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Monday, March 11, 2013

ERP implementation for many organisations has proven to be a disastrous undertaking with budget overruns, time delays, poor outcomes creating chaos, impacts on management and employee morale and a general sense of a waste of corporate time and money.

Whilst there are many issues to be considered in any ERP implementation a key issue is the organisation underestimating the magnitude of the work to be done and the development of a detailed project plan that is based on wishful thinking rather than the reality of the work to be done to successfully complete the project.

Development of a project plan starts with the acquisition strategy where the rationale for the ERP project is considered along with expected outcomes, costs based upon actual work to be completed, resourcing the project, current KPIs and projected improvements to the KPIs and any other issues and impacts identified as part of the rationale process.

Unfortunately for many organisations management see ERP as a computer project to be delegated to the computer department. Issues of corporate change management and process reengineering tend to be assumed to be part of the project without delegating the necessary authority to those tasks with the detail to get the job done. Assumptions on the work to be done without any data confirming the magnitude of the tasks simply leads to shortcuts being taken which can have a major negative impact on the business post-live running.

ERP project plans can also be derailed by unknown issues that arise during the implementation stage of the project leading to scope creep and increased costs. The project plan should be a realistic plan with milestones showing all of the identified tasks to be completed by who and by when. Project plans with a go-live date mandated by management without understanding the quantum of work to be done across the organisation leads to a negative attitude by those who are tasked with getting the work done and a belief that management are not serious about outcomes.

An effective ERP project plan not only considers all of the tasks to be completed by specific milestones but also includes a resource plan to ensure resources are available to carry out the work as well as keeping the business running. Separate project teams dedicated solely to the task of implementing ERP are a luxury many organisations cannot afford and arguably may not be the best approach to gaining broad employee acceptance of the system. Some teams achieve their tasks on time whilst others may slip affecting any other team/s dependent on the slipping project teams activities which can have a cascading effect on the entire project.

The project plan should be rigorously followed with senior management engaged at least monthly, preferably weekly to review progress and intercede where necessary to keep the plan on track. Issues of scope creep should be kept to a minimum via the up-front work done on the ERP model and operating specifications to ensure a good software fit that does not require and modifications beyond the initial configuration.

The rate of ERP failures should serve as a lesson to ensure the ERP project plan and schedule is realistic and achievable by the organisation. Assumptions and wishful thinking play no part in ERP projects and only leads to bad outcomes. Project managing the ERP project based upon a realistic plan and ensuring all tasks are completed and with strong management support and communication will ensure a successful ERP outcome.

Suggest you read the article on the 26 steps for successful ERP and construct your plan around those activities.