Your job is at stake and the company stands to lose millions. The task directed to you is to select and implement the next generation ERP system that should make the entire company more efficient. Will your legacy be as the sponsor who picked the wrong system that turned out to be a waste of millions?

The software will impact HR, accounting, budgeting, reporting, point-of-sale, inventory, benefits, credit card processing, executive dashboard and cash management. The corporate goal of increased efficiency can backfire into increased inefficiency if you have the wrong system or poor implementation. This will cost the company millions in time spent learning a system that doesn’t address needs – and it is not a one-time cost but a continued annual cost to employees, management and shareholders.

You can expect higher turnover from employees and longer hours worked to address system shortfalls. The primary beneficiaries of the system won’t trust it, and new inefficient processes will be created to rectify system inadequacies. The smart company cuts their losses and spends millions more on the correct system and training.

I witnessed first hand the impact of poor implementation on a new investment accounting system at a national insurance company. It was unbelievable. The group failed to properly parallel the new and old systems. Many users did not truly understand the new system and information was entered incorrectly.

Trash in, trash out and the accounting team was left manually verifying everything out of the system every month. Years of long hours, manual processes and heavy employee turnover burnt out the staff. Even worse, the system was a bad selection but this poor implementation left such a bad taste that nobody would entertain talk of a new system.

A system selection and implementation is like trying to navigate through a minefield – if you miss one mine or critical need, it can undermine everything else including what may be good about the system. Unfortunately, you only get one shot to get it right. There needs to be a process to carefully select and implement the new system:

System Selection

Current Requirements:

Occasionally I have come across implementation guides that link the first step as “selecting the system.” While critical, selecting the system is never the first step. To even get to a system selection, you need to truly understand the business requirements of the system.

Perhaps you have a complex budgeting process that uses Excel to compare actuals to budgets and you want to automate this manual process. You need a system to input budgets that automatically compares budget to actuals for a given period. If you process a high number of credit cards in a recurring manner then you need a system that allows for this. Hopefully, it will also identify cards that expire and create an automated process for that customer to be notified to update their card online.

The point is that you cannot even consider a system until you understand your most basic needs today. If you saw a lonely person about to die from dehydration from being lost in the desert – you don’t give him a hug, what he needs right now is water!! You need to document each area that will be impacted and their requirements from the new system. And it should be done in detailed, concise and in simple terms. This is the baseline requirement of any system to meet your current needs today.

Future Requirements:

We also need to consider the future business requirements of the company. This is difficult because we are now thinking about tomorrow’s needs. Using our budget example, imagine the company is growing rapidly and may need multiple, separate companies that need to be rolled up and compared to budgets. Then you require a system that will allow for multiple separate legal entities to have budgets entered and automatically create reports comparing actuals to budgets at product line, legal entity and consolidated basis. Considering the future requirements, the needs-analysis has to be performed for each area that will be impacted by the system and these groups need to think proactively about the future.

Now that you have current and future requirements of the system you can begin selecting systems that have the features you need today with the flexibility needed for the future. You should also consider only companies that have solid customer bases that will continue to reinvest in the product. Do not select a new vendor or one that has few customers.

System Implementation

A poor system implementation is almost as bad as selecting the wrong system. It won’t be optimized and current and future requirements may not be addressed. The right system with a bad implementation is still the wrong system as the desired functionality and efficiencies won’t be realized.
The following guidelines should be followed for successful implementation:

1) Engage a 3rd party for implementation. Your current employees already have a full-time job and it has nothing to do with system implementation. Hire the professionals, preferably at the firm you purchased the software from or a referral from them. Both have reputational risk and a vested interest in your success.
2) Make the implementation a priority to the executive team and the entire organization. The task becomes more challenging when stakeholders are not engaged in the process.
3) Establish a timeline with benchmarks and hurdles for the consultant and your team. This should not be a soft timeline but should have hard dates and detailed hurdles.
4) Approach the task and communicate it for what it is: a difficult and challenging implementation that is needed by the company to become more efficient and grow.
5) Follow-up and hold people accountable for their deadlines and tasks in the implementation.
Proper understanding of current and future business requirements are needed to select the right system. Extreme focus and prioritization of the implementation will realize the efficiency desired.