The underpinnings of modern business are people, process, and technology. These three domains are inextricably interrelated. What drives people is passion, what they do is process, and what they generate is data (and product).
Companies and leaders purchase software applications that attempt to resolve symptoms of a bigger operational issue. They buy expensive Enterprise Resource Planning (ERP) software and expect that it to solve everything, but that approach won’t do much except rack up the company credit card.
ERP is a Tool, Not a Cure-All
The way businesses go about selecting tools does not serve them well. Roughly 25% of ERP implementations are successful.
According to ERP Focus:
- 60% of ERP projects fail
- 80% of customers are unhappy with their ERP
- 90% of ERPs fail to deliver any measurable ROI
- 95% of failed companies spend less than 10% of their ERP budget on education/training/change management.
- 57% of ERP implementations experience delayed go-live
- 54% of ERP implementation exceed budget
Why such abysmally low success rates?
It’s not the ERP, it’s You
Have you looked at customer reviews of ERP software? You find both raves and rants about the same ERP software. Is the software somehow different from one customer to another? Let me suggest that what these reviewers are actually reviewing is their implementation, not the software.
Companies set themselves up for failure when purchases are made without specific problems and solutions in mind. Implementation isn’t about installing software. Implementation is about achieving results.
Here, we’ve outlined a five-step selection process to help your team successfully implement ERP software.
Step 1: Build the Team, Engender Alignment, and Set Goals
If you don’t know where you are going, you can’t get there. Define success metrics. What will the business look like, or be able to do with the perfect ERP? What business risks could we eliminate or reduce? What information do we need to run our business and how (format, frequency, and to whom) does that need to be presented?
These questions are best tackled by a group of people representing various aspects of the business and who can think across the enterprise. This vision must be shared between team members, not one individual.
Working with a technology consultant can allow you to understand the gaps between where your processes are and where they need to be. Then, you can take meaningful action and decide on a tool that will genuinely support your company’s future success.
Step 2: Build a Roadmap, Know Where you Are, Where you Want to be, and How to Get There
Understand, without puffery or ego, your current situation. You want a clear picture of your current business as it is, not as you think it ought to be. This is where an outside consultant can be critically important.
Build a roadmap taking you from the current situation to the future situation. To get those new capabilities, what needs to be in place beforehand? Once you have the components of a roadmap, lay them out in sequence and specify rough budgets for each.
Check-in. Don’t automatically throw out your current ERP. Do you need a new ERP or just refine the one you’ve already got?
Step 3: Build a Value-Generating RFE, Not a Value-Preventing RFP
Often, Requests for Proposals (RFPs) create more roadblocks than value. Engaging with vendors in a meaningful way can enhance the relationship and improve the overall implementation experience. We recommend shifting to a Request for Engagement (RFE) rather than the traditional RFP. An RFE is an invitation to the vendor to teach you about how they would solve your business problems.
To do this they need to know as much about your business as possible—warts and beauty marks. Give the vendors leeway to add value to you and become your partner.
Step 4: Turn the Sales Process into your Educational Process
Remember you are after the business outcomes. From the roughly 2400 ERP vendors, invite a handful to respond to your RFE. From their responses, find five that offer:
- Software that matches your type of business
- Data technology coherent with your Master Data plans
- Pricing within your budget
- Accessible implementation solutions for your team and consultants
Manage the demonstration to be an educational process for your team. Two to three demonstrations are usually sufficient. Encourage the vendors to demonstrate business processes with your data in their systems. Request that they demonstrate process flows like order to cash, procure to pay, and record to report. Engage with them during the demonstration, challenge them, and see how they react. Do they engage as a partner or are they more focused on making the sale?
Step 5: Picking a Winner
Create a rating system with specific criteria where every participant evaluates the demonstrations as they are occurring. Collect and discuss the demonstrations and ratings to determine the best fit.
Make your selection knowing that the software is less important than the implementation and you’ve just taken the most important steps to ensure your implementation team is off to a good start.
At this point, reevaluate and make sure everyone is on the same page. Regular regrouping helps companies adapt to a new way of operating. It helps them understand that the business has changed and encourages buy-in.
Getting Started with Aldrich Technology
Now is the time to consider bringing in professionals who can help your business achieve these goals. Choosing the right ERP will help your company consolidate its efforts and streamline operations.
If your organization has questions about helping maximize productivity, implementing new tools or platforms, or getting strategic help to enhance your business continuity and resilience, the Aldrich Technology team of networking and infrastructure professionals is available as a resource.
Aldrich Technology helps companies justify, select, and implement ERP systems. Aldrich Technology is completely independent and does not resell or have any vested interests in any ERP vendors, implementers, or other technologies.
Meet the Author
Vice President, Business Strategy
Aldrich Technology LP
Peter Adams leads business strategy for Aldrich Technology. Prior to Aldrich, Peter founded and ran Lighthouse Information Systems, a West Coast technology consultancy focused on leading clients through technological and operational challenges in order to promote growth and facilitate successful systems. While running Lighthouse for more than 35 years, Peter served clients across countless industries,…
- ERP selection and implementation
- Operations and process analysis
- Technology as a strategic asset
- Business assessments