July 26, 2012 11:45 AM
Once the initial euphoria of having just selected a new ERP system wears off and your team realizes that the real work is just about to begin, one of the first orders of business is to define your implementation phasing strategy.
As we outlined in our 2012 ERP Report, a large majority of organizations implement in phases, whether it be by module, geography and/or business process. Similarly, most clients we work with – especially larger, more complex multi-national organizations – are too big to take the big bang approach, so they tend to look for ways to minimize risk and operational disruption by phasing their ERP implementations.
Unfortunately, there is no black and white or canned phasing strategy that works for most organizations. Because there are a large number of variables that need to be considered, defining the ERP implementation phasing strategy can be difficult for those that haven’t been through the process before. Add to the mix the fact that most software consultants have a very myopic view of how software should be implemented in a perfect world, and suddenly you are left with a difficult puzzle to solve.
The first step to a successful ERP implementation strategy is to understand the key variables that need to be considered. Below are three considerations to factor into your strategy:
1. Technical and software considerations. Most ERP consultants understand the architecture and limitations of their respective ERP systems, so they generally have a very consistent view of how software should be implemented based on their technical knowledge of the software. In addition, most of these technically-focused phasing opinions are consistent whether you are implementing SAP, Oracle E-Business Suite, Microsoft Dynamics or a Tier II ERP solution. For example, most ERP consultants would agree that core financials and accounting modules is a pre-requisite to job costing and business intelligence. However, other examples may not be as cut and dry, meaning that advice from consultants is often based on the modules that they’re the most experienced and comfortable implementing rather than what makes the most sense to your business. This is where independent and business-focused expertise can and will help.
2. Potential business benefits and low-hanging fruit. Potential business benefits and operational improvements can and should be a key determining factor in your phasing strategy. After all, chances are that you’re implementing ERP software to alleviate some sort of operational pain and/or delivery measurable business benefits and return on investment, so your phasing strategy should take these factors into account. While it may not make sense to implement your manufacturing functionality without first having your financials in place from a technical perspective, there may be other phasing decisions that are more driven by your business than by the software itself. For example, if order entry is currently a very inefficient process but warehouse management is manageable as-is in the short-term, it may make sense to develop a strategy that calls for order entry and customer service to be included in Phase 1, but defer warehouse management, logistics and shipping to a later phase.
3. Organizational change management considerations. Just as operational pain points may drive your desired phasing strategy, so too may organizational change management considerations. During your organizational readiness assessment, which should be completed prior to the start of any ERP implementation, you will have identified “pockets” of resistance in the organization, as well as organizational pockets of support. For example, we find that sales employees can be more resistant to ERP implementations than finance or accounting types that are more impacted by a lack of a good enterprise system, so we often recommend to these clients that they defer sales processes and modules to later phases of the project. You obviously don’t want to avoid areas that are resistant to change, but it is generally easier to build early momentum with groups that are more open to the new processes and system. As a side note, it is important to keep in mind that assessing organizational readiness requires finesse to discover underlying symptoms of employee resistance, even if the employees are saying they accept the changes on the surface.
When it comes to determining a phasing strategy, the above three variables are typically the most important strategic considerations that we discuss with our clients. It is important to realize, however, that assessing potential phasing strategies with these three variables may deliver three entirely different conclusions, which means your business will have to determine which criteria are most important to make your implementation successful. (Hint: the first, more software-focused variable is typically the least important to most clients, even though most ERP consultants will tell you that it is the most important).
However, assessing your options with these three variables may also identify the “easy” answers to your phasing strategy. For example, if assessing your implementation needs from all three perspectives points to finance and accounting as a clear Phase 1 need, then you have at least defined one of the steps of your phasing strategy. Working through the trade-offs and pros and cons of each possible phasing strategy with people that have the appropriate business process, organizational and technical competencies will eventually lead you to conclusions in the other areas as well.
Find out more ERP implementation techniques and tactics in my serialized e-book, An Expert’s Guide to ERP Success. The first three chapters — Strategies for Preparedness, ERP Software and Vendor Selection and Analysis of Specific ERP Systems, are available for free download in our Resource Center
Originally posted on 360º ERP Blog
With over fifteen years of consulting experience, Eric Kimberling has a wide range of professional expertise in companies ranging from the SMB market to large corporations. Eric’s background includes extensive ERP software selection, ERP organizational change, and ERP implementation project management experience.