2. Planning &
Execution
PURPOSE
It is rare for any manager to be involved in more than one or two implementations of
a new ERP even over the course of a long career. The implementation of a new ERP,
particularly if done in conjunction as part of a multi-company/SBU integration as is
often the case, may be one of the most challenging change initiatives during the
career of many.
This presentation is intended to provide a very high level conceptual framework for
discussions as the business considers implementing a new ERP.
3. Planning &
Execution
ERP?
HOW, WHAT, WHICH?
Speaking with companies about ERP for over 25 years, I have often heard:
“We disrupted the business, we spent millions of dollars, we painfully finished
the implementation, but we did not end up with what we expected.”
The common element to each of these has been the approach. The range,
impact, and risks of implementing a new ERP require a very different approach
than even the largest operational initiative.
4. Planning &
ExecutionUnderstand “WHY” at the Organizational Level
There are a number of valid reasons to implement a new ERP, but it is
important to understand what is driving this decision.
1. Is the decision necessary to address internal business needs or business
model changes?
2. Are competitive pressures demanding increased agility?
3. Are there too many disconnected business systems today?
4. A vendor says you need this and “we have all the bells and whistles”?
5. The IT manager says: “existing systems are old or no longer supported –
this will put us where we need to be”?
6. The staff is saying: “the current system is old and hard to keep using”?
Each of these and others may influence decisions that define the company’s
strategic roadmap, the business plan, and the program scope.
5. Planning &
ExecutionWhat is Important… How? Which?
There are many ERP alternatives available.
It is critical to start by answering one question: Will the new ERP
application be limited to only few simple functions, or will we use it as a
catalyst to change the business?
1. Major change initiatives including most leading ERPs should be approached
as Business Change Programs to control the inevitable risks and define a
well understood expectations framework.
2. An inadequate pre-study with follow-up validations will invariably lead to
increased effort to mitigate later risks, limit higher costs, and execute
needed late-stage changes.
3. Only simple ERP implementations, those with very limited functionality, or
in-place ERP upgrades should be approached as a Technology Project led by
an existing manager.
6. Planning &
Execution
What Is Important for ERP Decisions?
A short list of possible considerations might include:
○ Increase flexible responses to a changing and competitive marketplace
○ New regulatory demands
○ Increase management control and visibility
○ New customer expectations
○ A changing staffing/skills landscape
○ Need for enhanced business analytics/business intelligence/both
○ Demands of trading partners
○ Sales force challenges
○ Online Marketplace/Customer Enablement
○ Globalization
○ Time to market pressures
○ Ease of Adoption
7. Planning &
ExecutionWhat A Major ERP Implementation Means
1. A new ERP often significantly changes the way that business is
conducted?
2. The impact of a new ERP may affect a business for 10 years or longer?
3. There will be human impacts that must be considered:
○ To our presence in the market
○ To our customers
○ To our trading partners
○ To our staff
○ To our products
○ To our financial relationships
4. Getting ready is as important as the execution.
8. Planning &
ExecutionCritical Understandings for Success in a
Major ERP Implementation
The key tasks of executing a major ERP implementation are very much the
same for either a middle market firm or the very large multi-national.
Enterprise Resource Planning is not about the technology…. The technology
simply enables the desired business capabilities and outcomes.
Successfully implementing a new ERP is about managing Fundamental
Changes that will effect:
1. Executive decision making
2. Business processes (running the business)
3. Financial and regulatory constraints
4. Every person who either produces and uses company information
5. External relationships and fulfillment with customers, trading partners,
financial partners, suppliers, investors, regulators, …
9. Planning &
Execution
Make Selections Based on Business Objectives
– Not Technology
Does the ERP vendor really understand my business model and sector(s)?
1. Financials including valuations, fixed assets, AR models, tax, etc.
2. Product Management life-cycle
3. Supply Chain
4. Production/Delivery Modes
5. Servicing and Customer Support Models
6. Globalizations
7. Multi-company, multiple sectors, inter-company
8. Sales modes (Channels, verticals, direct, online, etc.)
Note: Each ERP platform typically has modules that are highly configurable… These same questions
should be asked when selecting an implementation partner for the chosen platform.
10. Planning &
ExecutionWhat Is The Magnitude of the Acceptable
Change?
1. What might our organization look like afterward?
2. What should our operating environment/business model look like
when this new ERP is in place?
3. As we consider alternative ERP solutions, can the new process, the new
business execution, and the new technology skills demanded be
developed… Or if they must be recruited, how easily can they be
found?
4. How will/should the constraints inherent within questions 1, 2, and 3
above influence the consideration of potential ERP platforms ?
Answering these questions is an important preliminary step.
11. Planning &
ExecutionKey Areas to Mitigate ERP Risks?
ERP – Key Areas
(after the ERP selection)
Business objectives management
- Understand and agree on the transformation definition based on a
diagnosis
- Identify the business value and set business end-state objectives,
- Develop vision, scope, business case which are used throughout the
project and realized after program closure
Solution management
- Investigate alternatives to decide upon the best-fit final solution
- Develop processes that are in line with business objectives
- Provide the technologies necessary to reach the business objectives
- Accept a solution that matches the new or modified to-be processes
- Perform verification and validation
Business change management
- Drive the organizational transformation needed, through communication,
training, and roll-out
- Transform business targets into matching business results by active
involvement of all stakeholders
- Ensure that technical solutions, processes and organization changes
conform to complete business solution
Project control
- Integrating the three areas above
- Balance quality, time, cost and content
- Control change, risk, budget, resources, and all deliverables
- Maintenance of stakeholder involvement
Business objectives management
Solution management
Business change management
Project control
12. Planning &
ExecutionCommon Good Practice Flow for ERP
Concept Study
Decide which solutions to investigate further. This marks the end of Pre-Study activities
and starts the program. This activity begins the elimination of considered alternatives
Solutioning Development
Test solution finalists and choose one solution and approve the way the business will work
in combination with the enabling technical concept
Final Development
Freeze the overall solution. Develop business and technology components required by the
solution.
User Launch
Conduct all business and technology functional tests. Approve that the solution is ready
for user validation tests
Change Initiation Approve the business value and business case - formally start the pre-study
Release
Conduct final user acceptance. Approve that the solution is ready for “prime-time” and the
organization is ready to receive it
End
Approve that the solution and deployment are achieved according to the Agreement, hand
over the responsibility to a maintenance group, and close the program
Visioning Approve the project vision and the diagnosis of as-is vs. to-be. Produce a preliminary scope.
Follow-Up Next Steps
Validate that the business objectives have been achieved and, if needed, decide action
plans and further change management activities
13. Planning &
Execution
A Possible Approach To The Pre-Study
Current status in each
functional area
1. Function 1
2. Function 2
3. Function 3
4. Function 4
5. Function 5
6. Function 6
7. Function 7
8. Function 8
9. Function 9
10. Function 10
High
Low
Low Usability High
1
2
3
4
4 3 2 1
Functionfulfillment
10
5
6
8
1
2
4
3
1
2
4
3
Will fulfil or exceed requirements to efficiently execute activity
Will only fulfil basic requirements to efficiently execute activity
Will fulfil requirements, but takes more resources than current solution
Will not fulfil requirements to efficiently execute activity
7
Evaluate a future state for each
functional area with alternatives
Where Are We Today? Where Do We Want To Be?
14. Planning &
ExecutionKey Decision: A Fully Dedicated ERP Leader
In any but the smallest ERP implementation; considerations for the ERP Program
Leader should include:
1. Proven background leading enterprise-level, mission-critical changes.
2. In-depth conceptual knowledge of each operating area of the business to be
effected by the new ERP value stream.
3. Significant experience in human capital, best-fit methodologies, value chain
analysis, process modeling, best practices, and financials is very helpful.
4. Significant matrix management experience and relationship skills.
5. Strong oral, written, presentation, and relationship skills. Able to communicate
effectively with the executive suite, process owners, the financial team, or plant.
6. There will be resistance to change of this magnitude and difficult decisions will
be required. This role is ideally positioned as either a direct or dotted line report
to a very strategic senior executive or to the President. (1) (2)
(1) Very significant additional risk may be introduced if the role is positioned within existing operations or IT.
(2) Strongly recommend engaging an interim manager rather than a resource viewed as a contractor or vendor.
15. Planning &
Execution
KEY ISSUE:
Understand the Typical Time Commitment
Note: This time commitment will represent a continuing risk throughout the implementation.
ERP Implementation
Resource
Expected Time
Commitment
Who/Role/Function
ERP Program Manager 100%
Formal authority to direct, define, coordinate, and make decisions related the ERP program's
day-to-day activities and issues. Establishes objectives, develops requirements, plans
schedules and manages budgets and costs. Leads analysis of business activities, program
reporting, change controls, goals, and communications throughout the organization.
Facilitates ERP acceptance at all stages and from all levels of the enterprise.
Steering Committee 2%
Executive Management Team: Define and drive organization support of the ERP
implementation. Addresses identified road blocks. Approve all changes to project scope and
major budget impacts. Accept/reject readiness for key phase changes.
Core Team
Up to 20%
Heaviest at Milestones
Senior Business Process Owners: Functional decision makers responsible for driving all
inputs and availability as needed of subject matter experts within their respective areas. Act
as the business' primary advocate for the business requirements within the areas of their
respective responsibilities. Responsible/Approve/Accept key decisions and change requests
within functional area(s). Heaviest at Milestones. (allow minimum 2 hours per week)
IT Team 5% to 90%
Execution of the technology sub-project (application development, infrastructure, support
implementation partners/vendors). IT managers heavy involvement during planning, staff
involvement heaviest beginning after initial decisions have been made. Up to 90%
involvement beginning before acceptance testing.
Program Sponsor 5% Represents the interests of the Executive Team to the Program on a continuing basis and
drives executive team involvement/decisions as required
Is the Organization Prepared and Able to Support the Time Demands?
16. Planning &
ExecutionDo We Understand Risks To Be Managed?
Deloitte estimates that up 75% of new ERPs fail to meet expectations.
In one study: Only 68% of executives and 61% of employees are at least
somewhat satisfied with their implemented ERP solution.
What would we do if this ERP implementation:
Took longer than expected?
Effort exceeded planned staff allowances?
Implementation exceeded planned budget?
Experience an increase in total costs as a percentage of total revenues?
Unforeseen changes increase implementation costs?
Experience organizational resistance and high learning curves?
Experience major operational disruptions at go-live?