Whether your company is brand-new to the ERP space, or you’re looking to replace outdated, monolithic solutions that are wearing down your inventory ecosystem, implementing a new ERP is a challenging journey. Unfortunately, many organizations fail to win in the implementation stage. Many studies suggest that ERP implementations have high failure rates, and a shocking 43 percent of projects go over budget while 49 percent go over their timetable.
To date, major consulting firms and research bodies have put out a variety of ERP implementation strategies. McKinsey devised the 7S Model, Bain has a variety of research papers surrounding implementation, and BCG puts out yearly implementation recommendations. Still, a mere 20 percent of companies capture even one-half of the value they projected out of their ERP, and failure rates continue to hover at a relatively stable number.
So how do you win? Today, we want to break down best-practices for ERP implementation. We’re going to keep the structure simple, the message clear, and the value quantifiable. The truth is: implementing an ERP doesn’t have to be a headache. But you may have to make some sacrifices upfront that will help you prevent revenue bleeding post-deployment.
Without a doubt, the research phase is the single biggest driver in ERP implementation failures. You have a ton of ERPs to choose from. Each of these solutions is producing a swarm of marketing materials, and you’ll get hit with three-and-a-half billion statistics surrounding the value of each solution. Take a step back. Don’t choose a solution based solely on capabilities. In fact, all of those rich capabilities may be weighing you down. In today’s ERP environment, many companies are looking to tear down large solutions with cobbled together capabilities in favor of light and agile core solutions that can handle point solution integration.
According to BCG, companies need “flexible systems that allow them to respond rapidly to customer needs and new opportunities” noting that “these next-generation, modern ERP systems are likely to have a smaller core of critical business processes” but provide access to “more specific functional and industry-specific applications” from third-party vendors. In other words, think about your ERP as the heart of your digital strategy. It doesn’t (and probably shouldn’t) have every feature under the sun.
Instead, you can rely on point solutions and third-party apps in the cloud to deliver additional capabilities to your ERP — which keeps your ERP lean and your options wide-open.
To be fair, choosing the right ERP is the longest cycle. So, most businesses are fully aware of how challenging this step is in the context of ERP implementation. Larger companies may take a while to complete this stage. Between third-party buying consultants, corporate procurement teams, and purchasing committees, larger companies typically divert down a road filled with decision-makers and groupthink.
As an ERP-agnostic company, we aren’t going to touch on the pros and cons of individual ERPs (you can read some of our past blog posts discussing NetSuite, Dynamics 365, Epicor, or Acumatica to learn drill-down features on various market solutions). However, we will give you a key piece of advice: establish your tech needs and your business needs.
Do you want a lean piece of technology with core features? Or are you looking for an all-in-one ERP? Remember, the leaner you go, the more options you have in the future. You can always build out additional capabilities via third-party vendors. If you choose to tackle an all-in-one solution, you need to have upfront discussions about how that solution will serve you in the future. The last thing you want is to redeploy and re-implement in four years.
Some questions to ask during the research and implementation phase:
You need to get the research and planning phase right. Prioritizing the right opportunities is the key to recognizing value from those opportunities during the rest of the implementation process.
At this point, you have a specific solution in mind. Whatever purchasing teams you’ve created (e.g., committees, consultants, project teams, etc.) should be starting post-purchase activities, confirming readiness to integrate said ERP, and working on any additional plans, documents, and strategies. We won’t cover most of these, since many are going to depend on the size of your company, industry, and scope.
Hint: You can learn more about specific implementation team strategies in NetSuite’s integration guide. Alternatively, if you favor agile, McKinsey has a guide on executing ERP implementation using the rapid-fire, opaque sprints that define modern-age SCRUM, agile, and DevSecOps approaches.
For now, let’s look at the three most critical components of the onboarding stage:
Perhaps the most technically terrifying component of the onboarding cycle is dealing with data. You need your existing static data integrated directly into your new ERP, and you also need to “plug” your ERP into your existing data streams, lakes, buckets, and stack. Not only do you need to confirm data viability, but you’ll need your data to execute the testing phase.
Here’s a tip: don’t use agile. Data migration works best in traditional environments. It’s a very framework-driven process, and it requires pitch-perfect execution. It’s ok to spend a decent chunk of time on your migration effort. Find the right balance between migration speed and data security. Remember, your ERP may need to be customized to meet internal governance policies. This process often happens around the same time as migration. Get both right. Follow standardized migration strategies and hyper-focus on proper migration across each data ecosystem. If you make mistakes during migration, it will impact testing — which has a trickle-down impact on your entire launch.
Seventy percent of inventory-based businesses that onboard ERPs need significant customization. That’s ok! Many ERPs are built to favor manufacturers and retailers. So, if you’re a distributor or third-party logistics company, there’s a good chance that you’ll need extra flavor to make your ERP work ideally in your environment. Think about third-party solutions. For example, StockIQ offers a swarm of forecasting, inventory visibility, replenishment, and reporting features that are custom-built for 3LPs and distributors. We easily integrate into nearly any ERP. If you decide you need these extra capabilities, now is the time you should be thinking about it.
To be clear, you don’t necessarily have to implement third-party solutions at this phase. But it’s ideal. That way, you can see the full scope of your ERP during the testing phase — not just a small preview.
Most data isn’t static. How will your ERP “flow” data across the rest of your stack? Obviously, this step involves figuring out your integrations and ERP data health, but you also need to step back and look at your entire data architecture. ERPs work best when they’re jam-packed with relevant data. You have to enable your ERP if you want it to enable you.
Time to test. Get ready for problems. In an ideal world, everything would click instantly. This isn’t an ideal world. You should have a robust testing team (hint: agile works great for this) that’s backed by processes and possibly a dedicated troubleshooting team (hint: SWAT works great). Plan out test cases based on need. So, you may have a test case for promos, logistics, and specific ad-hoc events. It’s important to test across dynamics. Don’t just test for day-to-day validity. You will hit crisis points. Prepare for them early by testing for these situations. McKinsey noted one logistics company that created a 12 person PMO to test across +3,000 use cases. While that may be too extreme and scope-heavy for mid-market players, the idea is solid—test for alternative scenarios — not just perfect-day situations.
Training trips many organizations up. You should create a training document early in the cycle, but now is the time to actually dig deep and perform training across teams. Easier said than done. Chances are, each team will use your ERP uniquely. So, you need to both train individuals over the scale and scope of the platform, while simultaneously training teams on the features they will use most. Ownership is big. End-users need to truly own the solution for your deployment to work.
We’re going to ignore the technical side of deployment. It varies by provider. But it’s important to work through the big 5 obstacles during this phase:
Instead of industrializing the entire process, consider breaking down your deployment based on these obstacles. What type of governance do you need? What risks are there, and how can you mitigate them? Is there scope creep? If so, where’s it coming from? Do you have top-down buy-in? Is there tangible accountability for leveraging your ERP to the best of its ability? What are the consequences of accountability failures, scope creep, and risk mitigation?
Deploy around your problems — not into them.
Once everything is deployed, your work actually starts. ERPs are transformative. Those third-party solutions like StockIQ that you plug into your ERP are equally as transformative. The way you do business will change for the better. But it will still change. And change is tough. We highly recommend building a change management team. You need constant training and communication to develop the digital competencies necessary for ERP execution. Remember, the technology part is done. But you still have a people and process challenge undertaking. Focus on eliminating the barriers that surround ERP functionality and productivity on the people-side.
First, employees need to feel comfortable using your new ERP. This is important. They don’t only need to know how to use it. They should want to use it. If you had an old ERP, you’ll likely deal with frictions surrounding “newness.” Many employees will favor the old system simply due to familiarity. This fades with time and training. Consider sponsorships, coaching, and resistance management techniques to offset the “newness” factor. To be clear, change management is, by far, the longest step. It could take a significant amount of time. That’s ok! You’ll see results early on the technical side if you choose the right solution. Those results start compounding as you win people over.
Implementing the right ERP is challenging. We can help. At StockIQ, we provide industry-leading forecasting, inventory-visibility, and replenishment features to your favorite ERP. Plug us in early in your implementation phase and watch your inventory frictions disappear. We help inspire confidence, deliver tangible results, and win over employees with best-of-breed inventory management features. Contact us to learn more.