1.

What are the factors that contribute to the successful

implementation of ERP?

Ans: The factors that contribute to the successful implementation of ERP :

1. Make sure you understand why you are implementing ERP—This is

arguably the most

important one. It is easy to see that many big companies are running SAP or
Oracle and maybe

you should too, but it is harder to consider that maybe you do not need an
ERP system at all.

Perhaps process improvement, organizational redesign, or targeted best-of-

breed technology

will meet your business objectives at a lower cost. By clearly understanding

your business

objectives and what you are trying to accomplish with an ERP system, you
will be able to make

a more appropriate decision on which route to take, and that may or may not
involve ERP.

2. Project Planning—ERP implementation starts with project planning—

setting project goals,

identifying high-level business requirements, establishing project teams, and

estimating the

project costs. Project planning offers the opportunity to re-evaluate the

project in great detail.

If the ERP project is not justified at the planning phase, organizations should
not hesitate to

cancel the project. For every successful ERP project there are projects that
are canceled before

implementation.

3. Plan upfront—An ERP vendor’s motive is to close a deal as soon as

possible. Your
responsibility should be to make sure it gets done right. Too often, companies
jump right in to

a project without validating the software vendor’s understanding of business

requirements

or its project plan. The more time you spend ensuring that these things are
done right at the

beginning of the project, the less time you will spend fixing problems later
on.

4. Focus first on business processes and requirements—Too often, companies

get tied

up in the technical capabilities or platforms that a particular software

application supports.

None of this really matters. What does matter is how you want your business
operations to

run and what your key business requirements are. Once you have this
defined, you can more

easily choose the software that fits your unique business needs.

5. Align the organization on the true destination—You should make sure that
everyone in

the organization has the same vision about the original motivations for
implementing ERPenabled

processes: what the targeted capabilities were, as well as the targeted

benefits. Only

then can an organization really know how close its ERP program is to being
complete. This

alignment needs special focus on people: communicating, managing

expectations, education,

and top management support.

6. Architectural design—While high-level architectural decision is made in the

process of

ERP vendor selection, it remains a critical successful factor in integrating ERP

with other
e-business applications, e-commerce applications, or legacy systems. Choice
of middleware,

interface software, or programming languages drastically impact the

implementation cost

and release date.

7. Transition project roles to a way of life—Information technology people,

ERP experts,

process experts, site leaders, the project manager, and the steering
committee—going

live can involve hundreds of people, in dozens of roles. But at go-live, once
the program

is operational, the ways roles change and the way such change is
orchestrated can be an

even larger undertaking. Companies successful in the post-implementation

phase are simply

better at mobilizing and guiding such efforts. They are also better at
preparing people for the

critical shift, moving from being team members to champions.

8. Data requirements—Unlike in-house e-business applications, much of the

packaged ERP

implementation involves the integration of ERP systems with existing e-

business software

(CRM, SCM, and SFA) and legacy information systems. Appropriate level of
data requirements is

critical for an ERP to interact with other applications. Data requirements

usually reflect details of

business requirements. It costs ten times to correct a mistake at later phase

of ERP implementation

than the effort to correctly define requirements at analysis and design phase.

9. Apply planning and program management practices throughout the

program life
cycle—If there is one thing that companies should master by the time they
go-live, it is

program management and planning. Companies that will succeed are those
that accept the

fact that if they are to achieve their benefits, the operation and maintenance
phase demands

at least as much planning as the implementation phase did.

10. Strong project management and resource commitment—At the end of

the day,

your company owns the success or failure of a large ERP project, so you
should manage it

accordingly. This includes ensuring that you have a strong project manager
and top players

from the business to support and participate in the project.

11. Achieve balanced people, process, and technology changes across all
areas—

Companies undertaking the ERP journey must make changes and take action
in all areas

of the modern enterprise. They need the best-of-breed technology tools, the
most effective

work processes using world-class practices, and people who are trained and
motivated. They

will also need strategies that fully leverage these new organizational
abilities. Far from being

a one-dimensional project, the ERP journey must keep changing play and in
balance, in all

these areas—a fact that successful companies never forget.

12. ERP must be driven by a business case—In other words, the work must
be directed

toward improving specific business metrics: improved cash flow, faster

hiring, reduced costs,
and accelerated shipments. Both line and IT managers must identify the
processes that need

improvement. Focusing on business process improvement is the only way to

know whether

you have got your money’s worth.

13. Commitment from company executives—Any project without support

from its top

management will fail. Support from a CIO or IT director is fine, but it is not
enough. No matter

how well-run a project is, problems arise (such as conflicting business

needs), so the CEO

and your entire top management needs to be on board to deal with some of
these.

14. Active executive direction—Executive direction in this case means more

than just oversight

or support. People do not adapt to doing work in new ways without some
inspiration from

the top. ERP systems are huge, influencing thousands of people, processes,
practices, and

policies. There are thousands of decisions to be made—both large and small.

Someone at the

top of the organization has to make the call.

15. Focus on capabilities and benefits, not just going live—The ERP
implementation was

initiated because of its benefits. Thus, it will not matter much if a schedule is
missed by a

few days or even weeks. However, if you miss out on an expected feature or
benefit, then it is

going to hurt. Therefore, make sure that all the features that were planned
are implemented.

16. Make ERP-related decisions quickly—How about a rule that all decisions
must be made
within three days? This may seem arbitrary, but setting a fast and deliberate
implementation

pace is critical. Experience has shown that when an ERP project stretches
more than 10–12

months, it is at risk—mostly because key team members move on.

17. Put the very best people on the implementation team—The natural
tendency is to source

projects with employees who are the most available. These people may not
have the skills or

process knowledge required to get the job done. This is complex stuff. An
ERP project will require

the best talent that you have. And if you assign only part-time talent, then
work gets prolonged

and the project is at risk. ERP work is not just a project. It is the beginning of
a continuous

improvement process. There are at least five years of benefits to get out of
any ERP implementation.

18. Phased approach—It is important to break an ERP project down to

manageable pieces by

setting up pilot programs and short-term milestones. Depending on the IT

experience, some

organizations choose the easiest piece as the pilot project, while others may
implement a

mission-critical application first. The pilot project can both demonstrate the
benefits of ERP

and help gain hands-on ERP implementation experience.

19. Data conversion—Second generation ERP systems use relational

database management

systems (RDBMS) to store enterprise data. If large amounts of data are

stored in other

database systems or in different data formats, data conversion is a daunting

task, which is
often underestimated in ERP implementations. A two-hour data conversion
task could be

turned into a two-month effort as a result of the DBA group’s lack of

technical experience

and the management’s incompetence or ignorance.

20. Organization commitments—The involvement of ERP implementation

goes far beyond

the IT department to many other functional departments. The commitment

and smooth

coordination from all parties is the key to the success of ERP project. The
commitments come

from the understanding of how ERP can benefit each functional department.
For example,

if the warehouse staff is not completely sold on the benefits of the inventory
control module,

they may not input the kind of usage data that is essential to the project’s
success.

21. Create a partnership between your software vendor (and implementation

partners)

and your stakeholders—While this concept may seem obvious, it has been
found that

the vendor–client relationship is often contentious and sometimes outright

hostile. This

fact is particularly true if the organization is severely divided regarding the

choice of vendor

software. As problems arise during implementation, and they will arise, the
blame

game often begins. Before long, the project evolves into a standoff with
neither vendor

nor client willing to admit fault. A third-party project director or manager is

often the best
solution for this dilemma. This person can usually serve as an objective
mediator to bring

the parties together, finding solutions, rather than allowing the project to
slow down to a

crawl.

22. Sell, sell, and continue to sell the ERP to your stakeholders—
Implementing ERP

systems are extremely complex and take months or even years to

implement. If your

stakeholders understand the long-term benefits of the system, they are

much more willing

to accept any perceived temporary steps backward.

23. Build and leverage process expertise—Process focus is if anything, more

important after

going live since the company now has an even greater core of process
expertise. Successful

companies fully capitalize on this expertise and the power of ERP-enabled

processes. One way

is by sending process experts from the implementation team back into the
organization, or

by having some serve at centers of excellence, some as key process

performers, and some as

business managers. Successful companies never forget the point of the

integrated enterprise—

that it is not about ERP so much as it is about people involved in ERP-enabled

processes.

24. Adequately resource your project (especially in the functional areas)—

Ensure that

replacements are in place to release key team participants. The people who
do the daily work

of running functional departments are the same people who will be essential
to implementing
an ERP system. No surprise. The people with the most knowledge will be
needed for the

majority of the project. Priorities will conflict between the demands of the
office and the

demands of the project. The most effective solution we have seen is hiring or
contracting

with additional resources to serve as backfill for key office personnel.

Admittedly, a new

resource cannot do everything that an experienced resource normally does;

however, the

replacement can handle routine work and coordinate with the experienced
person for critical

decisions.

25. Define metrics and manage them—Successful companies set targets,

establish budgets,

and make it happen—especially after going live. On the other hand, after
seeing head counts

fall and inventory shrink to more efficient levels, less successful companies
can see these

gains reversed if they do not continue to define metrics and stick to them.

26. Communicate and manage expectations at go-live—Many stakeholders in

the

organization expect the ERP to be an ‘everything for everybody’ solution.

Even in the best-case

scenario, this is rarely true. And inevitably, some functionality must often be
re-scheduled

into a post ‘go-live’ phase. All of this combined could create disillusionment
with the new

system. If the project teams are struggling to meet deadlines, they may have
to make decisions

on the functionality that needs to be delayed in order to meet the original

‘go-live’ date and
avoid delays. These decisions must be communicated and ‘sold’ to the
stakeholders to ensure

expectations are effectively managed. The organization needs to know what

will be in place

at ‘go-live’ and when they can expect the additional functionality.

27. Extend capabilities beyond the ERP foundation—As a backbone

technology, ERP

delivers more powerful benefits when companies do their utmost to build on

that platform.

In doing so, successful companies turn to a host of complementary

applications that

generate ROI, from advanced planning and scheduling to warehouse

management to sales

force automation. Successful companies also pay closer attention to the

constant stream of

innovative new solutions developed by today’s software developers like CRM,

SCM, BI, etc.

28. Ensure the project has sufficient budget—What project teams feel they
have enough

money budgeted for their projects? The perception of not enough funds is
likely to be even

greater in a project with the complexity of an ERP. Careful planning during

the budgeting

process helps project teams make better decisions on timing and allocation
of resources.

If budgets are not sufficient to support the deadlines, project resources find
themselves

working extensive overtime and under constant pressure. Ultimately, morale

disintegrates

along with the quality of work. If counter measures are not implemented, the
image of the
entire ERP system could suffer not only during implementation, but also long
after go-live.

29. Encourage functional ownership of the project—Doing project work is a

way of life for

most IT departments, while functional departments typically have little, or no

experience

with projects the size of ERP implementations. Thus, many organizations

choose to let IT lead

the ERP implementation. Rarely is this decision successful. In the long term,
the functional

departments with own the ERP. Hence, they must establish the rules that
govern system

functionality; learn how the system will handle business processes within
their departments

and be able to obtain information by on-line inquiry or by creating their own

reporting. This

ownership should be in place at the start of the implementation project.

30. Develop dependency-driven project schedules that can be tracked and

managed to

provide early warnings and help avoid crises—Successful ERP project

implementations

have well-planned project schedules. These schedules are not built from a
desired end date.

Instead, they are built with a realistic view of the amount of time needed for
the various

tasks. These tasks are linked with clear dependencies—what must happen
before a task can

begin. With a schedule, you can track and manage your progress throughout
the project.

Most importantly, a well-designed project schedule can provide early

warnings of problems.
31. Implement pre-project readiness assessment and overall project planning
—Most

organizations have never been involved in a project as complex and cross-

functional as an

ERP implementation. Additionally, an ERP project requires near full-time

participation.

A readiness assessment conducted prior to the project kick-off can help

identify areas of

strength and potential problem areas in need of improvement. This

information is extremely

helpful when planning the project budget and the project tasks.

32. Implement aggressive project management processes—The magnitude

of an ERP

implementation requires aggressive and structured project management

processes. An ERP

implementation is complex and touches virtually everyone in the

organization. Without the

structure of project management processes and without a project manager

who understands

this methodology, the project runs significant risks in time, quality, and
costs. ‘Go-live’ dates

could be missed and the credibility of the project team and the ERP software
itself could

suffer dramatically.

33. Create a project organization structure to provide planning and quick

response

for decision-making and issues management—The toughest problems with

any project

implementation involve people issues. Pre-project planning must include the

creation of

clearly defined roles and responsibilities. The following critical roles need to
be filled by
qualified people: project sponsor, project director and/or project manager,
functional team

leaders, technical team leaders, project coordinator/scheduler, etc. These

people must have

dedicated time to the project and they must be willing to be accountable for
dealing with

issues and making timely decisions. Many ERP implementations become

paralyzed when

issues are put on hold and are not dealt with quickly.

34. Make the best use of the external consultants and experts—These people
are paid

huge amounts of money for helping you in implementing the ERP system.
Thus, you must

make the best use of their knowledge and skills and ensure that the
knowledge transfer is

complete before they leave the project.

35. Ensure adequate training and change management—ERP systems

involve big change

for people, and the system will not do you any good if people do not
understand how to use

it effectively. Therefore, spending time and money on training, change

management, and job

design is crucial to any ERP project.

36. Teach the organization to use new capabilities—The natural progression

from building

capabilities is actually using them. While this may sound obvious, many
organizations are

far better at building new capabilities than at teaching (and motivating)

people to use them.

Successful companies avoid this fundamental imbalance. For them, teaching

goes hand-in-hand
with building new capabilities, from defining roles to developing skills to
culture shifts.

37. Implementation review—This review must be performed after users are

competent with

the system. The goal is to ask the software vendor to suggest better ways to
use the system.

38. Assign clear ownership of benefits—During implementation, it is usually

clear that the

responsibility for going live—on time and on budget—ultimately belongs to

one person, the

project leader. But after going live, who owns the benefits that are being
targeted? In many

companies, that is a difficult question to answer—no one is been identified as

the owner.

But in successful companies, accountability for results is no mystery. The

owner may be the

business unit leader, a project sponsor, a process owner, or someone else.

What is important

is that there be somebody whose responsibility is realizing the benefits.

39. Focus on achieving a healthy ERP ROI (return on investment), including

post-implementation performance measurement—This requires doing more

than just

developing a high-level business case to get approval from top management

or your board of

directors. It also entails establishing key performance measures, setting

baselines and targets

for those measures, and tracking performance after go-live. This is the only
way to truly

realize the benefit potential of ERP.