The Details for ERP Implementation Project Excellence Factors
Implementing ERP systems is a complex endeavor, fraught with visible and hidden risks that can compound over time, leading to project drift and inefficiencies. These challenges contribute to what we call the "ERP implementation malaise" paradigm. So, how can companies break free and rise above this common scenario?
Outlined below are key implementation Project Excellence Factors. When followed effectively, these control factors accelerate the realization of exceptional ERP results. While these control factors have overlapping elements, each warrants independent consideration. When executed well, they function harmoniously, like a fine-tuned engine. However, weaknesses in any area can disrupt the entire project, with multiple weaknesses virtually guaranteeing failure.
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ERP Project Leadership
Achieving the full potential of an ERP project requires that the buyer’s leadership team, supported by an external strategic advisor, own and lead the project through all phases—including the critical pre-implementation planning work. This leadership must be operations-focused, understanding the essence of the business and its strategic goals. ERP implementation is not an IT project. Key reasons for buyer leadership:
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- Firsthand Knowledge: Buyers understand their business processes, opportunities, and obstacles.
- Accountability: Buyers must live with the project results and are therefore most motivated to ensure success.
- Implementer Limitations: Implementers often operate with assumptions of passive client engagement, which will stifle potential.
- Rapid Course Correction: Strong buyer leadership enables quick adjustments or replacements of underperforming implementer or internal personnel.
- Post Go-Live Improvement: Buyer-led projects reduce overdependence on external implementers for ongoing ERP improvement work.
- Authority: Only the buyer's leadership has the authority to resolve difficult and complex project issues.
Leadership must remain proactive, establishing clear rules and consequences for actions that jeopardize the project.
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Pre-Implementation Planning
Successful ERP implementation requires extensive preparation before the formal implementation begins. While the timeframe required to complete this planning varies depending on the company's size and complexity, it is essential that the process is executed with momentum and continuity and conclude near the implementation’s formal start. This preparation addresses all Project Excellence Factors and involves the following key steps:
A. Targeted Business Process Topic Discussions: This step identifies and records targeted business process topics based on the following criteria:
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- Cost-Saving Potential: Business processes with the potential to generate significant savings when improved.
- ERP Boundary Processes: Business processes that exist at or cross the ERP boundary (boundary in the diagram below).
- Complex Processes: Business process areas requiring an involved review to better assess the path forward.
- Entrenched Legacy Thinking: Processes influenced by outdated practices and subject to potential significant changes.
- Change Management Challenges: New business processes likely to encounter substantial user resistance.
- Upstream or Downstream Dependencies: ERP business processes or metrics affected by, or that affect, other enterprise business processes.
This discover is highly organized by business process categories and topics. It is used during the formal implementation to influence the future-state business process and metrics design.
B. Assessment of Existing Business Process Support Tools: Existing tools, such as spreadsheets, paper forms, procedure lists, and commercial or custom point-applications, must be identified and evaluated. These tools currently support business processes and metrics that are known, or suspected, to be within the ERP’s scope.
These existing tools are critical to assess in the business process design phase of the ERP implementation. The potential is that most of these existing tools can be full, or partially, removed from use after the ERP go-live event.
C. Establishment of a Buyer-Controlled Implementation Approach: This step involves setting-up comprehensive project controls for the buyer all based on the Project Excellence Factors described in this document. Setting up this implementation approach requires serious professional insight. This includes the sensitive exercise to adjust the selected implementer’s normal methods to scrub out elements not aligned. These adjustments mainly focus on:
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- Project Detail Control: Ensuring all project details are tightly managed and in the firm control of the buyer.
- Implementation Methodology: Modifying and removing implementer methodologies to align and not conflict with the Buyer-Controlled Implementation Approach.
- Project Personnel: Ensuring clarity and synergy among project team members and necessary external partners.
D. Implementer Immersion: The immersion process prepares the ERP implementer’s lead business process consultants, along with other relevant consultants, for the formal implementation. This highly efficient exercise achieves the following objectives:
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- Strategic Education: Provides ERP consultants with a broad understanding of the buyer’s business operations and strategic goals.
- Detail-Oriented Preparation: Delivers specific insights into high-value and complex business process objectives.
- Rapid Readiness: Builds the confidence and competence of ERP consultants on methods and tools being used, enabling them to move efficiently into the formal implementation project.
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The ERP Project Team
The ERP project team structure shown below is presented generally. However, every role shown has material purpose on most any typical ERP implementation although some roles can be filed by the same person, usually in smaller companies. The roles highlighted with the orange background comprises what is materially missing on nearly all ERP projects and is the project function built to enforce the critical Project Excellence Factors listed in this document.
Key points about the project team structure are:
Overarching Leadership: The leadership team must be actively involved in strategic and interdepartmental or intercompany project activities. However, company leaders rarely have insider knowledge of ERP projects and the ERP industry—which is necessary to navigate past many insidious project problems encountered. To support this effort, a Strategic Project Advisor is included in the team structure, as shown in the diagram. This role strengthens the leadership team to tackle the complexities of the project effectively.
Internal Project Management: The buying company’s internal project team is responsible for managing day-to-day activities, including project plans, milestones, and issue resolution. Notably, the internal team does not require prior knowledge of the specific ERP system being implemented. Instead, subject matter expertise is provided by the ERP implementer and independent ERP consultants involved. The internal team works closely with the external Project Control Team to protect the integrity of the Project Excellence Factors for which a highly successful ERP project depends.
ERP Implementers: The ERP implementer serves as the primary subject matter expert for the ERP system and provide many potential roles as shown in the project roles diagram above. Since ERP implementers are accustomed to significantly leading projects for clients, their understandable instincts must be moderated. Clear steps (2C and 2D) to manage implementer alignment are outlined in the "Implementation Preparation" section above.
Independent ERP-specific Implementation Consultants: This role is important first to have one or more carefully selected independents involved to provide an objective perspective on proposed approaches to meet business process objectives. Secondly these consultants can help meet personnel requirements as needed and often have connections to other experienced independents. The company never should be overly dependent on the main ERP implementer.
External Project Control Team: The Buyer-Controlled Implementation Approach seeks project excellence through a structured framework and continual focus on protecting the integrity of the Project Excellence Factors. However, this approach is challenging to execute effectively. Weakness in any element of project control can have a ripple effect on other elements. To mitigate this risk, the external Project Control Team provides rigorous oversight and alignment across all project phases. Key members of this team should lead the implementation preparation phase (item #2 in this list) where the foundation for real success is established. Also, members of the Project Control Team should have no business interest in upselling any business software or development services.
Onsite and Remote Service Delivery: A well-managed project enables many tasks to be completed remotely after initial formative work. This reduces travel demands on consultants, minimizes travel costs for the buyer, and increases options to access skilled resources. Successful remote work depends heavily on implementing the comprehensive project control measures described herein.
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Establishing and Controlling ERP Project Scope
Defining the Scope: The scope of an ERP project is established by evaluating the following key factors:
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- ERP and Application Capabilities: Understanding the functional and technical capabilities of the ERP system and any integrated applications.
- Business Process Requirements: Considering the complexity and breadth of buyer’s business processes within the ERP’s boundary (using results from Pre-implementation Planning Step 2A above).
- Workload Expectations: Estimating the expected volume of work required for the ERP project.
- Enterprise Change Management: Evaluating the level of organizational change anticipated and the readiness of controls to manage such change effectively.
- Project Team Readiness: Reviewing the status and capacity of both internal and external ERP project participants.
- Operational Data Quality: Assessing the condition of operational data to assess readiness for migration and use within the ERP system.
- Go-Live Timeline: Considering any established go-live date objectives and their feasibility considering all project constraints.
Controlling Scope in the Implementation: Controlling scope during the implementation depends on the internal project team and external Project Control Team’s effectiveness in protecting the Project Excellence Factors listed in this document. Any proposed changes to scope should go through a mechanical process that seriously considers the pros and cons of such changes.
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ERP Project Management Approach
Adopting an Agile Framework: The project management approach for ERP implementation should be dynamic and agile, reflecting the complex and iterative nature of such projects. Key characteristics of Agile project management include:
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- Iterative and Adaptive Methods: Agile emphasizes iterative, incremental, and adaptive approaches to managing the design and execution of project activities. This method is particularly well-suited for engineering, information technology, and new product or service development initiatives.
- Continuous Issue Resolution: Agile anticipates the discovery of consequential issues and obstacles throughout the project lifecycle. It prioritizes addressing these challenges promptly and encourages frequent incremental corrections toward keeping the project on track.
- Flexible Timelines: Major implementation milestones often feature extended timeframes and overlapping phases. This reflects the inherent uncertainty in project timelines at the outset. Additionally, granular tasks such as configuration, application/metrics development, data migration, procedure development, and testing must be scheduled on shorter time horizons, as these activities are subject to dynamic cause-and-effect processes.
Limitations of Waterfall Methodologies: Unlike Agile, traditional 'Waterfall' project management approaches—commonly used in construction projects—are poorly suited for ERP implementations. In construction, it is feasible to meticulously plan dependencies, tasks, and timelines for the entire project. An entire ERP projects cannot be realistically planned this way. Notwithstanding, there needs to be a firm go live date objective and there can be activity areas of the ERP project that can take on the Waterfall approach.
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ERP Project Duration and Pace
Establishing Project Pace: The pace of an ERP implementation project should prioritize momentum and continuity while accounting for anticipated obstacles and constraints. A well-defined and maintained pace ensures the project progresses steadily, contains disruptions, and avoids the risks associated with stagnation.
Project Duration: The planned duration of an ERP project depends on several factors, including:
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- Business Process Complexity: More intricate processes require additional time to analyze, configure, and implement.
- Project Scope: The breadth and depth of the implementation significantly impact the timeline.
- Resource Availability: Access to skilled internal and external personnel plays a critical role in determining project duration.
- Momentum and Continuity Objectives: Sustaining progress throughout the project lifecycle is essential to avoid delays and inefficiencies.
- Business Cycles: Critical business activities, such as fiscal year-end or peak operational periods can affect implementation timeline and start/end target dates.
Protecting Project Pace: Maintaining a consistent pace is crucial for higher levels of success in an ERP implementation. Key strategies include:
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- Executive Oversight: Ongoing executive involvement is necessary to monitor progress, address delays, and provide the push required to maintain momentum.
- Avoiding Stagnation: An ERP project is akin to a large ship—it requires significant effort to regain momentum if slowed or stopped. Proactive management helps prevent such disruptions.
- Monitoring Impacts: Changes in personnel, obstacles, or scope should be continually analyzed for their effect on project pace. The default response should prioritize adjustments to these factors to protect the overall momentum.
- Low Tolerance for Delays: Avoiding delays caused by personnel unavailability or incomplete assignments is critical. Such disruptions can create ripple effects, compounding damage to the timeline. To mitigate this risk, ensure backup resources, including external implementation consultants, are in place.
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Informed Business Process Design - Company Details in ERP Implementations
The Challenge of Handling Company Details: In a typical ERP implementation, there are thousands of existing company details that may influence the design of new ERP business processes, metrics, data, interfaces, usage procedures, and integrations. These details stem from various sources, including:
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- Documented Inputs: Statements of ideas, concerns, and questions gathered throughout the organization.
- Legacy ERP Systems: Existing ERP processes, metrics, and data that have often been customized over time.
- Business Process Support Tools: Auxiliary tools currently supporting business processes that the new ERP can either fully or partially replace. Examples include spreadsheets, standalone business applications, paper forms, procedures, and email templates. Without diligent effort here, many existing tools, that should have been retired, live on. This leads to inefficiencies and potential backsliding as users revert to familiar methods instead of adopting the new ERP’s functionality.
- Institutional Knowledge: Undocumented methods and insights held by employees—often called tribal knowledge.
- Best Practice Guidance: Industry or functional area recommendations that shape business process design and metrics.
Capturing and Organizing These Details: To effectively capture and manage these details during an ERP implementation:
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- Use a Collaborative Application: Employ a tool and methods designed specifically to manage the complexity of existing company business process, metrics, data, and integrations—and ideas, tasks, and issues related to future ERP design.
- Organize by Business Process: Structure details by business process categories and other relevant attributes to enable efficient use during the implementation.
- Ensure Buyer Control: The ERP buyer should fully control the capture and management of company business process details, lowering dependence on any external entity, while better protecting confidential information.
Drive Adjustments to the New ERP: Visibility into comprehensive company details facilitates hundreds of adjustments to the new ERP and satellite applications. Purposeful adjustments that mostly would have been missed or compromised without this visibility. These adjustments may include:
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- Business processes improvements—though configuration decisions, workflow development, or new functionality.
- Creation of new data fields and attributes.
- Modifications to user interface forms.
- Metrics and notifications design.
- Procedure for user – especially exception processing.
- User training to improve onboarding and reduce backsliding.
- Methodical retirement of existing process support tools being replaced.
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Understanding ERP Built-In Tools
ERP tools are essential for developing extended functionality, interfaces, workflows, metrics/reports, and integrations. Some tools are built directly into the ERP system, while others are third-party offerings.
A thorough understanding of these tools by the buyer’s team provides several key benefits:
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- Enhanced Project Control: Enables better planning, execution, and overall leadership during the business process and metrics design phase of the implementation.
- Scope Management: Improves the ability to detect and prevent the misuse of built-in tools in ways that conflict with the project's scope or the objective to adapt to the ERP’s native capabilities wherever practical.
- Internal Skill Development: Facilitates training of internal personnel to assist with built-in tools use, fostering long-term independence and self-sufficiency in managing functionality, workflows, and metrics.
A lack of familiarity with ERP built-in tools can lead to the following problems:
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- Underutilization: Failure to leverage the potential of built-in tools, resulting in missed opportunities for functionality/metrics improvements.
- Overutilization and Misuse: Excessive reliance on tools to pursue unnecessary or illegitimate application development objectives, leading to increased costs, project delays, and potential harm to project continuity.
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Adapting to New ERP Systems and Managing Change
Organizations implementing a new ERP system should adapt, wherever practical, to the native functions of the ERP. A "properly selected" ERP is one that should offer best-practice business process structures for the size and industry of the buying company—so there should be continual adaptation opportunities.
Evaluate Exceptions Rigorously: Any proposed deviations from the ERP’s native functionality should undergo a formal review process. This minimizes the risk of carrying forward outdated or unnecessary legacy processes and metrics that may undermine the ERP’s effectiveness.
Prepare Users: Users must be educated on the importance of adapting to the ERP’s native processes as it is a normal human instinct to protect things for which we are familiar and appear to be sufficient.
The Role of Change Management: ERP projects inherently involve significant changes as ongoing opportunity to improve processes, metrics, and workflows are detected. Effective change management is critical to ensure these opportunities are more completely realized.
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ERP Implementer Commercial Terms
Arranging proper commercial control with implementer and other outside contractors is important. Key items are:
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- Project Continuity – rules and penalties for causing personnel delays
- Work product ownership explicitly with buyer
- Termination of implementer and other external resources
- No restrictions on buyer hiring other firms and independent contractors
- Precedence on commercial terms between a Master Services Agreement (MSA), a Statement of Work (SOW), or any other documents.
- Consultant related cost control terms for:
- Expenses and travel time charge
- Overtime / weekend / holiday billing rates
- Minimum charges (including the 8-hour day concept)
- Rates by role or person - NOT BLENDED
- Scheduled services cancellations
Preparing to Implement ERP
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ERP Implementation Team
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ERP Implementation Team
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Hiring an ERP Implementer
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Controlling ERP Implementation Complexity
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Benefits of Radical ERP Implementation Controls
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