Successful ERP implementation can result in multiple benefits for manufacturers and distributors, writes JP van Loggerenberg, chief technology officer at Syspro.
In fact, statistics show that the top reasons to implement an ERP solution are to increase efficiencies (35%) followed by cost advantage (29%).
Despite these advantages, some businesses have some trepidation around signing an ERP contract due to the high failure rates in the industry. According to analyst firms, up to 75% of ERP implementations fail.
Some of the reasons cited for those failures include poor planning, over customisation, and a lack of understanding of core objectives.
There is also little understanding of the ERP implementation process because it is not a ‘one-size-fits-all’ process.
The steps a customer takes along an ERP journey is almost like climbing mount Everest. It involves multiple stages that need to be completed and ‘climatised’ before moving to the next.
During each stage of the journey, customers need to be asking their vendor the right questions to avoid heading in the wrong direction.
Phase 1: Planning for success starts with discovery
The first stage of the ERP implementation ‘journey’ starts with the planning approach. Here it is important to understand your business challenges or strategic vision, to set the right objectives from the outset. For example, you may want to gather actionable insights to improve overall business performance, or you may want to increase customer touchpoints by exploring new e-commerce channels. By understanding the business case, you will better understand what optimal digital solutions to incorporate.
It is also important to undertake a self-assessment during this phase to ascertain where you sit on the digital maturity scale. Your business may be a digital register at the bottom end of the scale because digital initiatives are disconnected from your business strategy.
Your business could fall in the middle of the scale as a digital player, where you have aligned digital initiatives to your strategy, but they cannot be described as disruptive. You could even fall at the top end of the scale as a digital disruptor.
Ultimately, it is important to identify the level at which your business stands to understand where your business should move and the possible risks.
Phase 2: Design and refine
The next stage is the design phase, where you allocate resources and build a multi-layered project team to ensure the success of your implementation. Here, it is vital to build an ERP implementation dream team with functional knowledge, will contribute to the design of new business processes, and assist in documenting the requirements.
The team needs to know what parameters in which they can operate – what is ‘on the table’, what is not, and where the team may ‘push the boundaries’.
The ERP implementation team will architect the solution based on the information gathered in the planning and discovery phase. Once this is completed you will have an accurate scope to determine timelines.
If you have a predetermined GO LIVE date, you will most likely need to reduce the scope or add resources.
Phase 3: Implementation
The next vital phase is implementation. Too often the end of an ERP project is determined by the go-live date, meaning the date the business starts using the ERP application for daily business transactions.
In reality, the implementation phase involves multiple stages. For example, your implementation phase could include training, field testing, go-live of core functionality, best practices and industry configuration.
It is strongly recommended that a change-management strategy should be outlined during this phase as this will establish a solid foundation to determine the success of the project and ongoing digital transformation efforts.
A change management strategy should have an inclusive communications plan that includes frequent project updates.
Phase 4: Monitor and assess
Once you gain momentum on an agreed strategy, you will need to continuously monitor and assess whether you need to adjust the process to leverage new technology or adjust to new trends in the market. Understanding that an ERP project is an ongoing program is important to maximize and sustain the full benefits of an ERP system.
The most significant benefits are more likely to be realized sometime after the go-live date. In order to get to this stage, executive decision-makers and their organizations must work to ensure that the primary drivers, the system, process and people come together to operate the new system and perform the new processes.
Your ERP solution will therefore evolve with the changing eco-system and of course your shifting needs. You could then evolve to including advanced modules and perhaps further third-party integrations and moving forward you would have an advanced ability to realize full ROI.
To complete a successful implementation project, it is vital to work with a trusted advisor that understands your manufacturing or distribution business.
Manufacturers and distributors need a focused approach to adopting the emerging technologies that can add value, simplifying complexity wherever possible and ultimately providing a competitive advantage.