7 Critical Steps To A Strong ERP Strategy

Success is rarely an accident. Results are always better when you’ve laid the proper groundwork. And a major investment in infrastructure like an ERP system demands careful strategic planning. Going into an ERP decision without adequate preparation can mean budget overruns, missed targets, or even a failed implementation.

The reality is that, despite best efforts, most ERP projects fail to deliver on the defined outcomes. As projects progress and get “managed,” time and budget goals can push aside the central objectives.

We’ve identified seven critical factors to keep you on track and to ensure a successful ERP initiative.

1 -Prioritize industry best practices

First, in order to drive the right outcomes, prioritize industry best practices and ensure compliance with all business and regulatory requirements.

You’re the expert in your business and industry. Select the partner who knows ERP in your industry best. You don’t want a  jack-of-all-trades. You want a specialist who knows ERP and your industry requirements better than anybody, who will ensure that you’re compliant, future-proofed, and ready to succeed.

ERP has a long lifetime and your choice of partner will set the limits of your manufacturing operation for years to come. You need to work with an ERP firm that has seen all of the potential pitfalls and knows how to navigate around them.

2 -Assemble a crack implementation team

Success demands the best and brightest. The selection and project teams need to be made up of people who not only have the right knowledge, vision, and focus but who are also willing and able to drive change. Every person in the group needs to bring value. The team also needs to be empowered to take ownership of decisions, managed through good project governance and controls.

Since ERP transitions are once-per-career events for most, don’t count on your team members to have specific ERP implementation experience. To get to great, you have to bridge any knowledge gaps. Take advantage of the expertise of your ERP partner to fill in any gaps that can make a difference in the transformation of your business.

3- Start with compelling business drivers

Companies should only start an ERP project if there are critical business drivers – such as profit, assets or growth objectives – that support the change. If the project doesn’t have a major impact on business performance, it will be at risk from day one. Over the course of the work, it’s important to be very clear about what the business drivers are and to make every decision with them in mind.

When you have the business rationale documented properly, you can work on communicating the urgency of the mission within the project team. With continued, clear communication, it’s more likely that the objectives of the ERP project will remain true from start to finish. 

4- Focus on speed to benefit

With the current high level of disruption in the marketplace, implementations have to be as fast as they can. If you move too slowly, your project can get stale and lose momentum, and there is a high risk that your new ERP system is out-of-date before you go live. Strong leadership and management support are essential to keep the implementation moving.

In a longer implementation, it gets harder to keep the right people involved in the project, which can lead to delayed, compromised, or inaccurate decisions. Further, resource management within the company becomes more difficult and the running costs of the project increase rapidly, putting the quality of the end result at risk. When benefits are realized later than expected, the entire project can fail.

5- Guard against “wish listing”

You know the scenario: you poll the departments and everybody has a request. Wish listing is one of the big risks in an ERP project. Expectations set during the selection process can endanger scope, time, and budget. If you allow wishing listing at the selection stage, you will push up costs and timelines. The last 20 percent of the wish list can easily cost 80 percent of the budget. Stick to the core objectives.

Also, a wish list mentality can become baked into the project team. The team can start demanding everything they want, regardless of cost, instead of the outcomes you really want.

Think through what’s reasonable and realistic to aspire to, versus aiming for the stars. If you try to do everything at once, the project could balloon and the risk increases that you won’t accomplish anything. Small incremental steps aligned to the business drivers and outcomes agreed upon are the most effective. Keep the process on track with clear and consistent communication.

6 -Plan for future disruption

People often replace their ERP because the world has changed around them. But now change is more frequent than ever before. How do you factor in an ever-increasing level of disruption and change?

Building requirements based on current requirements means that you’re obsolete before you start. Don’t look at how you work now. Look at how you plan to work in 12-24 months, five years. How are you going to adapt to the wider changes? How do you build flexibility into your requirements?

You need to think about the technical capabilities of your ERP partner that will enable you to respond to change and build for the future, meeting requirements you don’t even know about today.

Then, it’s not just about the project, but also about what happens after you go live. How will you support the onboarding of new hires or ongoing employee training? How do you ensure standardization and consistency across all plants? Evolution, change, and disruption are the new normal. If your new system can’t support those changes, you’ll end up very quickly back in the same behind-the-eight-ball position. You need to think about ongoing, continuous improvement to future-proof and ensure scalability.

7-Enter into a partnership

Consider that you’ll have a relationship with the ERP vendor for many, many years. You need to make sure that the provider has the right attributes, the right cultural fit to sustain an effective relationship over the lifetime of your entire ERP relationship. 

Answer these questions as a team: Do you want a single relationship or the responsibility for managing multiple relationships? Does the ERP company have a reputation for caring, and do you have the assurance that you’ll have access to the people you need when you need them? Do you have a common culture and share the same values? What geographic scope and coverage do you need? Don’t just think of time zones and language, think about local legislation and regulations.

In the end, a strong ERP strategy ensures a singular focus on one objective – improving the performance of your business, while not wasting your investment.

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