Enterprise Resource Planning (ERP) has been described as a business system supported by software that allows an organization to administer the efficient and effective use of its materials and resources by supplying an integrated system for its requirements.
In spite of the substantial benefits that ERP systems can deliver, less than 30% of ERP projects are successfully implemented; that is, projects completed on time and on budget with all features and functions operating as stipulated. Some reasons for failed implementations include:
- Treating ERP implementations merely as software and not as an enterprise – wide system;
- Failure to adopt a new organizational policy to implement ERP or to deal with the changes produced by a new ERP system;
- Projects exceeding budget requirements;
- Inability to accomplish planned objectives; and
- Inadequate education and training of users.
Determining success: The Post – Implementation Phase
Successful ERP implementations don’t conclude at the post-implementation phase; in reality, it’s after the system has been implemented that determines the success of the system. Yet, most organizations fail to conduct a post-implementation assessment to see how their ERP systems are aligning with the business. Below are five key essential areas that should be explored when conducting a post – implementation assessment.
1. Baseline and post-implementation performance measures
Every ERP project should possess a solid business case well before the system is selected or implemented. However, the only way to comprehend the level of ERP business benefits is to measure performance before and after post-implementation. It is crucial to establish baseline performance levels, then compare those to the performance levels after the system has been implemented. This will help detect areas of under-performance and opportunities for continuing improvement.
2. Pinpointing areas of continuing education
Regardless of the level of training and education that has been delivered to employees, there will be a reduction in productivity immediately after the post-implementation phase. They key is to minimize this drop and assist employees to ultimately be more productive and efficient than they were before the new system was implemented. Post-implementation assessments should investigate areas where employees are under-trained or could benefit from ongoing coaching. This will assist to enhance the business benefits of your ERP system in the longer-term.
3. Looking for opportunities to better business processes
An ERP implementation does not guarantee that business processes are going to be perfect. There are always going to be process inefficiencies and breakdowns that can be improved. By working with employees to identify process pain points and following this up with root cause analysis for these pains, the organization can identify opportunities to improve processes and make them more productive and effective.
4. Surveying stakeholders
A post implementation assessment should incorporate a survey of stakeholders, including employees, managers, the IT team, customers or clients and vendors. Are they content with the new system? How has the system impacted customers’ and vendors’ interactions with the organization? It is important to identify valuable feedback that can direct future direction as well as an overall assessment.
5. Examining costs against benefits
Once a comprehensive assessment has been completed, it is critical to analyze actual versus forecasted costs and benefits. Studies show that cost escalation is one of the most common problems with ERP implementations. Many ERP vendors charge additional fees for separate modules and add-ons. It’s one of the leading reasons cost escalation takes place.
The above five areas are important steps to ERP benefits realization and part of an ongoing organizational change management program. The focus is to leverage the investment made in ERP technology to realize a strong return on investment.
How to Optimize your ERP System (and avoid implementation mistakes)
An ERP system selection and implementation must maximize your return on investment (ROI) by focusing on the challenges that are most relevant to your business. For more information, download our guide.