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Anyone who reads the business press regularly has encountered at least one article describing the horrors of a failed ERP implementation. Hershey Foods Corp's 1998 SAP fiasco is considered by many to be the highest profile ERP failure. It resulted in retailers having empty candy shelves in the weeks leading up to Halloween. An ERP implementation failure, however, is an equal opportunity demon. All of the top-tier software vendors can claim several. In the fall of 1998, our firm was asked by a regional turnaround firm to analyze and correct an ERP implementation that was deemed to be a major contributing factor in a manufacturing company's failure to perform. After a thorough analysis, we were able to identify several implementation design flaws and several procedural problems. We quickly implemented a number of changes to the software set-up as well as changes to related processes. While we were able to significantly improve the functionality of the ERP system and Company operations in a short period , we were, unfortunately, too little too late. Management had made several poor strategic decisions in addition to the failed ERP implementation. Cumulatively these problems resulted in the company's bankruptcy..
Later that year, following the operational success of the previous engagement, we were asked to do the same thing for a major manufacturer of high-end and custom footwear. After thorough analysis, changes to software and processes, the company was able to utilize the inherent functionality of the system very effectively. This time the outcome was better for all involved. Our small firm gained a reputation for being able to quickly assess an ERP system, identify problems and make meaningful changes to salvage and improve what is often a massive investment in technology. During the course of other ERP system "reclamation" engagements, we began to identify several common threads which each of the failed implementations had in common. We discovered several key tasks, which if not completed effectively, can lead to a finished product that does not live up to expectations. We have emphasized these elements in our own implementation methodology, and as a result, we have successfully completed several major software implementation projects.
There are seven key elements to any successful system implementation. These are:
· Defining requirements,
· Managing interfaces,
· Cleaning (or creating) master data,
· Avoiding customizations,
· Re-engineering processes,
· Company specific training and
· Anticipating and managing "go-live" panic.
Requirements Definition
The requirements definition is a critical first step in the software implementation process. Simply put, a requirements definition is "figuring out what to make before you make it"." ( is there This process has gone by many names over the years; "needs assessment, JAD, etc.". It is as basic to a software implementation as a blueprint is to construction of a high rise building. Completing a requirements definition is critical for four reasons:
(1) it forces companies to think in formal terms about what it is necessary and critical to run their business and to articulate their finished product expectations,
(2) it facilitates the comparison of features and functionality of competing software packages,
(3) it can be used to force software vendors to demonstrate functionality that is critical to your business versus functionality in which the software package excels and
it is an excellent tool to evaluate the success of the project, post completion.
The requirements should be prioritized into "mission critical", "required" and "nice to have". During the software evaluation process, users should be limited to a set number (five or seven) of "mission critical" selections per module or functional area. This forces users to think through and focus on the truly important functional requirements. But most importantly, it serves to limit unnecessary operational complexities and control project scope. Many implementations have run aground and floundered because project scope was gradually expanded, sometimes unknowingly. Throughout the implementation process, meeting these critical requirements should be used to insure that the project does not veer off course and project scope is not expanded.
Interfaces
It is easy to underestimate the importance of interfaces and the time that may be required to develop and test them. Many implementation projects have been negatively impacted by too little attention being paid to interfaces to other automated as well as manual systems. It is rare that an ERP system doesn't have several other core applications that it must feed and/or be fed data.
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