No one wants to do an ERP implementation. It’s a whole lotta pain and a whole lotta work for something that is often not a lot of customer facing joy. In fact, we have seen clients procrastinate and turn a blind eye to all the additional systems that they have had to add, in order to compensate for an ERP system that the business has really outgrown. Some clients have gone to extraordinary lengths to avoid doing an ERP implementation.
A good ERP system is like the foundations of your home. When they’re well-built and doing their job, they not seen and rarely thought about.
However, poorly constructed foundations are a world of pain when it comes to keeping the walls up and the roof watertight.
I started out in ERP. It was the backbone of the business and everything I knew and had lived and breathed as someone operating a business.
What is ERP?
We’ve seen many interpretations over the years of what ERP can mean to a business. If you’re looking for a dictionary definition then this link is helpful.
“Enterprise resource planning (ERP) is defined as the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain.”
The history of ERP comes from manufacturing you can tell from the name ‘enterprise resource planning’. Traditionally a lot of ERP systems have been about materials management, master data alignment and ensuring that the process through the supply chain is connected to the business needs of being able to place orders and receive inventory.
We say, that for a retail business, it contains all the critical elements of:
- Product
- Orders (both sales and purchase – linked),
- Inventory and
- Customers
Ideally it should also have financials baked right in, so that the business owner can run a cash flow report and know where outstanding purchase orders are and who will need to be paid (in which currency).
This doesn’t mean that if your manufacturing or planning system doesn’t link to financials that it’s not working, there are many ways to get a suite of working systems happening in a business and how you approach getting the best coverage for you depends on your business.
Benefits of an ERP System
- Enterprise-wide integration. Business processes are integrated end to end across departments and business units. For example: A new order will initiate a credit check, query product availability, and update the distribution schedule when it is placed. Invoices are sent once the order is shipped.
- A common database. With a common database, data can be defined for every department using the same definition (or that’s the game anyway). The trick here is to try and make that common language work across the business and don’t let people make up their own lexicon when we’re all talking about the same thing.
- Real-time (or near real-time) operations. Problems are identified quickly and the seller has more time to fix the situation.
- Consistent look and feel. Early ERP vendors realized that software with a consistent user interface (UI) reduces training costs and can make it easier to grasp new areas of a system. One of the things that we’ve grasped having worked on multiple systems is that if people understand the process, the UI is not so critical as they know what the end outcome is supposed to be.
Evaluating and Selecting the Best ERP System
Because every business is unique. It would be so lovely to be able to offer people who ask a ‘here’s one I made earlier’ type of answer to the ‘which system?’ question. It really does depend though on the business, on what your internal capacity and capability, on what your current systems do well, and of course on your budget.
Although ERP is likely the ‘home’ system for your product, customer and inventory data there are often other systems that hang off it and rely on these key pillars of information. That is why we offer a “System Sense Check Process” as a service.
We spend time with the people in your business who are familiar with the current systems and processes. We look at reports, ask questions, and put together process flows that show your current state of play. After we review this with you, we will make high level user stories that can be used to share your requirements with a software vendor.
At the end of the 6R System Sense Check process you’ll have a systems overview diagram, a set of process flows and a list of user stories.
ERP Software and Process Implementation
The majority of successful ERP deployments are driven by an executive sponsor who sponsors the business case, obtains approval to proceed, oversees progress, leads the steering committee and eliminates roadblocks. In fact there are four foundation project roles that are essential to ensure your project has in place to start well, keep momentum and finish strong.
1. Making the Project case
Typically, the sponsor oversees the creation of a business case, which includes estimated scope, budget and timeline and can include the following:
- Business outcome; the thing that we’re looking to improve or solve
- A high-level scope / list of requirements
- Known assumptions (anything that we might exclude from scope)
- Estimates for implementation costs
- Estimates for implementation timeline
- Project and operational risks and possible issues/ considerations
- Resourcing plan and potential recruitment estimates
- Once the business case is complete, the executive sponsor presents the business case to the appropriate group of senior leaders for formal approval to spend money and direct teams work on the ERP project.
2. Planning the program
The high-level timeline created for the business case is then refined into a work plan, which should include the following steps:
- Establishing key team members; internally and external to the project. Confirmation of external partners. Typical partners include: ERP implementation specialists, change management specialists and technical specialists.
- Contracts for new software, technology, and ongoing support services should be agreed.
- Establish infrastructure approach; whether on premises or in the cloud the infrastructure needs to be considered carefully. When there are multiple software providers working together ensuring that access and clear roles and responsibilities are understood early will set the partners up better to work together.
- Agree on ways of working including, tools, communication, processes and timeline.
3. System configuration (and confirmation of process)
- Confirm process and ensure that gaps in current and future process is well understood, figure out how the software will be configured and what’s needed to support the team and the business process.
- Configure the ERP software to reflect the intended business processes.
- Any additional developments or changes should be completed or scheduled.
- Migrate (and cleanse) data. This one is always a fun step!
- Test, test and test. There is no such thing as too much testing (or at least we’ve not seen it yet). Testing is the way that the business team gets familiar with the way the software works and develops internal expertise.
- Depending on the size of the business/ team and rollout – training documentation might be needed prior to testing (usually initial key user training and then end user training).
4. Deploy the system
Prior to the final cutover when the new system is in production, multiple activities will be completed. These include:
- Training for those who have not been in the early training perhaps end user training is required (size of ERP and business impacts this effort).
- Clarify cut over activities, old systems being switched off (still accessible for history) validation of data by business users and sign off of data taken over being complete.
- Establish the support required for the early days and at what points this support will be reviewed to adjust it as the business learns.
- Make the final “Go live” decision. Once the executive sponsor (and key project team members) are confident the ERP is ready, the business will switch from the old system to the new.
5. Mastering the Systems
Following ERP deployment, most organizations experience a dip in business performance as staff learn new roles, tools, business processes, and metrics. In addition, poorly cleansed data and infrastructure bottlenecks will cause disruption. All impose a workload bubble on the ERP deployment and support team.
Many businesses have found after ‘go live’ they need the support of the project team almost more than they did when preparing for taking the project live. People think that once software implementation is done, they’re done.
Sometimes largest, piece of work is learning how to use the software and realising it’s benefits.
The knowledge gained in the project by key users needs to be shared and supported through the business, sometimes well planned and tested operations don’t translate into active use very well.
As you can see an ERP system provides structure for a business with respect to financial, manufacturing, distribution, supplier, and customer management. Figuring out which ERP is going to work well for your business will likely take some time and effort on your part, but it can be made a whole lot easier with the help of a professional who has a deep understanding of ERP systems.
TL;DR
A good ERP system is like the foundations of your home and can improve a business’s efficiency and effectiveness but choosing the wrong system or underestimating the implementation of one can have a devastating and long lasting effect on your business. Have confidence in your projects success when you work with an experienced ERP project partner like 6R Retail. Get in touch to see how we can help you.