How to define an effective implementation strategy

Here at Reflex, we regularly attend Panorama Consulting‘s live ERP webinars because they always discuss the latest research on ERP software and implementation. As the owners and developers of a fully integrated ERP solution, we’re glad to see that Panorama’s advice aligns with our own business strategy, ensuring that all of our implementations continue to be successful and that our clients remain happy with our software.

On July 28, Panorama held a webinar entitled “The Path to ERP Implementation Planning,” which discussed results from actual ERP implementations and how to use this information to define an effective implementation strategy.

Led by Geoff McPherson, Director of ERP Selection and Implementation at Panorama Consulting, the webinar covered items such as common implementation challenges, key variables, and how to convert an implementation strategy into action.

According to McPherson and the 2016 ERP Report, the most common challenges of any ERP implementation are having to deal with cost overruns, duration overruns, and receiving 50% or less of the desired benefits. There are numerous options when it comes to ERP implementation and McPherson outlines each of the different strategies and the options available to different businesses.

For example, a fully integrated system has lower technical complexity, a single platform, tighter integration, and scales the costs over more users, while a best of breed system can be the best solution for individual functions and require fewer organizational change trade-offs. Companies needing a solution for a single function would benefit from a best of breed system, while companies looking for a full management solution would do well to choose a fully integrated system.

In terms of ERP development strategy, McPherson states that a system that requires zero customization comes at a lower initial cost with less technical complexity, lower ongoing maintenance costs, and smoother upgrades. In this case, however, there is more pressure to ensure that the software is a functional fit.

“Zero customization is possible,” says McPherson. “The downfall with that is getting people’s buy-in. If they’re not getting what they want, they reject the system.” Companies are thus responsible for selecting a solution that’s the best fit for the organization out of the box.

Customized solutions offer less organizational resistance, but can place “restrictions on continuous improvements and [be] very costly.” McPherson suggests that customization should be kept to 10-12% because extensive customization of ERP systems can increase technical complexity, require higher ongoing maintenance costs, complicate upgrades, and introduce a higher risk of failure.

One of the biggest challenges faced by companies implementing ERP software is the decision on how much historical data should be converted to the new system. While converting historic data is easier for employees, it can result in longer implementation times and more time required for data cleansing.

“Our recommendation,” says McPherson, “is to bring across the least amount of transactional data possible” to reduce implementation and data cleansing times.

The significance of implementing an ERP system is that the software becomes a key component of the business and acts as a guide for the company’s business processes. Rather than a piecemeal solution, ERPs offer a long-term approach to business strategy.

“ERP becomes more of a strategic proponent going forward,” says McPherson. “Better business decisions are made and you’re not looking to rehash everything in five to ten years.”

Once businesses are aware of their options and have a defined strategy, they can move forward on implementing the best solution to help the company. McPherson recommends “[using] a proven and comprehensive implementation plan as a starting point to avoid recreating the wheel.”

Having a solid plan or strategy in place is as important as the actual implementation because it ensures that everything has been considered beforehand and that the business has chosen the best solution to meet its needs.

“Spend a lot of time on planning,” says McPherson. “Don’t rush it and don’t get hung up on the date. Get the planning right, get it in place—[you can] have a date to push people and get them where they want to be, but [keep planning]. If you don’t, it could come back to haunt you.”

Learn more about Panorama Consulting’s ERP Webinar series here.

*Originally posted on August 8, 2016 by Ken Ingram on LinkedIn Pulse.