Project Management Paves the Path to a Successful ERP Implementation
The decision to upgrade to a new enterprise resource planning (ERP) system is a pivotal one, but it's important to recognize that real challenges lie beyond the selection process.
Successful ERP implementation requires strategic planning, precise execution, and a firm grip on project management.
To put it mildly, implementing a new ERP system is not "business as usual" but a transformational, often complex, journey.
“The implementation process can be complex and time-consuming, depending on the size of your organization, but it can help organizations achieve the benefits of an ERP system, such as increased productivity, cost savings, and improved data accuracy,” writes business coach Kathy Haan in Forbes.
Crucial Role of Project Management in ERP Implementation
Successful ERP implementation isn't solely about the technology itself; it's about managing the intricate web of processes, people, and resources involved.
At KnowledgePath, experience has taught us that there is a strong correlation between completing an ERP project successfully and an organization’s skill in project management.
Here are key reasons why effective project management is vital in ERP implementation:
- Clear Objectives: Defining clear project objectives helps align efforts and provides a roadmap to success.
- Resource Allocation: Proper allocation of resources ensures that the project has the necessary manpower and tools for smooth execution.
- Risk Management: Identifying and addressing potential risks in advance minimizes disruptions and unexpected setbacks.
- Communication: Open and consistent communication fosters transparency and collaboration among stakeholders.
- Timeline Adherence: Adhering to project timelines prevents unnecessary delays and ensures that the project stays on track.
- Scope Control: Managing the scope of the project prevents feature creep and helps in controlling costs.
- Change Management: Preparing and guiding employees through changes minimizes resistance and enhances adoption.
What Could Go Wrong? Understanding Project Success Rates
Remember, implementing a new ERP system is not an everyday experience for companies.
In the realm of project management, failure is an unfortunate reality.
The Annual Project Management Institute (PMI) Global Survey on Project Management finds that the success rate of projects successfully meeting their business goals hovers between 65 and 72 percent depending on the priority an organization places on “power skills”.
PMI defines power skills as abilities and behaviors that facilitate working with others and help project professionals to succeed in the workplace. Some individuals and other organizations also refer to them as “soft skills” or “interpersonal skills.
The fop four power skills that help project professionals fulfil organizational objectives, according to PMI:
- Collaborative leadership
- Strategic thinking
PMI analyzed data from nearly 3,500 project professionals and found that:
- Projects that successfully met business goals by priority placed on power skills: 72 percent high power skill priority vs. 65 percent low power skill priority.
- Projects that experience scope creep by priority placed on power skills: 28 percent high power skill priority vs. 40 percent low power skill priority.
- Budget lost to project failure by priority placed on powers skills: 17 percent high power skill priority vs. 25 percent low power skill priority.
“An emphasis on power skills, in concert with strong technical skills, boosts organizations’ project management capabilities, leading to better performance on individual projects and project portfolios,” said PMI. “Organizations leaning on power skills like problem-solving and strategic thinking can expect to see higher organizational agility and project management maturity to help them face complex project challenges, market changes, technological adoptions, and socioeconomic pressures.”
The numbers can get even more sobering when considering a transformational ERP implementation.
“If the statistics are right, success for many technology projects remains elusive,” reported CIO magazine in 2021. “Research from Boston Consulting Group, for example, has found that 70% of digital transformations fall short of their objectives. Similarly, the 2020 Global Application Modernization Business Barometer Report found that 74% of organizations that had started a legacy system modernization project failed to complete it, consistent with the 70% rate of failure McKinsey & Co. reported several years ago.”
The Next Steps for Successful ERP Implementation
Assessing your company's needs followed by the evaluation and selection of an ERP system are major hurdles, but what should the next steps be to ensure success?
Try these best practices when implementing your new ERP system:
- Advise the Employees of the New ERP System: Communicating the decision to implement a new ERP system is paramount. Employees need to understand the why, how, and what of the change. Address their concerns, highlight the benefits, and provide a clear timeline.
- Data Preparation: This step involves assessing existing data, cleaning, and consolidating it, and ensuring data quality. Proper data preparation reduces migration errors and ensures accurate and valuable insights from the new system.
- Configure and Optimize the New ERP System: Tailoring the ERP system to align with your business processes is critical. Configuration ensures that the system works in harmony with your operations, while optimization enhances efficiency and performance.
- Upload Current Data to New ERP: Execute data migration meticulously to prevent loss of information and data integrity issues. Regularly back up data and perform dry runs to identify and address potential challenges.
- Testing, User Training, and Education: Rigorous testing validates the system's functionality and its alignment with business needs. Comprehensive user training equips employees with the skills to utilize the new system effectively, reducing friction during adoption.
- Go Live: The moment of truth. Launching the new ERP system requires a well-planned cutover, with a fallback plan in case of unexpected issues. Monitor closely post-launch to swiftly address any teething problems.
- Ongoing Support: The journey doesn't end with implementation. Provide ongoing support to users as they navigate the new system. Address questions, concerns, and issues promptly to ensure a smooth transition and continuous operational excellence.
Partnering Can Help Maintain Unwavering Focus
The complexity of ERP implementation can sometimes cause organizations to lose sight of the project's core objectives.
The solution can be to partner with a skilled consultant such as KnowledgePath that can keep the spotlight unwaveringly on your ERP project.
ERP implementation experts can meticulously plan, monitor, and manage every facet of the implementation, ensuring that your goals are not overshadowed by distractions.
In the end, installing an ERP system is not just adding a large software package to your organization’s toolkit, but signifies a profound transformation in the way your entire organization will operate, communicate, and innovate.
Reach out to KnowledgePath today for a partner that will help your business embrace the future with confidence.