For manufacturing businesses who are undergoing a process of selecting an Enterprise Resource Planning system (What is ERP Part 2) , a number of critical elements should be considered. These critical factors range from the identification of key objectives, through to top management support and together result in the successful deployment of your ERP solution, and ultimately return of investment for your business.
ERP project critical success factors:
- Top management support
- Clear requirements and objectives
- Business process modelling
- Project management and communication
- Managing change
- Managing people
- Training and education
Top management support
The executive sponsor, sometimes called the Custodian or Seeker of Value, is a member of the executive team tasked with developing a Case for Change document, or the Requirements document. This describes what the proposed ERP project entails, why it is being undertaken, and what the expected cost is.
Whoever is given this role must have a sustained presence from start to finish in order to maintain project momentum. This is the person with overall responsibility to ensure the ERP project delivers what has been scoped in the Case for Change. This includes control of the timeline, allocations of resources, and managing risks. This person also has on-site responsibility and acts as the single point of contact to manage issues. If your project involves working with business partners, this is an important project role.
The custodian is not the same as the project manager and doesn’t necessarily need technical knowledge, but rather co-ordinates people and activities.
Clear requirements and objectives
When defining requirements, you first need to define your current state in detail, and then your future desired state, also in detail. If you have done that, then you should have a good understanding of your business and technology requirements and the path to get to the desired state.
You have to really grasp how your business rules and processes work, and to specify if and how those will change to achieve the future desired state. It’s not uncommon for executives to have a high-level vision but not much detail orientation. Therefore, make sure you have the people who know the details – that doesn’t necessarily mean the same as technical know-how. When the inevitable, unanticipated changes crop up in mid-project, an understanding of the details will also help in finding ways to deal with the changes – whether it’s a scope change, an undocumented process step, or a change in priorities/ procedures.
Business process modeling
If you think of an ERP project like building a house, you need a way for the plans to develop as your ideas and perspectives evolve. When you start planning a house you don’t go straight into the details. You may have some ideas (even a vision), but you need guidance from an architect on what is possible, feasible and within budget. So you start with drawings that help you decide on the appearance of the house, then move into the technical and architectural details, and finally the construction and engineering specifications.
With an ERP project, you need the equivalent of a construction blueprint. But in this case, the details are what the business structures, functions and processes be like at the end of the project.
The problem with complex software projects is how to communicate the varied components, interactions, hierarchies and responsibilities to all parties concerned. You need a representation that will capture all these elements in a way that is clear and easy to understand. This will ensure that the various parties involved can achieve alignment in terms of a common understanding of business needs and technology capabilities.
With the integration of business process modelling (BPM) and ERP, those visual representations can be made. A BPM tool can be used in the same way that you start a house, with some initial sketches. It allows you to view the business from a high level to make sure executives agree with the ‘look’ before going into more detail. It also provides connection between business requirements and IT capabilities.
Project management and communication
With a business process map of the ERP implementation requirements, a project manager with an understanding of ERP systems can develop a project plan. A project manager will know how to break a big project into smaller, less complex, and shorter stages, and make contingency plans to deal with risks.
Good communication is key to the success of a project, and it should be part of the project manager’s job to set up a communication plan. This plan helps to organize and document the process, types, and expectations for communications. It will include frequency of meetings – often weekly – but when nearing the go-live phase, meetings should be daily.
Organizations often spend a good deal of time and money working on the design of the ERP system to ensure they have got it right before the implementation starts.
With an integrated BPM and ERP, new ideas and issues can be raised after implementation is finished, so that re-planning, review, and approval can be managed.
An ERP project can succeed or fail based on the commitment of the people who use it. Therefore it makes sense to communicate with employees – early, often and in-depth.
For any major business change project, unless you have everyone personally involved, your project will encounter difficulties. You have to ensure that you get input from everyone on the team. The project can only be scoped properly if all the issues and details are identified – this won’t happen unless everyone’s input is taken into account.
You can start a project with all the right people, but on projects longer than a few weeks it’s possible that some staff may leave. So you must ensure staff changes incorporate a hand-over process to prevent project inertia when someone leaves and a new person comes in.
Training and education
The training and education phase is often included near the end of a project. However, it’s necessary to include it at the start to acquaint the project staff with the information they will need during the project. This includes education on business terms, processes, as well as technical issues.
The training and education phase at the end of the project is for the rest of the organization to understand the new ERP system.
Don’t forget training for the custodian. This person may not have such a good understanding of the ERP system, so consider it before the project starts. This will enable them to promote and protect the project when required.
Beating the odds of ERP failure
A project requires staff and experts to come together on a temporary basis to carry out a one-off change that will lead the business to greater success. It is also a complex project which must be managed in the right way. By following the steps above you can ensure that your ERP project keeps heading in the right direction.