Questions Companies Should Ask Themselves About Implementation Before Selecting an ERP

There are complex challenges today facing many businesses, whether global or local, and these challenges are expected to grow in intensity and complexity. One of the ways many businesses have chosen to respond to such challenges is with the implementation of company-wide systems called ERP systems. In fact, ERP’s widespread acceptance by business is a testament to its efficiency  at integrating business processes such as accounting, manufacturing, distribution, and human resources into a unified computing system.

Given the relatively large financial commitment that an ERP system requires, the importance of a successful ERP implementation cannot be overvalued. Many factors go into a successful implementation, however, studies have shown that many ERP software failures are oftentimes linked with inadequate training of staff expected to use the software. Additional challenges surround managing culture-change issues, such as organizational changes and changing business processes, initiated by ERP systems projects.

In order to minimize the impact of the potential negative effects of company-wide organizational and business process changes, it is prudent to recognize the importance of both the vendor’s and the client’s joint involvement in this project. A successful ERP implementation rests equally with the two parties, and, consequently, a careful analysis of the company’s readiness to roll out ERP capabilities to its end users is critical.

A thoughtful analysis should include a critical examination of the following three criteria:

  • Continuous or phased implementation schedule
  • Data migration
  • Employee training

While not exhaustive, this list provides an important understanding of the company’s key objectives and priorities ahead of dealing with the full impact of an ERP implementation.  

Continuous or Phased Implementation Schedule

Given the scope and complexity of ERP systems, it is no surprise that the implementation schedule itself can present some challenges; for example, should the implementation be run in a continuous or phased manner? A continuous approach would entail an ongoing roll out over one, two, three years or more; whereas a phased approach would be carried out in a more thoughtful manner, paying attention to the priorities of the different business divisions and how their individual work flows may be impacted by the implementation. For example, the accounting department might opt for implementation to begin at the end of the fiscal year; on the other hand, the production department might argue that this is a peak work period for them and not the best time for tackling with a complex implementation.    

Data Migration

Data migration is a similarly important business consideration prior to an ERP implementation. In fact, it can be fundamental to a successful ERP implementation. Perhaps the major challenge for data migration is to determine which data is appropriate for moving to the new ERP system. With the integration of the different business processes, critical decisions must be made with respect to data –  in other words, in moving to a single source information system, which data can and should be integrated into the new system?

For instance, the accounting department of a particular company may choose not to transfer the entire accounts receivable (AR) and accounts payable (AP) transaction history but only the end of an accounting period, with ending balances. If, however, the data is required to produce business forecasting reports for medium and long term business planning, then all AR and AP data must be migrated.

Employee Training

The role of employee training to facilitate implementation is well documented in the research literature. Lack of end-user training and failure to understand how enterprise applications potentially change business processes can lead to implementation failures. Human related issues like resistance to change can impede an employee’s learning progress, even if the ‘new’ process streamlines and improves overall productivity for the employee. While an ERP system could be a success from a technical perspective, success also depends on employee willingness to engage with the new system. A company’s investment in creating an employee atmosphere that is ready for change can affect the perceived value of the system and is a major prescription for the overall success of an ERP system.

In Closing

An optimal implementation of an ERP system requires a well planned execution, covering all organizational processes. A high degree of attention must be paid, from a task management perspective, to the when, how, and why of implementation, but, equally important is the evolution of the human element in the company. Employees must understand the value and implications of the ERP system and be able to handle the consequences of the new system and the redefinition of the business processes.

Contributed by Gabriel Gheorghiu – Experienced consultant and analyst focusing on business software and customer interactions