When an organization implements an Enterprise Resource Planning (ERP) system, the role of the executive decision maker is critical in the way the project is run. If you have been involved in several ERP projects, you can find out about a well-managed project. There is a sense of excitement and optimism, people have a positive view of the new system, there is active participation in discussions, and as decisions are made by decision makers, people quickly move to the next topic on the list.
Then there are poorly managed projects. Execution has significantly exceeded target runtimes, costs are beyond budget by staggering proportions, there is no end in sight and people may not even know what the end looks like. Property moves around, people don’t know what’s going on and have no say in anything.
The executive decision maker makes the difference between the two implementation scenarios. This person has a well-thought-out strategy for what the ERP project will accomplish and then controls the implementation phase to ensure that the strategy is followed.
Why is implementation different from selection?
In the previous two blogs in this series, I covered how the executive decision maker approached the selection phase of an ERP system. The reason for having a separate section on implementation is that sometimes some executive decision makers are involved.
In the implementation phase, the focus of decision makers should be on four factors:
- general objective
- Control the schedule
- Resource allocation
- Risk Management
the management of change
As I mentioned in Part Two of this series, ERP leads to intermittent change, so managing change is also the responsibility of the executive decision maker.
When a new ERP system is introduced, affected individuals typically focus on several outcomes including fear of new technology, not being able to perform required duties, or having to move to a new job they don’t know how to do. Thus, their behavior can be considered resistance to change.
Executives need a rigorous change management approach such as choosing ERP and implementing their project. You should focus on managing the people side of change, helping employees be ready, willing and able to make the transformation and adopt the new way of working.
The reason why the company decides to move to 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 up front about what the goal of an ERP project is. Then as the project progresses, focus is placed on that goal. The danger is when people begin to lose sight of the business goal that was the cause of the project and turn to the project’s self-centered goals.
When determining the timeline for implementation, consideration should be given to the magnitude of changes that will occur. The decision maker’s job is to highlight critical aspects of implementation and prevent less problems from hijacking progress toward the goal.
The executive decision maker must ensure that the implementation project has sufficient resources to achieve the goal and match the change you are trying to achieve. Executives often raise the issue of not having enough time to devote to implementing ERP. Therefore, responsibilities must be delegated.
There are three groups to which accountability is delegated during implementation.
- steering committee
- Project manager
- process owners
The Steering Committee shall take full responsibility for the following elements of the project:
- Commitment to project resources in terms of money and staff
- Monitor project progress and impact on the organization
- Empower the project team, specifically the project manager, to make decisions
- Solve escalated issues
- Confirm key decisions such as commissioning and completion of project deliverables at the end of the implementation project
Organizations do not necessarily have management with the necessary skills and experience to manage an ERP project. You need maturity in delivering large projects and managing an ERP project internally. Delegating the management of an implementation project to an external project manager is often the best way to ensure that implementation is going according to plan.
The project manager must be an attractive person who works full time on the implementation project. A good project manager will reduce the time high-level executives spend on implementation and increase the chance of success. An independent external project manager will monitor the interests of the organization and oversee team activities on behalf of the executive decision maker.
The role of the project manager is:
- Implementation project management
- Maintain communication at all levels within and outside the project team
- Manage any scale issues
- Manage conflicts that may arise
- Take the decisions entrusted to them and escalate decisions that require the decision of the Steering Committee
Process owners are representatives of functional areas. They are responsible and authorized to sign the business process outline for each of their areas. Their role is:
- Providing knowledge and skills in their functional areas
- Contribute to the design of the To-Be business process diagram
- Assistance in compiling documents
- Ensure different functional areas work together
- Ensure the quality of work performed
- Provide some training to others in their field of employment
If you’ve followed the strategies laid out so far in this series, you’ll avoid some of the risks of an ERP project – there’s operational support, business processes built, a full-time project manager, and change management integrated. There are some technical things to be aware of.
- Data migration: This includes moving data from legacy systems to an ERP database. This is challenging and often takes longer than expected.
- Technical Infrastructure: This can include insufficient system resources to meet the increased demand that the ERP system will provide.
There are three important milestones at which significant risks can occur:
An ERP system rarely fits perfectly into organizational requirements. The gap-appropriate implementation phase is a milestone as any deficiencies are identified. While there will be discussions about how to customize the system or business processes, any alternative solutions or customizations involve risks. Refer to the assignment matrix covered in a previous blog and make sure it is not skewed towards the lower right quadrant of the matrix as the risk increases dramatically.
This is where your team tests the solution – business processes, roles, responsibilities, system settings, preferably using actual data to show what you’ll get at the end of implementation. The risk here is to agree to a solution that may work but does not achieve the business objective and will not bring business benefits. If these are not clear, people will need to go back and work on implementation more.
go don’t go
The ultimate risk is determining if and when the implementation is ready to go live—when you’re moving from legacy systems to the new ERP system. Once this happens, any previous systems will be terminated, previous business processes will not work again, and everything will only be available in the new solution. If there are unexpected serious problems, you simply cannot go back. You will have to start a new project to get back to the old system and way of working.
Implementation of your own ERP system
An appropriate ERP implementation strategy should be based on degrees of freedom. For the One Degree of Freedom ERP project, the strategy is to focus on speed and cost. For two degrees of freedom: Enterprise Resource Planning (ERP) Project and Business Processes, the strategy is to ensure consensus on the business process outline and then base the project on this document. For two degrees of freedom: Enterprise Resource Planning (ERP) and grassroots organizations, the strategy is to focus on managing people. For the Three Degrees of Freedom ERP project, speed is important, but cost is not – money has to be spent to save time.
Going live is not the end of an ERP project. It’s when the commercial benefits begin to emerge. Go-live only starts a new stage, which will be covered in the next blog.