ERP solutions have helped today’s industry leading enterprise companies revolutionize the way they operate their global supply chains. Because of global ERP systems like Microsoft Dynamics AX, these companies have been able to drive operational efficiency in all key functional areas, connect individuals and teams across the world, and access real-time visibility into global supply chain data. These benefits enable companies to improve decision making, increase productivity and efficiency, and accelerate growth and expansion.
“Why don’t all enterprise companies use a global ERP solution?” you ask.
First, it would be an understatement to say today’s ERP implementations are complex and warrant in-depth planning from subject matter and industry experts. Oftentimes, this doesn’t equate to “cheap”, and a lot of organizations today still view strict cost-cutting as the way to fuel growth.
Another reason companies are hesitant to implement global ERP solutions is because recent research and media attention have put failed ERP implementations into the spotlight. In Panorama Consulting’s 2012 ERP Report, they found that half of the companies surveyed reported receiving less than 50% of the benefits they set out to achieve in their ERP implementation. And it seems like new multi-million and billion dollar lawsuits are filed every month due to failed ERP implementations.
So what can you do to ensure your ERP implementation creates a competitive advantage – and not a corporate nightmare?
ERP implementations face a number of risks and challenges due to their complexity and the transformational impact they have on companies. These risks can be further amplified in global ERP implementations where distributed teams, cultural differences, local requirements, and other factors provide additional threats to the implementation.
By understanding and managing the challenges below, companies can improve the probability that their ERP implementation will drive the expected results.
- Transformational Project vs. IT project – The largest challenge facing organizations implementing a global ERP system is that it is commonly considered an “IT project” – with executive decision makers absent throughout the entire project. A global ERP implementation should not be viewed simply as “changing software systems”. Instead, it should be viewed as an opportunity to transform and align an organizations’ people, processes, and technologies across multiple departments, locations, and countries. And due to the enormous impact on the day-to-day operations of the business – for example, many locations that previously worked separately in silos of data now have to be tightly integrated together – it is critical that executives take an active role during the selection of vendors, through systems and process blueprinting, change management, implementation, and training.
- Reengineering Business Processes: As mentioned above, global ERP implementations involve more than just replacing a business management system(s); they also require the reengineering of current business processes for implementing globally adopted best practices and standards. The most fundamental driving force for a company's business success is their people. However, the way people perform the tasks and processes necessary to complete their workloads can make the difference between success and failure in today’s markets. In order to successfully transform their business, organizations need to identify opportunities to streamline processes, reduce waste, and automate paper-based or manual procedures. At the same time, they need to successfully manage changing processes with employees, ensuring that their day-to-day activities are easier, more efficient, and more productive.
- Project Management: You’ve got a lot riding on the successful implementation of your new business systems and processes. Effective project management is critical to ensuring a successful implementation. All projects are constrained by four factors: time, costs, quality and scope. For any project to be successful, these four constraints must be in equilibrium. If any constraint is out of balance, the project is headed for disaster. Make sure you work with a partner that has a consistent, repeatable, and flexible methodology that provides a better implementation experience and less risk to your company. Also choose a partner that has a track record for providing consistent communication and reporting to help keep you informed and up-to-date with the project’s status.
- Differences in Culture, Language, and Compliance – When undertaking a global ERP implementation, customers need to be concerned about whether their implementation consultant and ERP system can enable the company to be successful in multiple countries. From a systems standpoint, the ERP software needs to be able to handle multi-compliance, multi-currency, and multi-language requirements where you and your partners operate (or intend to operate). Implementation consultants also must be able to manage differences in culture, language, and local compliance regulations to successfully implement the solution across the globe. This requires working with partners that can find the proper balance between using enterprise best practices and global templates with local requirements knowledge and experience.
- Selecting the Right Partner: Global ERP implementations are not IT projects; they are enterprise wide business transformation projects. Organizations going through a business transformation project need more than a software reseller; they need subject matter and industry experts that have deep experience and a successful track record of aligning processes with the people and technology solutions that support them. The right resource can provide the right services and support to ensure that your process and technology investments help you – and don’t leave you in the 50% of customers who never realize the benefits of their investments.
Today’s world is increasingly flattened by technology, global complexity and new global competition - making it critical for a business to be able to rapidly see and react to signals, threats and opportunities. Going one step further, in this world where the pace of business is constantly accelerating, imagine being able to anticipate rather than react to those signals. Success today and tomorrow increasingly depends on information insight and efficient business processes.
When implemented correctly, globally adopted systems and processes can allow a business to overcome the challenges of globalization and operate more efficiently, effectively, and profitably.
Merit Solutions is a focused-strategy business process consultant and systems integrator with the goal of being the very best at helping clients optimize their people, processes, and technology investments in order to automate, grow, and transform their business.