Living With Your New ERP System
You’ve gone live, temporary staff and vendor representatives have left the building and the old system has been switched off. The stakeholders have seen all their objectives delivered. The users love the new system and don’t sigh wistfully for how things used to be. The new system seamlessly supports working practices and there are no errors or issues outstanding.
If this were always the case, then there would be no need for this article. In my experience, this doesn’t represent the reality of what happens. Some investments in an ERP system fail to deliver all that desired at the start of the project. But businesses do not have to accept this; there are many ways to optimise an ERP solution.
I am concerned with the implementation of ERP software packages that a range of IT companies develops and sell. ERP serves as an all-important information pipeline that links finance, manufacturing, logistics, sales, and other departments. This allows the various departments to share information and to process transactions smoothly. The “resource planning” that gives them their name is now just a tiny part of the capabilities they bring to an enterprise.
We often overlook the post-implementation stage of any project. Businesses are too keen to return to BAU. Although typically carried out around three months after go-live, I would advocate that even if you have been live with a system for a few years, it’s still worth carrying out an efficiency exercise. It can be all too easy to jump straight to solutions without taking the time to understand the root of the problem.
Most ERP implementations do not reveal their value until after they have been running for some time. Going live with an ERP system is only the first milestone on a long journey to growth.
I am proposing a three-stage process: the undertaking of a post-implementation audit, lean process alignment and maximising business benefit — we consider each of these aspects below.
Post Implementation Audits
The best way to ascertain how well your business system is performing is to ask the people dependent upon either its processes or its outcomes. Asking will cover a cross-section of users, managers and the IT department; but include customers and suppliers too. There are some methods for gathering this information, including questionnaires, focus groups, informal meetings and interviews. Questions can be open-ended, allowing you to pick specifics. Or use tick-boxes against a range of possible options, which will enable you to analyse the data statistically.
Whichever approach you select, there are some key questions to ask:
- Does the system meet the needs of your daily activities?
- Is the system efficient to use?
- Is the system delivering on the promised functionality?
- Have business processes changed?
- Are there any old systems still in use?
- Are there any spreadsheets or databases in use?
- Is there data to show that the new system has delivered business benefit?
- Could further training improve the utilisation of the system?
- Do you believe that you are utilising all of the available functionality?
- Does the system provide all of the information you need to do your job?
Direct more specific questions at personnel where there are issues with particular functionality, or, where you require more detail, (i.e.) performance issues.
The outputs from this process will generally include a list of functional gaps, processing gaps, and system issues. You will end up with a range of statistics that can be used to determine the status of the project and provide a benchmark for assessing progress when the process repeats following issue resolution.
Lean Process Alignment
Lean delivers what companies need in today’s competitive world. Shortened lead times, improved quality and productivity, reduced cost, increased profit and better customer service. A well-functioning and aligned ERP system will also deliver against these goals. ERP systems work best in a cross-functional environment with departments talking to each other and agreeing on working practices.
One of the areas where we find an imbalance is where the processes are out of alignment with the system. People are working hard to hold onto their previous ways of working, which may be in direct conflict with the ERP system in use. This imbalance can cause inefficiencies, frustrations and cost to the business. Sometimes this can become apparent within days of the new system going live. It may hide from view for months or even years, quietly eroding any faith people may have in the system.
Having spent a great deal of money buying a new system, it always amazes me how often people incur further expense by ensuring the new system accurately replicates the old one – “same tune different piano”. ERP implementation is an ideal opportunity to re-engineer business processes. But, aggressive timescales can often prevent this from happening. The best applications are those where the effort has been expended early on to document existing operations and to identify non-value-adding ones. You can then use the new ERP system to drive through new ways of working.
The starting point is to map out all of the business processes to establish those that are value-adding and those that are not. An ERP solution provides a window on what is happening. It is often useful to compare the system’s way of doing things with what is happening in practice. Once process flows are determined, then the business needs to look towards identifying the best activity flow.
Maximising Business Benefit
The processes highlighted above should have produced a range of opportunities to maximise business benefits. There is a further area to monitor. I refer to this as “system noise”. These are the quiet grumbles, water fountain conversations, inter-departmental stresses and strained relationships. The noise may occur so frequently that it’s become invisible, and thus there is no mention in the analysis. It is imperative that whoever is project managing this process picks up on these things.
Once all of the issues/challenges have been documented attention needs to focus on developing and implementing solutions. The system vendor needs to be involved with the process, as they will know to ensure that you are getting the best from the system. Even if there are significant problems with the system, it does not necessarily mean that it needs replacing.
We should consider whether the previous system has indeed had a replacement? Or, is it still in use? This consideration will have a double impact as the new system will be missing a vital element of the process flow, causing issues down the line. It will also ensure that the users do not entirely migrate onto the new system. This reluctance to let go may reflect in the number of spreadsheets and manual recording systems still in use. It is important to remember that you ask the users to change the way that they work fundamentally. They may well be fearful of relinquishing knowledge that gives them job security. ERP systems formalise and make transparent business processes, and this can be challenging for those people who feel secure with their expertise.
This links to the second point. Changing hardware and software is not the hardest part; it is the cultural change required to make the ERP system performance efficient that is difficult. Without changing the culture, business behaviour will remain the same, and an improvement opportunity missed. People don’t like change. ERP asks people to change how they do their jobs fundamentally. If you use ERP to improve how people process orders, manufacture, ship and invoice goods, you will see the value. But if you install the software and leave working practices the same, then at the very least you will see no benefit, and in all likelihood, the new software could slow you down.
Phase 2 module implementations
At this point, you should give attention to Phase 2 module implementations. These are the tools that looked exciting at the demonstration, but when the budget or implementation started to get challenged were deemed less necessary than the primary modules. Typical these include Business Intelligence (BI), Customer Relationship Management (CRM), Advanced Planning Management (APM) and process automation tools. These can often be what the stakeholder is expecting, and without their implementation, the stakeholder will never consider the ERP project a success. Also, some can be used to support the implementation of lean practices.
Linked with the phase 2 modules are the third-party integrations that may have formed part of the solution. These are challenging in two ways. Firstly they involve multiple parties which can present an ownership challenge and they include writing specialised coding to support the linkages. We often underestimate the time to develop these links which may continue to show a challenge post-go-live. All interested parties must get together to resolve any operational issues.
Secondly, the survey may illustrate that the system is not set up correctly – assumptions may be wrong, analysis fields may be missing key elements, the data may contain errors. All of these factors will make the ERP solution ineffective and will need a resolution. You will need to conduct a reimplementation exercise, with the support of the vendor, to address these issues.
Another area of neglect is the task of keeping the system up to date. Most vendors issue a range of patches, bug fixes, and minor version updates; as well as the more major system upgrades. You will experience the most efficient support if you have kept your system on the latest release. This will also ensure that you prevent experiencing issues that have already been addressed. However, one factor more than any other will have an impact here – any customisations that were an “essential” requirement at the start of the project will make applying upgrades much more challenging and expensive. Effort should be made to resist these where possible or look to eliminate them as the system becomes embedded and the processes subject to lean alignment.
One of the significant challenges of any implementation is the training of end-users. Typically termed senior users receive training on the system by the vendor at the start of the project. They then spend subsequent months developing the solution and testing it. Usually, at this point, the senior users have the responsibility to train the end-users – they are unlikely to receive any training themselves. The success of this process is reliant upon the skills of the trainer and the responsiveness of the trainee. Also, people change jobs more frequently nowadays, and so it is easy for system knowledge to leave the business.
Businesses can mine value from an ERP system post-implementation. To achieve this value, they need to understand what their ERP system can do and then invest in people, training, the system and internal processes to achieve alignment. Following this process should leave the business leaner, more efficient, and able to gain competitive advantage.
Finally, remember that the cost to re-implement an existing ERP system is likely to be substantially lower than the costs – in money and resource, required to select and implement a brand new system.
If you would like to find out more, contact us today for an initial, no-obligation discussion about how we can help you and your business deliver your vision for the future on +44 (0) 1282 463710.
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