The role of digital transformation in modern realities is extremely high, its influence on industry and the world economy is growing by leaps and bounds. The high desire to have a digital copy of the business for the owners and management of enterprises is due to a wide range of opportunities for its use: tools for tracking and analyzing the current financial condition of the organization, the performance of production units and the front-office. All this is only a small part of the capabilities of a digital product.
For the production enterprise, the tool used to maintain the business is the ERP system. Such a strategic decision as implementation of ERP software will allow the company to save a large amount of cash resources, increase work efficiency and level possible operational risks.
Implementing an ERP system is an extremely complex and time-consuming process. Many difficulties and pitfalls arising from the project implementation can increase its value to unprecedented values, which most likely will have a negative impact on the project’s ROI and financial performance of the business as a whole. In order to avoid these problems, the customer needs to be wiser and act as a risk manager of the project, knowingly consider the possible risks and prepare his company for innovative changes.
Here we discuss about the approach to the implementation of the ERP software, which will avoid the most common mistakes and help the customer to approach the project management as wisely as possible.
To make the project successful
In order for the project to go as smoothly as possible, it is necessary to conduct a thorough preliminary work that would allow the manager to create a clearer vision of how the project will be carried out, and who will be responsible for certain actions.
The priority task is to identify the responsible person, the project manager. He should have the appropriate knowledge and competence, and it is also preferable that he be interested in the successful completion of the project on the implementation of the ERP software.
Having assembled a team, it is necessary to thoroughly discuss the KPI of the staff and the project as a whole. It is extremely important to establish measurable goals of the project and to fix the criteria for the success of its implementation. Without installing them, it will be extremely difficult to draw up both the Charter of the project and the Terms of Reference, and, therefore, the final result of work will not satisfy anyone.
Starting to create a project charter, it is important to remember what it is intended for. This document should describe the essence of the project, ensure its understanding and purpose. It is also required to reflect a preliminary distinction between roles and responsibilities, describe the objectives, and identify key stakeholders and powers of the project manager.
Before launching, it is strongly recommended to preliminarily assess and prevent possible risks that may arise during the implementation of the implementation project.
Manage Risk – Avoid failure of implementation before it starts
Risk 1: Sabotage by the team
The main risk, on which the fate of the implemented ERP software depends, is its rejection by the users. There are a lot of reasons for that, but first of all it is connected with insufficient competence of employees, natural fear of innovations and unwillingness to leave the comfort zone, that is, ordinary laziness. It is in the interests of the manager to hold a meeting in advance with anyone who will be a direct user of the system and explain the benefits of its use for the employees themselves. After the implementation of the ERP system, employee training is required, and key specialists are sent for advanced training. Without user training, it is in vain to hope that they themselves will understand the new system, so you need to take the initiative.
Risk 2: Unrealistic expectations
If you do not understand why exactly you are implementing an ERP software, you will never be able to assess how beneficial it affects the work of your organization. Excessive requirements for the implemented system have a negative impact on the emotional and financial condition of customers, because such expectations as improving business profitability, increasing free cash flow, increasing sales, do not depend on the system implementation project and the coordination of its work, but, first of all, on quality making management decisions. ERP system is only an assistant for the development of competent and effective management in the company.
Risk 3: Lack of formalized business processes
It is impossible to effectively implement the ERP software if the business processes in the enterprise are not formalized and not optimized. If you do not know who is responsible for what, what steps the processes consist of and who is responsible for their implementation, then this implementation will turn into a big headache and high financial expenditure for you, and the efficiency of the system will tend to zero.
Due to the fact that this work is extremely time-consuming, it is advisable to invite a team of highly qualified specialists to carry out it, who within a reasonable time will do all the necessary work.
It will be a big plus if the same organization or even the team with which you are going to implement the ERP system will deal with the formalization of business processes. Then we should expect a high synergistic effect, which will affect the quality of the implementation of the project implementation in a positive way.
It should be understood that many of the risks that may arise during the implementation of the project are not defined, and it is not only impossible to foresee them, but it is not necessary either. The main possible problems can be dealt with at the planning stage of the project – prior to its implementation.
Project plan a formality or necessity?
Consider what information should be included in the project management plan:
- Preliminary plans for the budget, the timing and content of the project – Describes the investment plan of the organization, the timing of the tasks and the main proposals for the project.
● Requirements Management Plan – A description of how the requirements of all project stakeholders will be collected and analyzed.
● Change Management Plan – The main points of how you will behave if there is any unplanned requirement for implementation on your part or other changes on the part of the contractor.
● The plan for managing the relevance of data – It is extremely important that the project was carried out according to a single register of documents. The plan describes methods and ways of leveling the risk that the customer and the contractor are guided by different versions of the same document, which can lead to a decrease in trust between the parties and even a break in relations!
● Project Integrity Management Plan – A description of exactly how you will manage budget funds, which people to involve in executing orders, etc.
● Next, to work on the Terms of Reference of the project – the basic document of the ERP implementation project.
If you decide to implement the manufacturing ERP system, then the project should begin with the creation of a technical task. Despite the obviousness of this requirement, many managers believe that this is a secondary process, only eating up a substantial share of the budget and resources. This statement is far from the truth, because the technical task allows to fix the goals and objectives of the future project and legally protects the customer and the contractor from non-compliance with the project implementation conditions.
As a rule, the creation of the technical task is carried out by the project performer, after a preliminary survey of the company. Then both parties agree on it make changes, new requirements and attach to the contract on the provision of services.
It is extremely important to treat the preliminary stage of the project as carefully as the implementation stage, because it is at the initiation and planning stage that the project route map is drawn up for the future. And the more thoroughly it is worked out, the more efficiently and quickly the project will approach its successful completion.