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A two-part guide to selecting and implementing a new ERP system

YOU CAN ALSO LISTEN TO THIS ARTICLE

The first part of Global Shop Solutions’ ERP implementation guide, which ran in the February issue of FAB Shop Magazine, focused on five strategies to prepare for ERP implementation. This second part focuses on the actual implementation.

As stated in part one, U.S. manufacturers must continually cut costs while at the same time improving productivity, quality and service to remain competitive. ERP software can help them accomplish all this and more. When done right, ERP can literally transform a manufacturing business. So, here are the steps to take to actually implement an ERP system right the first time.

For an ERP system implementation to be successful, stakeholders need to be realistic about the timeline to launch.

1. Have an implementation plan

A written plan is important because it removes much of the ambiguity from the process, establishes deadlines for achieving milestones, and provides a tool for ensuring that all individuals and departments stay on track. In addition, a written plan serves as a guiding force behind the implementation.

An effective ERP implementation plan can be done in spreadsheet format in one or two pages. It should:

  • Identify all technical issues that need to be addressed by IT
  • Include all goals and objectives
  • Assign specific tasks and responsibilities to individuals and departments
  • Set deadlines for milestones such as data conversion, training schedules and data testing
  • Establish a firm go-live date

Many companies use an audit to track progress against the plan. In fact, the best ERP vendors provide you with their own audit form and insist on your feedback. These audits typically ask questions related to general areas of security, menu, help, training and conversion, as well as specific modules such as inventory, estimating and operations. They provide a tool for measuring how well employees are learning and understanding the software during the training phase and for identifying potential bottlenecks in the implementation.

A good plan starts with realistic goals. For example, don’t expect to buy ERP software in November and go live on January 1. Also, take into account the workloads of your employees when setting up the implementation timeline. Overloading employees who are already working at full capacity raises stress levels and resistance. As much as possible, schedule training and implementation around work rather than in place of it.

Finally, keep in mind that if minor bumps occur, stick to the components of the plan as much as possible, but be prepared to tweak the timeline to accommodate circumstances that may arise.

The role of an ERP system is to deliver the modules a manufacturer needs to deliver a quality part on-time every time.

2. Select the right approach

There are two basic ways to implement ERP software: a phased-in approach and big-bang approach.

The phased-in approach implements the software one or two modules at a time, starting with the areas that need the most improvement. This gives employees more time
to train and get comfortable with the software before going live. It also puts less pressure on the organization as not everyone is required to learn the software and go live at the same time. It can also address the areas of your organization that have the greatest inefficiencies to produce fast gains and early successes.

The disadvantages with the phased-in approach are that it can allow employees to procrastinate learning the system and sometimes pit one group against another. For example, those required to learn the software may resent the extra work, while those not using it may feel left out.

With the big bang approach, everyone trains on the new ERP system at the same time and the data gets converted all at once. On the go-live date, you literally unplug the old system and plug in the new. The advantages? Everyone gets involved and you integrate all the systems at once rather than over a period of time. This cuts down on procrastination and creates a shared experience within the company as everyone learns and works together to be successful.

Drawbacks to the big bang method include having less time to test the data and experiment with the system before going live. Plus, if key employees fall behind or miss training, it can postpone the go-live date, which can stall momentum and enthusiasm.

The right approach depends on the timeframe and the amount of employees and resources you can commit to the project. A good consultant makes a recommendation based on their understanding of your needs. However, the final decision should always rest with your team.

Regardless of the approach you choose, the implementation requires four basic steps: preparation, data conversion, training and testing, and going live. Each step should have specific timelines for completion and someone accountable to meet those deadlines. Keep in mind that implementation is a fluid process that requires adapting to different circumstances as they arise. Plan thoroughly, implement carefully and be prepared to adjust when necessary.

3. Utilize training opps

When it comes to training employees on the new ERP system, two critical questions immediately arise:

  • How much training is required for success?
  • How much should you budget?

Truly, you can never have too much training, especially with a big-bang approach. An ERP system is sophisticated, and people need plenty of time to learn it, experiment with it and see how it works before going live. Granted, the best ERP applications are intuitive and easy to use, but proper training goes beyond the basic software so that employees can utilize all the features to maximize your investment.

Overall, your budget depends on the size of your company, the number of employees who will use the product, and their knowledge base regarding software and computers in general. Generally, smaller companies will pay less for the software, but more for training. As companies get larger, the cost of training as a percentage of total cost goes down. Once you get to 15-plus users, a training budget equal to 25 percent of the software cost represents a realistic minimum. Regardless of cost, the best ERP companies offer three types of training:

  • Vendor-based. Your employees go to the vendor’s site for an intensive crash course in the software. This typically involves the first round of training and generally lasts three to five days.
  • On-site. The vendor comes to your site to work with specific groups and individuals. This training can last one or more days and usually involves some of your own data.
  • Online. This can include online tutorials as well as subscription classes with a live instructor. The classes generally run one to two hours and cover specific areas of the software.

The subscription classes can help employees get up to speed quicker and use more of the system once you go live. They’re also good for second- and third-generation employees, so that outgoing workers don’t have to train their replacements. Remember that training shouldn’t end with implementation. Bringing in onsite instructors once a year enables employees to use the system more effectively, which enhances your ongoing return on investment.

Watch the video to see a real-world example of the benefits that come from implementing ERP.

4. Putting it all together

Ultimately, the success of any ERP implementation depends on three critical factors: support from senior management; a written plan with clearly defined goals, timelines and responsibilities; and a comprehensive training schedule that includes vendor-based, onsite and online training. Follow through on these three areas and you’ve won 95 percent of the battle. For the remaining five percent:

  • Choose your priorities. Most companies do 80 percent of their business with 20 percent of their customers, vendors and part numbers. If you plan to convert your data a little at a time, start with the 20 percent that will yield 80 percent of your results.
  • Don’t waffle on the go-live date. People need deadlines to hold them accountable. If you extend the date because employees aren’t ready, they will continue to procrastinate. When you stick to a firm date, employees will learn the system.
  • Avoid the “super user” syndrome. Don’t depend on one highly motivated employee to become an expert on the software and then teach it to others. This ensures a delayed implementation at best and failure at worst.
  • Keep the momentum going. Avoid stops and starts in the implementation even if you only implement a little at a time.

Finally, accept the fact that you will never find a perfect time to implement ERP. The bottom line is that ERP can position a company for sustained growth and profitability. Keeping this end goal in mind makes it easier to endure the growing pains that inevitably arise when undertaking organizational change.

Global Shop Solutions

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