How to Align the Right ERP System for Your Organization

We hear from clients all the time, “We’re going to need a new ERP soon.” Most manufacturing and distribution executives understand that the ERP (enterprise resource planning) system sits at the core of the business’s operations, but the complexity of both the systems themselves and the marketplace of ERP vendors can make decisions about how to use them and how to invest in them seem overwhelming.

For many, if not most, of our clients’ highest-profile transformation projects, the question about ERP is the highest impact (and highest cost) decision to make. This means that many of the ultimate transformations themselves that improve processes and access to data, and drive profitability rely on some sort of system change to enable – if not drive – them.

Not only is the decision about your ERP solution one that you will not revisit for a long time, but it’s also one that will influence how your business operates for the foreseeable future. The ERP decisions you make now will institutionalize process and organizational structures and directly impact the efficiency of the business.

If your company is evaluating a major change to your ERP systems, here are the steps to consider:

Value Planning 

1. Defining how the systems will add value to the business – both quantitatively and strategically
2. Aligning the strategic direction of the company with the operational changes you need to make
3. If they don’t exist yet, blueprinting your business’s processes and evaluating the types of changes that will drive the most value
4. Assessing the pain points in the current business and understanding how changes to underlying systems can address them

Selection

1. Defining the processes of the business – how will you communicate what your business is as an operating entity to software vendors?
2. Defining your key requirements – what does your business do to compete more effectively and run more efficiently than other companies?
3. Knowing how to separate technology that adds value from technology that demos well
4. Evaluating and short-listing the most qualified solutions and implementation vendors
5. Working with short-listed vendors to create demos that allow your staff to compare them “apples to apples”

Budgeting

1. Accurately budgeting licensing and infrastructure, including understanding the various discounting levers available
2. Accounting for hidden costs like bandwidth, additional hardware, and your people’s time
3. Ensuring adequate investment in change management and training
4. Staffing adequately and ensuring the right people are in place to oversee the program

Program Management / Implementation

1. Executing the implementation with discipline and predictability
2. Structuring governance over key decisions on the project
3. Containing scope and budget
4. Understanding how the project interacts with day-to-day business activities and other projects, and being able to make decisions about tradeoffs of staff’s time and attention

Governance and Sustainability

1. How will the business create ideas for improving the system once it is live?
2. How will the ideas be grouped into projects and prioritized?
3. How will the projects be executed in a way that controls risk to the business?
4. How will you ensure that future decisions about system changes control risk and don’t create unnecessary complexity and chaos?

When looking into an ERP system, look for professionals with experience in both vendor-aligned firms and independent implementation practices. An independent practice can provide clients with unbiased advice on solutions and no-compromise methodologies for implementation.

If the ERP process seems overwhelming or if you simply want an independent perspective on your ERP environment, contact us.