Many CIOs ask me questions like how shall I select my ERP, how shall I select my implementer...
There are always three choices for the CIO of an organization that is acquiring a system to choose from, either to buy an ERP, to go for an in-house development of own system or to outsource system development to a software house.
Ever since I started my career with SAP project delivery management; I always had this tendency to choose ERP proprietary software over development projects either in-house or outsourced.
This is because my personal belief is that IT department should have a focus on business rather than technical difficulties and 500 pages requirements write ups, it should be a change champion rather than re-inventing the wheel called industry specific best practices.
ERPs are not only about integration and having features and functions availed for the business process optimization purposes, they are far more than that.
When you buy a world leader ERP system; you are outsourcing your maintenance, support, business continuity plans, upgrading and migration capabilities to an entire network of extra huge echo system of partners, consultants, resources, world class documentation and standardization.
ERP system is a suite of integrated enterprise application modules that conjoin functional areas and business processes in an integrated environment to provide support and better insights to the business.
The magic about ERPs (when properly implemented) is that they perfectly integrate organizational entities together; for example; supply is integrated with demand, back office; is integrated with front and mid offices, sales is integrated with production ... Etc.
During one of the projects I managed, the customer had about 6 non-integrated legacy systems to manage his multi-million dollars business; that customer had an independent system for finance, another for plant maintenance, one more for material and inventory management, sales force for sales, some programs for sales data integration to warehouse system as well as finance and nothing for production planning. This was totally chaotic, the customer bought sap and had everything integrated into one single database and a paradigm shift occurred to his business since then.
He stopped the production of some of his products after reviewing the real costing data cumulated from the system, and he re-engineered his production lines to produce other products that were loved by the consumers and generated high profits in short times, his customer service capabilities has dramatically improved by making valid delivery promises and then meeting those promises, the ROI for buying sap was latterly shifted upwards every single minute.
There are many strategic benefits of implementing an ERP solution to an organization; reducing chaos; alignment of strategies; operations is considered one of those benefits as ERP systems shall maintain the ability to run an enterprise in accordance with strategy, process and plans, also accessing the right information in real time to identify concerns early, and to achieve corporate objectives by aligning workforce and organizational objectives. Another strategic benefit is improving productivity and insight by reducing manual processes and maintaining cross functional data control and transparency as well as reduction in human errors due to automation of inter-company transactions. There are also operational benefits of implementing an ERP system; ERPs are designed around standard best-business processes, which are based on industry best practices.
Organizations can use these business processes to standardize their own processes. This process consistency allows a consolidated view of the business across the distributed enterprise, enabling organizations to drive continuous improvements, as operations are streamlined and there is healthy synergy between departments and functions.
Despite of all the benefits of an ERP acquisition, it has to be well noted that buying an ERP without proper evaluation will simply lead to a catastrophic disaster.
When evaluating an ERP the following has to be considered:
- Software viability and reputation
- Proven success show case
- Market leadership & footprints
- Meeting global compliance requirements
- Existing customers' satisfaction / loyalty
- Ability to expand to other platforms; ex: mobile data entry, online portals, RFID..etc
- ERP solution has to be designed to meet current needs without compromising the ability to meet future business requirements
- Industry specific functionality that enables holistic procurement, logistics, sales, financial and analytic processes
- Flexible capabilities and layout where the solution can be configured and personalized, not modified, to meet business and user requirements
- Scalable & modular - same natively integrated ERP - with the ability for growth
- Possess proper implementation methodology
- Possess proper migration and upgrade methodology
- Possess proper support methodology
Once the system evaluation is done, and a decision is taken to buy a particular ERP system; vendor management principles and acquisition strategy have to be put in place; for example; an implementation service partner has to be named based on a proper selection criteria that takes into consideration some quantifiable factors such as:
1. Number of years in business
2. Partner stability and reputation; ability to service and support the software
3. Number of successful implementations
4. Number of consultants
5. Customer references list and general partner experience
6. Industry specific experience
7. Partner resources capabilities
Implementation schedules, resources screening and allocation, support organization, implementation and support methodologies and roadmaps have to be well defined, payment terms have to be consistent with contracted exit criteria and quality measures.
API driven coding efforts have to be quantified and non-standard forms, reports, workflows, conversions, and integration programs as well.
The legally abiding project documents has to include:
- Detailed scope (functional, technical and project management).
- Out of scope list
- Duration of the implementation
- Implementation methodology & tangible deliverables per phase
- Entry and exit criteria
- After go live SLA (service level agreement)
- Delivery methodology
- Implementation norms and Project Management Procedures like
- Issue Management
- Risk Management
- Escalation Management
- Change Request Management
- Status and Performance Reporting
- Communication Plan
Now finally, I will have to whisper this recommendation in your ears; never compromise quality to budget... there are always the known pillars; time, cost and quality, the bad news are that you will never have all three together.
Consider your project as a restaurant that can offer you two items per set menu of three (Good - Cheap - Fast), so I believe the optimum choice is to have it good and fast.
To do it fast, it has to be done by an experienced chief, and those guys are really expensive.
Another one more recommendation, please dive as much into details as you can before signing a contract with your service provider.
Please investigate and get your people to fully understand how the service will be delivered in terms of:
- People:
- You really need to dive into details that depends on people like; testing deliverables and methods, training deliverables and methods, communication plans, escalation management, project organization and chain of communications, who is who and doing what, retention policy of project team...etc.)
- Process
- You must understand the project plan, project schedule, implementation methodology, project deliverables, and other project norms that are related to the delivery process itself.
- You must understand which business process will be covered in the scope, how it will be covered and what are the integration bottlenecks between those processes.
- Technology
- Please pay attention to the tiny details, have an in-house technology consultant around you as well... keep a close eye on software release, interface options, authorization management and security, servers topology and sizing, configuration transportation management, and on the top of everything; scalability and flexibility to move between different platforms (example; on-premise to the cloud - from the cloud back on-premise and hybrid cloud integration).
- Please pay attention to the tiny details, have an in-house technology consultant around you as well... keep a close eye on software release, interface options, authorization management and security, servers topology and sizing, configuration transportation management, and on the top of everything; scalability and flexibility to move between different platforms (example; on-premise to the cloud - from the cloud back on-premise and hybrid cloud integration).
- Data Management
- Ask your service provider about the availability of data upload templates and whether it contains self verification tools or not, what is his data management plan (a schedule has to be there as well), data dependency chart or illustration, and data management owner.
- Never underestimate data management as a project risk, most of the projects gets dragged behind schedule because of the delays in data delivery... have a close eye on data ownership (from both sides), data structure and dependencies, data complexity and data sizing.
Goodluck :smile:
