ERP Implementations Done Right: Do They Exist?

ERP Implementations Done Right: Do They Exist?

ERP implementations are complex endeavors, and there’s no universal approach to ensure success. Over my years working in digital transformations, I’ve seen certain patterns that define successful projects, and others that lead to failure.

During a recent conversation with Grady Brett Beaubouef, CISA, PMP, Published ERP Author , a seasoned ERP consultant and author of the blog ERP the Right Way , we took a deep dive into what organizations can do to navigate these challenging projects.

In this blog, I’ll summarize key insights from our conversation and provide actionable advice for ensuring your ERP implementation is done right. We covered critical steps for avoiding pitfalls, managing expectations, and understanding the role of leadership in guiding ERP projects to success.

You can also watch the full interview in this recent podcast interview with Brett:

The Importance of Doing ERP the "Right" Way

When we talk about doing ERP the "right" way, we’re referring to more than just implementing the software successfully. It’s about approaching the entire process strategically, keeping in mind the long-term goals of the organization. ERP implementations have three major players: the customer, the system integrator (SI), and the software vendor. To ensure success, each of these parties must understand their role and collaborate effectively—but above all, the customer must take ownership.

Too often, companies rely on subjective decisions during the software selection process, which sets the wrong expectations. They choose based on brand names, flashy demos, or promises that don't align with their actual needs. What they fail to recognize is that software selection should be driven by an objective analysis of how well the software fits their business processes and future goals.

The Pitfalls of Subjective Decision-Making

Let’s take a moment to reflect on the dangers of subjective decision-making. During our conversation, Brett highlighted how subjective preferences can lead to a significant gap between the expectations set during the sales process and the reality of what the software delivers. When companies select ERP systems without fully understanding their needs or the limitations of the software, they create unrealistic expectations. This often leads to disappointment later on when the software doesn’t perform as expected or fails to support critical business processes.

For example, I’ve seen companies select an ERP system based solely on brand reputation or because a competitor was using it. In some cases, they were swayed by an executive’s personal preference or previous experience with the software. However, these decisions weren’t grounded in the organization’s unique requirements, and that’s where things started to go wrong. What was missing was an objective, detailed analysis of whether the software could support the specific processes, workflows, and scalability needed by the organization.

By taking a more objective approach and aligning the software with the business’s needs, companies can ensure a smoother implementation. This requires not only a detailed review of the software’s features but also a clear understanding of how those features align with the company’s goals. Brett and I agreed that this kind of analysis is critical to setting the right expectations for the ERP project.

Setting the Right Expectations with Vendors and SIs

One of the critical points Brett emphasized was how important it is to set the right expectations with both vendors and SI partners. Many companies assume that once the software is purchased, the vendor’s job is done, but that’s far from the case. In fact, vendor engagement throughout the implementation is key to project success.

A recurring issue we see is that many ERP vendor contracts are designed to offload as much risk as possible onto the customer. This puts organizations in a precarious position where they are left to manage most of the project risks without adequate support from the vendor. For instance, it’s not uncommon for vendors to fulfill their contractual obligations by providing the software but to wash their hands of the implementation process itself. As Brett pointed out, this can leave customers exposed to project failure if the implementation isn’t managed properly.

To avoid this, Brett recommends including contractual clauses that hold the vendor accountable for project success. This could include provisions that require the vendor to provide key resources for a minimum percentage of the project’s duration, ensuring continuity and expertise throughout the implementation. Additionally, shared risk and reward models can help align the vendor’s interests with the success of the project.

The Role of the SI Partner

Just as important as holding the vendor accountable is ensuring that the SI partner is fully committed and providing the right resources. In many cases, we see SI partners assign “named” resources to a project, but those resources may not be fully dedicated. They’re often splitting time across multiple projects, which dilutes their attention and can result in delayed decision-making, missed deadlines, and reduced quality.

The best ERP implementations occur when both the customer and the SI have aligned expectations and dedicated resources. It’s not just about having named individuals on the project—it’s about having the right individuals with the necessary experience and expertise who are focused on the project full time. When SI partners stretch their resources too thin, the project suffers, and the customer pays the price.

To mitigate this, Brett suggested incorporating clauses in the contract that specify the level of dedication required from the SI partner. For example, if a senior consultant is assigned to the project, the contract should include a provision that ensures they will dedicate a certain percentage of their time to the project. This helps prevent situations where consultants are pulled away to work on other projects, which can cause disruptions in your ERP implementation.

Customers' Role

When it comes to ERP implementation, ownership is key. While customers often expect the SI partner to handle everything, the reality is that the customer must take responsibility for many aspects of the project. Ultimately, the customer is the one who will live with the system once the consultants leave, so it’s crucial for them to take ownership from the start.

One of the biggest mistakes I’ve seen is when companies fail to properly backfill roles for team members pulled into the ERP project. Employees are left juggling their regular responsibilities with the full-time demands of an ERP implementation, and this is a recipe for burnout and project delays. Without a proper backfill strategy, you end up overloading your team, which affects not only the project but also day-to-day operations.

Building Cross-Functional Teams for Success

It’s also critical to assemble a cross-functional team for your ERP implementation. ERP projects touch every part of the business, so if your project team consists solely of IT staff or executives, you’re setting yourself up for trouble. You need people from all functional areas—finance, supply chain, HR, manufacturing, etc.—to provide input on the system’s design and ensure it meets the needs of the business.

Brett highlighted how important it is to avoid siloed thinking during an ERP implementation. Decisions must benefit the entire business process, not just individual departments. For example, a decision that makes sense for the finance team might create inefficiencies for the supply chain team, and vice versa. It’s up to leadership to facilitate collaboration across departments and ensure that decisions are made with the entire business in mind.

Executives Must Lead the Charge

Leadership is one of the most critical success factors in ERP implementations. Throughout my career, I’ve seen that projects are far more likely to succeed when executives are deeply involved. This doesn’t mean making an appearance at the kickoff meeting and then disappearing for the rest of the project. Executives need to stay engaged throughout the process, reinforcing the vision and helping to guide key decisions.

As Brett pointed out, the role of the executive is to provide a clear vision and to communicate that vision repeatedly throughout the project. It’s important to help the organization understand the “why” behind the project. Why are we implementing this system? How will it improve the business? What are the expected outcomes? These questions need to be answered, not just at the start of the project but throughout its duration. This helps to maintain alignment and keeps everyone focused on the end goal.

Additionally, executives need to be involved in the tough decisions. ERP projects are filled with trade-offs, and there will be times when decisions need to be made that impact the entire business. It’s up to the leadership team to provide clear guidance and to make those decisions with the long-term success of the business in mind.

Customization vs. Standardization

One of the most hotly debated topics in ERP implementations is the issue of customization versus standardization. On one hand, customization can lead to inefficiencies, increased costs, and a longer implementation timeline. On the other hand, standardizing your processes to fit the ERP system out of the box may not always be feasible, especially if it compromises critical aspects of your business.

Brett and I discussed how organizations can strike the right balance between these two approaches. The key is to approach customization thoughtfully. Not every process needs to be customized, and in fact, most don’t. But there are times when customization is necessary to provide a competitive advantage or to meet regulatory requirements.

The Three Buckets of Customization

To help simplify the decision-making process, Brett suggested categorizing customization requests into three buckets. The first bucket is resistance to change. Often, employees will ask for customizations because they are comfortable with the old way of doing things and are resistant to change. These requests typically don’t warrant customization and should be addressed through change management.

The second bucket is regulatory requirements. These are non-negotiable customizations that must be made to comply with legal or industry regulations. For example, financial reporting requirements or industry-specific compliance rules might necessitate certain customizations to the ERP system.

The third bucket is competitive advantage. These customizations are made to enhance the company’s competitive position in the market. For example, if your business has a proprietary process that sets you apart from competitors, it might make sense to customize the ERP system to support that process.

MVP and Phased Implementations

One of the trends we’re seeing more frequently is the use of Minimum Viable Product (MVP) and phased implementations. In the past, ERP projects were often massive, big-bang implementations where everything had to be done at once. Today, with cloud ERP systems, companies have more flexibility to take a phased approach.

By starting with an MVP, companies can go live with a core set of functionality and then build on that foundation over time. This approach helps to minimize risk, deliver value more quickly, and reduce the overall complexity of the project.

As Brett shared, this approach can also be particularly useful when a project is in trouble. If the scope has expanded beyond what the company can handle or if deadlines are at risk, shifting to an MVP approach can help refocus the project and deliver meaningful results in a shorter timeframe.

The Role of AI and Data in ERP

As we look to the future, AI and machine learning are playing an increasingly important role in ERP systems. These technologies have the potential to revolutionize how businesses operate, but as Brett pointed out, the key to unlocking this value lies in data.

Many organizations are moving to cloud ERP systems but aren't fully leveraging their data. Without sufficient, clean data, the true potential of AI can't be realized. AI requires large volumes of structured data to generate insights and deliver value. For many companies, the ability to fully capitalize on AI will require building up their data maturity over time.

Another important consideration is that AI tools need ongoing training and refinement. It’s not a “set it and forget it” technology. Organizations need to commit time and resources to train AI models, ensuring that the insights generated are relevant and accurate.

The Future of ERP Trends to Watch

Looking forward, I expect to see a few key trends shaping the future of ERP implementations. First, we’ll likely see more flexible and modular ERP solutions that allow companies to start small and scale up over time. With cloud technology making ERP systems more accessible and customizable, organizations will have greater flexibility to tailor their ERP journey to their unique needs.

Second, AI and machine learning will continue to evolve, providing businesses with new tools to optimize processes, forecast trends, and improve decision-making. However, to fully benefit from these advancements, companies will need to prioritize data quality and invest in their data infrastructure.

Lastly, the role of change management will become even more critical as ERP systems continue to evolve. As businesses adopt new technologies, they will need to ensure that their employees are properly trained and equipped to use these systems effectively.

Final Thoughts

ERP implementations are complex, but with the right leadership, a dedicated team, and a clear focus on execution, organizations can significantly improve their chances of success. Whether it’s striking the right balance between customization and standardization, adopting a phased implementation approach, or preparing for the future of AI, doing ERP the "right" way requires thoughtful planning, collaboration, and commitment.

If you’re interested in learning more about ERP best practices or need help navigating your digital transformation, please contact us at Third Stage Consulting. Together, we can ensure your project avoids common pitfalls and sets you up for long-term success.

Tom Sprague

Account Executive @ Opkey | ERP Test Automation | Growth Driver | Tech Enthusiast

1 个月

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Nick Van Maele

Delivering successful ERP, HCM, and BI projects.

1 个月

You said: "The role of change management will become even more critical as ERP systems continue to evolve". Great point. Given that it is already a pain point in many projects, it's going to be another interesting decade in ERP-land.

Jean-Sylvanus Olympio, ieMBA

Senior Global ERP Projets Manager - Executive MBA

1 个月

Great post, Eric, Thank you for sharing your insights. I found it very valuable and inspiring!. Having worked client side and SI side day by day, recognition from all parties that the SI typically only provides anywhere between 60-75% of the deliverables on a major ERP-backed transformation is essential. All your advises are always helpful !

Anuradha Mudgal(IT Leader - People, Technology, Innovation)

Digital Transformation | DATA+AI| ModernAI|Product Management|ITIL|Merger & Acquisition |Operational Technology |IT Investment|Digital Technology Strategy|Business Transformation -COE/BPR

1 个月

"Great post, Eric Kimberling Thank you for sharing your insights. I found it very valuable and inspiring!"

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