TOP SECRET: 10 ways to implement world-class ERP

1 Map your processes Systems are only as good as the processes to which they are applied. Carl Tomlinson is principal practitioner at The Manufacturing Institute, which provides consultancy to lean minded manufacturers on ERP. As he says:?"If a new ERP system is deployed into an organisation with an existing MRP system and the stock record accuracy is 55% because stock transactions are not booked in a timely way, then unless that issue is resolved it's highly unlikely a new system will improve stock accuracy." All implementations should begin with an examination of businesses processes. If you don't like everything you find then bear in mind that many ERP systems feature best practice templates, advises Nick Castellina, senior research analyst at Aberdeen Group. Have an open mind over incorporating these into your own way of doing thing, he advises. Customisation is a fine balance. Too little and the ERP doesn't have the functionality you need; too much creates a rod for your own back when it comes to upgrading software, he says. 2 Have a project plan Think of implementing ERP as like buying a house. You'd begin the hunt with a basic spec of how many bedrooms you wanted, target neighbourhoods and your maximum budget. Adopt a similar nuts and bolts approach with ERP. What areas of the business do you want to improve and what are your needs? Is it all about cutting inventory or is improving on-time delivery a deal breaker? Set out what you want to achieve and make sure the targets are SMART (specific, measured, achievable, realistic and timed). The final element is key says Castellina. Building regular checkpoints into the project plan can give you early warning of an ERP implementation gone awry. And all strategic ERP visions need a degree of flexibility to react and adapt to life in the factory. "Having a static plan would be a mistake," advises Castellina. "Actions that were planned prior to the process going into motion are not aligned with the most realistic view of what has happened with the project." 3 Shop around for the right vendor Project plan in place, your next job is to set out your ideal ERP systems requirements and go shopping for a vendor, says Mike Price, MD at The Manufacturing Institute: "Typically, you want to go to a number of vendors to understand what they can do to meet your requirements. Where some companies fall down is talking to one solution provider who will offer their solution to the problem rather than thinking the problem through and defining it properly." But remember that the vendor can bring plenty of added value to the partnership. Systems will often feature industry wide best practice so it pays to adopt a listen and learn approach rather than simply reel off a list of demands. 4 Appoint an all-star implementation team Nobody knows ERP better than the operators who are going to be using it. It's vital to include a broad selection of employees in the creation and delivery of your ERP plan. Doing so will help you find and fix gaps in functionality as well as combat the misnomer of ERP being a thinly veiled IT department diktat. "ERP gains come from automating transactions and from better visibility of information leading to better management," says Dennis McCarthy of DAK Consulting. "This is best driven by the people who use the system working in cross functional teams. Involve future system users in reflecting on how ERP functionality with its potential to improve collaboration and communication can impact on daily, weekly and monthly routines." 5 Hire a project manager Behind every successful ERP implementation is a first rate project manager, the type who will walk through walls to achieve integration. Your shopfloor ERP general should be a skilled networker able to bring the best out of others and build momentum behind a project. They must also have the courage to ask the tough questions when momentum threatens to be lost. Castellina says: "It is important that someone takes ownership of the project and tries to reduce the efforts of having too many cooks in the kitchen. This employee will guide the project towards completion, be accountable and ensure the project delivers on time." 6 Flaws in the big bang theory Pause the launch sequence and take the mission control sign off the office door – big ticket blast offs are best left to NASA. The factory equivalent puts all your functionality on the line to all locations at the same time. That's a lot of unnecessary stress and potential risk if you've got just a single element wrong. Far better, say experts, to adopt a phased ERP launch. This will allow you to focus on the functionality deemed most important to your business. A staged launch also allows you to adapt and improve your implementation plan according to the challenges you encounter at each step along the way. 7 Engage your employees It's easy to overlook the importance of Alan in accounts amid a multi-million ERP rollout. But one howl of derision from Alan at a 'dog's dinner of an ERP system that no-one bothered to tell me about' could turn implementation toxic. A dejected Alan will opt out of ERP and if he's an influencer then others might just follow. Bringing Alan and company on board is about taking the time to educate them about the advantages of ERP, says Castellina of Aberdeen Group. "Show employees how it's going to impact their day-to-day lives rather than just saying here it is and you have to use it. Show them how it's going to improve their work and ability to succeed." Communication should be a two way affair with subsequent gripes, groans and great ideas voiced to the implementation team. 8 Train, train, train Pep talk over – and with your employees doing cartwheels at the thought of all that real time data – it's now time to equip them with the practical ERP skills. But think twice before you book the sandwiches and the function room, advises Castellina. "Best in class organisations are integrating training with daily business processes. By doing so, these organisations are minimising the amount of time that these employees are away from their day to day job. The method of 'training by doing' is more effective." Advanced ERP practitioners have a few other training aces up their sleeves, according to the Aberdeen Group. Job specific coaching stops employees getting bogged down in irrelevant ERP functionality. A new joiners' training programme will help you recycle tacit ERP beyond a departing employee's final day. And try a certification scheme. Best-in-class firms are three times more likely to have the equivalent of a driving test to ensure ERP users don't send your programme veering off course. 9 Made to measure Don't let your implementation turn into a techie's wet dream. Refer back to those simple metrics set out in your project plan and constantly assess whether you're making ERP work effectively. It's not a crime to bring it back to ROI when the IT bods are enthusing about additional terabytes. 10 Talk to your peers The Samaritans' knowledge of ERP is foggy at best. So if you do hit crisis point and want some impartial advice then a like-minded manufacturer offers far more rewarding counsel, advises Castellina. "Talk to your peers. There are ERP users groups that are often independent of the vendor where you can understand better how to use the solution. Go to other organisations with which you can identify who are using a similar solution." Top habits of best-in-class 85% devise an ERP project plan before choosing a vendor 84% elect an implementation project manager 81% use a phased implementation approach 76% standardise business processes 65% build in early warning flags for changes in ERP project scope 63% implement ERP training for new recruits 53% measure the business benefits from ERP implementation 41% integrate ERP training with daily processes 25% operate a certification programme for ERP users *Figures taken from Aberdeen Group's ERP Implementation and Training research, a benchmark of 170 businesses that had recently implemented ERP. Read the full research at http://tinyurl.com/6w5mtxc Who qualifies as best-in class? Aberdeen Group qualifies best-in-class manufacturers as those who: - delivered a 22% improvement in operational costs from ERP - achieved 17% improvement in profits over the past two years - delivered ERP projects 6% under budget