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Plan to Succeed in ERP Implementations - Jun 1998
| Project Management |
Plan to Succeed in ERP Implementation
This page has two parts - the first is directed at change management. This is one of the most important aspects of
successfully implementing automation, whether it is mechanized automation in facilities or enterprise automation.
The second is directed at using a structured approach in the implementation effort.
Making It Happen - 1. managing change
Weed out resistance to change.
Projects fail. It happens all the time. Even though the best minds work together and every technical aspect is
carefully scrutinized, projects can fail. Recent surveys reported that only 33 percent of reengineering efforts and 20
percent of new software applications succeed. Why? Fortune 500 executives and chief information officers report
that resistance is the primary reason why so many good ideas fail.
Too often, project managers focus on the technical and financial aspects of a project and neglect to take into account
the nontechnical issues. But it's the people who can make or break the success of a project. Without their buy-in
and support, projects are doomed. to paraphrase James Carville during the 1992 presidential election, "It's the
people, stupid."
Today's nontraditional workplace further complicates the situation. Lack of "face time" among team members -
caused by a rise in telecommuting, flex-time, job sharing, the use of temporary personnel, and the like - places an
extra burden on project managers. They are faced with the challenge of creating a cohesive team despite the fact
that team members may not have regular contact. This lack of ongoing face-to-face interaction between team
members and project leaders makes it more difficult for managers to anticipate and plan for resistance. To
overcome these obstacles, project managers must enhance communication wherever and whenever possible. This
is the only way resistance - and its roots - will surface.
Understanding Resistance is the Key.
It's not resistance itself that leads to failure; it's the way project managers handle it. To respond to resistance in an
effective and proactive manner, you must first understand what you are facing. There is resistance, and there is
resistance. Talk with all members of the team - whether they are full-time, part-time, working in the office or at
home - to find out their thoughts about the proposed change. Listen for common fears and anxieties in the answers
and strive to find out what's behind their resistance and how strong their opposition is. Knowing the intensity can
help you assess how best to approach resistance - and to transform it into support for change. Let's look at the two
levels of resistance that you will encounter.
Level 1: The Idea Itself. Managers typically interpret resistance as if it were Level 1, resistance to the change itself.
This is low-grade resistance, without any hidden agenda. People simply are opposed to the idea for any number of
reasons. They don't understand what you are trying to accomplish. They don't know why it is important to you.
They believe in the status quo. They don't know what impact the change will have on them. They don't think you
realize what this change will cost in money or time. They have ideas of their own about where the organization
should go.
There are effective strategies you can employ to help move beyond Level 1 resistance. Be sure to talk about your
ideas clearly and honestly. If the resistance truly is Level 1, then a clear presentation with time for spirited
questions and answers may be enough. However, this can be a dangerous approach if resistance is deeper.
The most common corporate response to resistance is to put on a show - tell people all about the change and try to
"wow" them into agreement. If all that people needed were the facts - What's the plan? When will we begin? How
much will it cost? - this approach might work. But if their questions go deeper - How do I fit into this plan? Are you
really serious about this change or is this another fad idea? - then simply putting on a presentation will leave these
issues unaddressed.
If left unattended, Level 1 resistance can intensify. To prevent this from happening, you must deal with resistance
as soon as you recognize it. Most people fear dealing with resistance at any level. So, even a simple Level 1
challenge like "We don't have enough staff to do that" may make them uncomfortable.
It is better to talk with people about the proposed changes, giving them the opportunity to make a contribution to the
idea or warn of potential pitfalls. Dealing with resistance in a proactive fashion requires that you delve deep and
explore until you are certain you have addressed all concerns and areas of confusion.
Level 2: Deeper Issues. While Level 1 concerns are primarily intellectual, Level 2 concerns stem from the heart and
gut and usually involve a personal fear or threat. Level 2 resistance is harder to get at. Surveys usually won't do it,
nor will large meetings. The best way to get people to move beyond resistance and get support is to get them
deeply involved in the change. Engage in conversation, either one-on-one or in small groups, to explore the
opposition and to gain insight into its roots. By staying open and curious about what people say, you will begin to
understand what their concerns really are.
Try a Little "What If."
Often the depth of resistance doesn't become apparent to project managers until they are asked to take action. For
example, an administrative project team within a government agency was considering ways to improve efficiency.
Their customers began to demand faster response time. The department's manual systems were no match for a
clientele accustomed to the speed of fax and modem communications. Although they faced resistance during the
early stages of planning, it wasn't until the team members began suggesting specific strategies that the deepest
resistance surfaced. People who had supported the early planning became suspicious of the very strategies they
had been supporting. It was not that they had been holding out, waiting for the right time to disrupt progress; it was
just that as they got closer to implementing plans, they discovered factors they had to resist.
This scenario could be avoided by a little planning for the inevitable. The U.S. Ary Corp of Engineers developed a
method to get issues out on the table before conflicts arise. All team members involved in a construction project
come together to define what this temporary partnership will look like. They discuss how they will handle such
issues as quality, completion dates, costs and cost overruns, safety and paperwork.
They address things that could go wrong. this is a pretty easy task: everyone in the business knows where the
hassles are. Then they devise strategies for dealing with these potential pitfalls. Think of these as "What If?"
scenarios.
It's easier to devise a solid approach to a problem before it's surfaced than when it is staring you in the face. "What
If?" scenarios allow you to step back and calmly play with possibilities, without the risk. Here are some ideas to
consider:
If the team members have worked together before, identify times when they were in conflict. If the teams are new,
ask people to draw on their own experience to identify potential conflicts that could occur during the change. Do not
assign blame. The goal is to identify issues that could come up during the current change, not to dissect past events.
Form mixed groups that contain representatives from a cross-section of departments and levels of the organizations
involved. Have those groups develop strategies to address problems should they occur. Groups should address
these questions:
How can we keep our focus on the goal if this issue occurs?
How will we summon the courage to stick with it, even if the going gets rough?
What can we do to ensure mutual respect in the midst of this issue?
What can we do to ensure that all the critical issues get out on the table?
How can we stay relaxed in the midst of this conflict?
How can we promote the development of common value?
Subgroups report to the full group all questions, comments, and suggested changes.
The full group decides which of the strategies it can fully support. By addressing potential resistance before it
occurs, you often preempt it. People get the critical issues out on the table and make agreements before anyone
else feels a need to put up a wall or attack others.
People Resist Change - that's natural and should be expected. As project managers confront an ever-changing,
nontraditional workforce, there is one word that must stand out as they strive to create support for change:
communication. By talking openly and honestly with team members to learn more about their opposition and the
intensity of it, project managers will be better able to find common ground and identify ways to work together to
make change happen. Team members will also be better prepared to devise "What If" strategies they will need to
overcome hurdles they will face along the way. By communicating - among team members and with team leaders -
teams will be able to move beyond the wall of resistance and implement the changes that will benefit all those
involved.
Making It Happen - 2. structured implementation
An urgent need for faster implementations and tangible returns.
A structured implementation can speed system deployment and the return on investment. Considering today's
business dynamics, companies simply cannot afford to spend years implementing technology solutions, even if they
offer the promise of workflow improvements and bottom-line gains. For some businesses, a lengthy implementation
offers enough time for competitors to overtake them, or at least threaten their market position.
In addition, experience shows that a long, drawn-out implementation increases the risk of project failure, impacts
system functionality and/or integration, and reduces both management's commitment to the task and confidence in
the project team. Especially in complex environments that involve multiple interdependent processes, the disruption
caused by a long implementation may reduce productivity and compromise customer service and delivery
performance.
Methods and Strategies
Conversely, relatively rapid implementations, performed within a well-planned, structured framework, are more
likely to succeed with easier migrations and integration, fewer production interruptions, less user stress, and faster
return-on-investment (ROI).
Software vendors and systems integrators are responding to companies' need for rapid, trouble-free
implementations by devising innovative ways to work together along with the customer IT team. Software vendors
play a key role in this partnership - if they realize that implementation means much more than simply getting the
application up and running. An IT solution adds real value to a business when it is truly implemented, which means
people in the company fully use the system's capabilities to improve workflow productivity and reduce costs to
strengthen customer service and gain measurable competitive advantages for the enterprise.
Most successful implementations are based on a "customer-centric" rather that "product-centric" one.
Whether a software vendor implements a stand-alone solution - i.e., production planning, scheduling, and execution
- or works side-by-side with a large systems integrator to implement a portion of a companywide enterprise
resources planning (ERP) solution, use of a structured methodology facilitates the task. To handle major ERP
implementations, leading enterprise application software vendors have designed their own methodologies within
which smaller software partners can work, using the time-saving tools and templates for modeling, interfaces, and
integration.
SAP, for example, employs its ASAP implementation methodology and TeamSAP approach to partnerships. The
Baan Co.'s TARGET methodology speeds up and streamlines the implementation process through the use of
sophisticated, industry-specific templates and a step-by-step approach. Baan's Dynamic Enterprise
Modeling-Strategy Execution (DEM-SE) provides business process templates that include Extended Enterprise
Models, Business Control Models, and Data Models - all of which reduce the complexity of the technology and
simplify implementation and integration.
An ERP system implementation that proceeds in defined phases affects all areas of an organization: its people, the
processes, and ultimately, the product.
While structured methodologies streamline implementation, the most successful implementations are based on a
"customer-centric" rather than "product-centric" approach. Before demand grew for fast implementation and ROI,
software vendors only had to bring in-depth knowledge of their own technology and product to the table. In today's
market, however, vendors must demonstrate the ability and willingness to put the customer's needs first so the
software tool will generate the desired business benefits and return on assets.
Successful teambuilding hinges on experienced leadership to evaluate and assemble the resources required to plan
a successful implementation. (See Master Planning)
To ensure that business and production processes are aligned properly to maximize the system's value, software
vendors still need a good understanding of their product's capabilities - as they relate to the customer's industry and
specific business. Vendors also must be knowledgeable about the processes involved, and the organizational and
cultural issues likely to be triggered by introducing new business practices. In short, today's implementation
strategy must be built on a foundation of people, processes, and product.
People. This issue refers both to the people directly involved in the implementation, and the associated issues that
crop up when a new software tool appears on the scene. The challenge is to have the strong change management,
organizational, and project management skills (ERP Project Management Basics) that will likely reduce risk and
manage complexity. Successful teambuilding hinges on experienced leadership to evaluate and assemble the
resources required - both internally and externally - to plan and launch a successful implementation and keep it on
track. The best implementation teams represent a combination of business, process, and product knowledge; skill
sets; and communication efforts that encourage people to share information and responsibility for the project's
success.
Process. To secure management commitment and ongoing support, it's necessary to define a business case for the
software tool, focusing first on the core functionality that provides the best and fastest payback. to achieve rapid
implementation and return-on-investment, the successful implementation strategy should leverage the best practices
built into the software, and processes should be realigned accordingly. This requires a knowledgeable
implementation partner with industry experience.
Product. Today's implementation partner should possess a thorough understanding of the software tool's capabilities,
technical skills to provide interfaces and integration with other systems within the enterprise, and business foresight
to determine how the software can best be applied to further the organization's goals.
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Eight Steps for Success
Whether the implementation involves a stand-alone software solution or is part of a larger project, one methodology
that has proven successful includes eight distinct phases. Each phase has defined deliverables that must have
executive sponsor and steering committee buy-in before the next phase can begin. These eight phases are;
1. Scoping. This phase takes place immediately after the contractual agreement. The implementation team defines
the scope and parameters of the project, establishes the metrics to measure progress, and sets up the
communication and reporting process. Deliverables for this phase include a general outline of the implementation
schedule and basic project milestones. An initial meeting engages all participants and builds enthusiasm, and concept
education introduces the software's capabilities and expected benefits (the Kick-Off Meeting).
2. Analysis. In this crucial phase, which typically takes about a month, the business environment and processes are
examined and evaluated, and defined business and production goals are prioritized. Next, a definitive
implementation timeline can be established. Deliverables for this phase include a formal vision statement of detailed
objectives, and the implementation's Technical and Social Design.
The Technical Design. - details how the product and processes will be aligned to achieve the desired objectives.
The Social Design - considers the "people issues:" how workers perform their jobs, and how the implementation may
change business practices, workflow, and reporting relationships.
3. Prototyping. The goal of this phase is to build, test, assess, and refine the initial prototype. In most cases, the
team identifies a portion of the plant or a product line on which to build this first iteration, which - depending on the
business goals - may or may not include all of the application's functionality. When the prototype has been built,
tested, and run, results are charted for performance and logic, and refinements are ongoing. The deliverable for
this phase is a "project notebook" and prototype demonstrations for the executive sponsor, steering committee and
key users. Additionally, the company's core team receives a greater degree of training in the software's
architecture and technology, capabilities, maintenance, and usage.
4. Deployment. Once the prototype has been refined and accepted, it's expanded and built to full production scale.
This phase includes data gathering, process modeling, and adding the specified "bells and whistles" to the basic
prototype. At this stage, supervisors and operators receive additional training regarding product performance and
capabilities, and any business process changes that will affect them or their work groups.
5. Interface/Integration. Occurring simultaneously with deployment, all necessary interfaces are designed and
integration issues are resolved to ensure the software works in concert with other systems. Key deliverables include
handing all files, specifications, upload/download and maintenance procedures over to the company's IS team, and
ensuring that effective knowledge transfer took place.
6. Parallel Testing. This phase involves complete simulation testing of the live system to validate its performance
and the effectiveness of interfaces/integration. Its key deliverable is acceptance of test results.
7. Cutover. Before cutover actually occurs, a strategy is devised to execute timely and effective rollout. The
rollout itself may either be phased or performed all at once; the choice depends on which approach will disrupt
business and production the least.
8. Continuous Improvement. This is more of a philosophy than an actual phase. To ensure continuous improvement,
a post-implementation audit should be performed after the system has been up and running for three to six months
to test whether or not the anticipated ROI and business benefits are being realized. Comparing actual numbers with
previously established benchmarks will reveal if the software tool does what it is intended to do - add value to the
enterprise. This first audit should be performed by the implementation partner to give the business's IT team a
"snapshot" of the company's post-implementation progress. After that, it is important to periodically review the
system's performance to ensure continuous improvement for maximum ROI.
Judging Success
How can a company tell if a software implementation was successful? Keep in mind that time to completion should
be counted in months rather than years. For example, implementing Baan Supply Chain Solution's Planner,
Scheduler, and Execution software - whether stand-alone or in concert with BaanERP - typically takes six to nine
months, depending on the amount of required business and production process reengineering.
Aside from quick implementation, business benefits and fast payback are key indicators of success. The new system
should start producing tangible benefits immediately, with payback occurring within a year or so. The investment
ratio of consulting fees to software expense for phased implementation typically runs about 1.5:1. When considering
how much of an implementation's success depends on factors apart form the software itself - people and
organizational issues, change management, process realignment, training, and technical design - that ratio
represents a real bargain.
To sum up, the key to successful implementation of an enterprise software solution is to apply people, process, and
product initiatives within a structured methodology framework. When these elements are brought together and
skillfully managed, companies can fully expect to realize shorter time to production, measurable business benefits,
and a rapid return on their technology investment.
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