TVision Technology Limited
10 Mistakes of Implementing Systems
The 10 common mistakes people make when implementing an ERP solution in a small to medium size business.
Implementing an ERP system is something that most people do only a few times in their career; others make a career out of implementing every day. As suppliers, it is always easy to spot who has experience and who is being naive; it’s an optimism that the process will be easy.
“Is it always this difficult?” Nick Grecian, MD of Gallowglass and self-confessed newby to ERP implementation in 2003.
“Yours has been one of the easier ones,” Richard Thompson, MD of TVision Technology.
This paper has been written by TVision’s Managing Director, Richard Thompson, who has over twenty years experience of implementing ERP systems, day in, day out. The aim of this paper is to highlight ten areas (out of the many we could have) where ERP implementations can stumble in the hope that forewarned is forearmed.
ERP implementations – decision criteria
One of the reasons that companies will put off implementing a new ERP system is because you do know that at the very least it will be hard work, cause a degree of disruption and represent a significant expense.
Gartner studies have shown that first time round, buyers think that price is amongst the top three criteria for deciding on a resource planning system. If the belief is that as long as there is no horrific budget over-run the implementation will be a success, then a fixed price contract may seem like the answer, unfortunately it’s not.
Why do these mistakes matter when you’ve got a ‘fixed price’ contract from your Vendor?
Because whatever you think, it isn’t ‘fixed price’. Not until your Vendor has given you a detailed document explaining what it is the software is going to do for your business and you’ve agreed to provide the internal resources of the right calibre that your Vendor tells you they need and you actually provide them, will you have a hope of getting the system you thought you were buying for a price you know in advance. To give you a rough idea of how difficult it is for us as suppliers of ERP solutions to supply that information early on, take a look at the white paper, “How Much will my NAV Implementation Cost?” We’re not being awkward or obtuse, we just don’t know enough until at least the analysis phase is complete and even then requirements can alter during the project, that’s why we have stringent Change Control but it all means that it is only when the project is completed that you will know the true cost.
Avoiding the 10 major ERP implementation mistakes
So, when you decide to buy a new system, how do you minimise the costs you’re going to incur and maximise the benefits to your business? Or how can you avoid the ten major mistakes that most people make in implementing their ERP system?
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Don’t buy ERP software that doesn’t fit in the belief either that you’ll grow into it or it will ‘do’. The software you buy should be capable of supporting two or three times the volume of business you’re doing now; not 10 times. If your business expands by a factor of 10, you’ll almost certainly need to use something else; the processes you have now will change substantially so accept that you’ll need to buy again. Don’t waste money buying ‘bigger’ software than you need. Similarly don’t believe that a ‘cheap’ ERP package which seems to have all the functions you need will have the oomph to support more than a couple of users.
Do your best not to make your decision on the basis of the salesperson you like the most after the first round of meetings. They won’t be in charge of your implementation (unless it’s their company’s first or second ERP implementation which is not necessarily a bad thing; we all started somewhere); you really need to feel you can work with the team that is going to work with you. So get to meet them.
Don’t be hasty in compiling your shortlist, especially not on price in the early stages. Ask vendors what process they’ll go through to get as accurate a figure as possible before you sign up. Can you pay for them to do that work and then decide not to proceed? (Don’t plan to re-tender at that point in time; this is an exercise to get a solid budget from your preferred supplier not to arm yourself for a price war.) You should be working with the supplier you feel most comfortable with. Re-visiting their costs competitively will only annoy them and damage the relationship. Either they can explain how those costs are built up and how you will share should they prove to be pessimistic, or you’re working with the wrong Vendor and you should move on. Let them know that’s what you’ll do as well!
Don’t exclude your key users from the evaluation process. Focus on getting your key users to be involved in the ERP project. I know they have a lot of other things they need to do in the business BUT this new system ought to be the lynchpin of how your business is going to develop in the next 10 years+.
Don’t underestimate the time and quality of resource you need to dedicate to an ERP project. Find someone intelligent in your business that you can get to spend 100% of their time on the implementation project. For each day’s time that you pay for from your Vendors, you should get 3 man days value out of it internally. You need someone to organise that and to become your first super-user. If you don’t your Vendor will charge you more than they said they would. (Remember, they told you after point 3 how much time and effort they’d need from you; if you don’t provide it, they’ll end up doing more work and charge you for it unless they’re stupid and can’t do the work. In which case, you chose the wrong Vendor and your project is doomed!)
Don’t forget to provision a contingency. Provide some leeway in costs in your own head but make your users justify every ‘change request’ where what they now want to do is different from what they first said they needed during point 3. Make sure that what they want to do can be justified in terms of work or money ‘savings’
Don’t take on all the responsibility; successful ERP projects need a sponsor at board level. Make your project sponsor responsible for signing change requests and paying invoices
Don’t be a bad client, be a good partner. Pay on time if your Vendor is achieving the agreed progress on the project. Don’t tie them to milestones as that’s not how good IT projects are delivered and it’ll only cause friction. Remember, you’re working with the team you feel / felt most comfortable with. If you weren’t comfortable with how they bill, why did you sign up with them?
Don’t skimp on training or allow it to be solely the responsibility of the Vendor to deliver. Get your ‘intelligent / key’ users to train others on how they think the ERP solution should work when ‘live’. They’re the ones that need to tell others how it’s going to work in real life. If they don’t believe in the processes then how do they expect their teams to believe in them?
Don’t be unrealistic in your data migration expectations. I know the new system is 1,000 times better than your old one but for each pound you spend migrating ‘old’ data to enhance your ‘new’ reports, that data is a quickly wasting asset. What’s wrong with a few more months of the old spreadsheets until the new system fills up with relevant data?
ERP Implentations - How To Do It Right
The ERP implementations that I can point to over the years as being my best; the ones where the client has gone on to grow their business, reduce their costs and increase their profitability have all had the following characteristics:
They stuck as closely to the ‘standard’ software as possible
They only made changes which they could prove would bring large benefits immediately
They migrated the minimum amount of data to get the system going and discarded all the old customers, products, jobs and suppliers. It was not a problem to set them up again if 1 week after ‘go-live’ they needed to use them
There was at least one person dedicated 100% to the ERP project
That person was not the budget controller
They used the ‘key / super’ users of their teams, the people that everyone else respected in the business to train the end-users
The costs they incurred were always within their own budget
They listened to their Vendors when deciding when to ‘go-live’ on the system and didn’t come out with the line ‘The ERP project has the full backing of the board and they have said that the project will get all the necessary resource to ‘go-live’ in 3 months time’ or whatever number of months the ‘board’ puts.
Unhappily, it’s only a handful!
The trite answer to how to avoid the mistakes would be “work with us” but actually that may not be true. We like working with clients who have a sensible approach and a willingness to partner. Your sensible evaluation may lead you to conclude that TVision, lovely as we are, is not the right ERP implementation partner for you. We will happily help suggest alternative partners if we all agree that this is the case (you may too far away, you may be in an industry that requires a specialist partner and we’re not it, you may be too small or too big – we hope some of you reading this are just right!).
Good luck with your projects, please do contact us, even if just for a chat.
