
- Has ERP helped reduce errors, improved efficiency & productivity of resources?
- Are Employees committed to Using ERP?
- Have Cycle times Reduced?
- Have you achieved accuracy in Demand Forecasting & Planning?
- Are you meeting Production Schedules & Timelines consistently?
- Has the overall Resource Utilization Improved?
Some Examples of Intangible Value Addition Results are:
- Data-Driven Decision Culture
- Speed in Business
- More Financial Discipline & Business Discipline in the Organization
- Efforts to achieve Operational Excellence
- Attitude towards achieving continuous improvement
- Improved Customer Relations
- Higher Customer Conversions
What are the steps & parameters in ERP Selection?
ERP selection is the most important step in the process of ERP Implementation. Defining the appropriate Vendor selection criteria keeping in mind your industry-specific unique requirements is crucial to ensure success.
- Assess your current business processes
- Clearly Define ERP Implementation Objectives
- Specify Criteria & Parameters to Measure ERP Success
- Budget Allocation
- Define Vendor Selection Criteria
- Shortlist & Evaluate Vendors
- Vendor Selection
Define Your Vendor Selection Criteria
Every company has its unique processes and hence should define its vendor selection criteria to suit their specific business requirements.
Some points to consider for vendors selection criteria are:
- Does the ERP Vendor Provide Your Industry-Specific Solution?
- Can ERP cater to your core functionalities?
- Do they have domain expertise to understand your unique specific needs?
- Will they be able to establish standard business practices?
- What is their ERP Implementation Approach? Flexibility?
- What is the ERP Deployment Methodology?
- Do they provide integration with existing 3rd party software?
- Does ERP provide mobile apps?
- Is the ERP Robust & Scalable with your growing needs?
- Will they provide Post Implementation Support
- Will they provide extensive ERP training to end-users?
How to Evaluate Different Vendors?
Carry out thorough research and gather the following information to know the ERP vendors who have carried out successful implementations in your industry. Ask for their reviews and shortlist the vendors who seem to meet the criteria.
- How many years of experience in your industry niche?
- How many successful implementations in your niche?
- Have they developed the software themselves? How often do they update it?
- Is the ERP software solution robust & scalable?
- Do they have a standard implementation methodology?
- Which deployment options do they provide?
- Have they provided exhaustive end-user training?
- Are they providing satisfactory post-implementation support?
- What are the pricing options & payment terms?
- Invite the Shortlisted Vendors to provide a Demo of their software.
- Discuss at length to gauge whether they understand your concerns.
- Judge whether they will be able to provide you the requisite solution/improvement as per your vision document
Only when you are convinced that the ERP Vendor will be able to add value to your organization go ahead and finalize the Order.
Well Begun is Half Done! We have provided a very comprehensive, step by step actionable, ERP Implementation – Planning & selection guide to make the best preparation & beginning of your ERP journey. When you follow these best practices you will be able to maintain the course and have a smooth and successful ERP implementation along with significant savings of time and money.