The Human Factor in ERP Implementations

Jim Martindale

Author: Jim Martindale, CEO, Navint

Companies often treat an ERP (Enterprise Resource Planning) implementation as a technology project. While it is technically a project that the IT department must lead, that’s only half of it. ERP implementations are more than IT projects; they are business projects led by IT. And once the system is employed, the ERP system is there to support finance, supply chain, billing and other business functions, making it critically important that the business be heavily involved throughout the implementation process.

There are two main reasons ERP implementations run over on cost and time.  First is that too often, too little consideration is given to how the eventual human users will react to changes in the way their data sets are presented with the new system. That means data conversion from the old system to the new system is essential as it’s the main way the business function interacts with the ERP system. Second is the very human desire to overlook gaps in the system’s capabilities that cannot be corrected without expensive and time-consuming customizations. Luckily, companies can avoid these expensive errors with careful analysis, good planning and thoughtful execution.

Business in the Driver’s Seat

If a company doesn’t have its business users heavily involved in the ERP system’s design and deployment, there will almost always be push back from users once the system is live. They could question why their work is being disrupted and may not understand how the system can support their business – which can significantly impact the overall business value of the system.

Also Read: Harnessing the Power of ERP and IoT Integration

Much of the conflict revolves around how team members use the data. For instance, if they formerly had a profit & loss (P&L) report or specific account charts that were displayed in a particular format, that may have changed with the new system – which could lead them to assume their data is incorrect. Rarely is that the case. Often, it’s simply a matter that the data is the same but is now not being presented in the same way.

Businesses can manage these challenges by undertaking three steps to ensure they have the right processes in place to make their ERP Implementations project successful – and infinitely valuable – to the business and the business users.

  1. Involve functional leadership and business users in the process. These are the users who own and understand the data – and will have the most expectations of that data once the system is live. Get these business and functional leaders involved in the data conversion process as early as possible. While this is a time commitment for them, it’s critical to have this buy-in at the highest level to ensure it’s more than the IT department that is setting the agenda.
  2. Be certain about using good representative data in the testing and user acceptance cycles. Businesses must to test the system with the actual data they intend to use. Test the scripts for data conversions and scrub and rationalize the data sets to eliminate duplicates/multiple versions of the same vendor name and similar instances. These systems have proliferated over the years with bad or outdated data – so using this as an opportunity to ensure the data is clean and tested is key.
  3. Reconcile data as one progresses in the project using the reports built in the new ERP system. Do not simply reconcile it in spread sheets. Businesses must remember that if they are still operating in the old system, they are creating new data, adding new vendors and generating new balances. Their data constantly changes; it’s a living, breathing part of their system. They must ensure it is working for them in the new system.

Mind the Gap

Software vendors are good at selling their software. They may roll in an industry team and veteran ERP sales force and then touch on requirements and gaps in the software’s ability to solve specific business problems. And there are always gaps. Unfortunately, customers often only pay attention to these “fit gaps” when it’s too late.

Many times, it’s only after the company has made their purchase and is far along in the implementation process that they realize the software does not meet their specific and intricate need. Too often, companies make quick choices without taking the time or making the investment to properly evaluate the fit gaps and understand how they will address them.

There are two ways to address a fit gap. Companies could change the way they do business – but that’s a non-starter for many companies as it can cause them to lose their competitive edge. Alternately, they can customize their ERP platform. If they go this route, they should try to keep the customizations to a minimum as they can cause the project to overrun, introduce ongoing complexity and remove them from an easy upgrade path. That could result in the team managing a non-standard platform for the long-term and introduce a new set of challenges.

Customers must understand that implementing an ERP system without any customizations can require significant business changes. It’s best not to commit to a contract until businesses are comfortable with the time, resources and cost that will be involved to fix the fit gaps, whether it be through business change or customization.

Also Read: Scaling DevOps for the Enterprise: Opportunities & Challenges

Measure Three Times, Cut Once

Measure three times, cut once is my moto. The biggest mistake we see in ERP implementations is customers who underestimate how involved the business should be in the project from the beginning. Often the IT department believes it can take the project 80 percent of the way and only involve the business in the last stretch. They know their colleagues are busy and their work doesn’t stop just because IT is implementing a new ERP system. While that may be understandable and laudable, it’s also shortsighted; everyone’s eyes must be wide open and on the implementation from the outset to make it a business success.  Without this comprehensive planning and the right buy-in from the business leaders, there is a chance of overshooting the budget, exceed the project timelines –and ultimately fail to deliver the actual business value you intended with your ERP project.