Assessing ERP Readiness

Determining an organization's ERP readiness for an ERP or large IT implementation is often one of the most difficult parts of moving forward with such a large undertaking. It is easy to get caught up in all the potential benefits of ERP and forget that there are some fundamental business issues to consider before proceeding. For example, to determine your organization's ERP business readiness, it is useful to ask the following questions:

• How standardized are your current business processes across the globe?
• Does your company currently have an internal organizational design, business process, and/or communications group?
• How much turmoil has your company faced in the last 3 years (e.g. layoffs, other large IT projects, management shakeups, etc.)?
• What level of executive sponsorship do you currently have in your organization?
• How many internal resources do you have committed to help with the project, including to address the business process aspects?
• Do you have a documented business case, assumptions, and ROI?
• Have you established project and business measures for success?
• Is your company culture conducive to accept such a large change initiative?
• Does your company operate as a single company across the globe, or more as a siloed group of organizations?
• Do you have a detailed budget, including line items for miscellaneous and unanticipated expenses?
• Most importantly, what is your motive for implementing ERP?

While your answers to these questions may vary, they will inevitably impact your level of project and business risk. They will also determine what additional mitigation efforts you may need to take. These are all factors that need to be considered as part of an overall ERP readiness assessment.

I am in the process of developing an ERP business readiness and risk assessment checklist. Check back here or on our web-site in the near future to take a look.

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Organizational Change Management in a Global Environment

Whether trying to standardize global business operations or implementing Enterprise Resource Planning (ERP) software in multiple countries, corporate executives face the issue of managing organizational change in an international environment. For any large change initiative, organizational change management is a challenging and difficult issue to address; however, with the addition of additional variables such as differing cultures, values, and languages in the international arena, the difficulty substantially increases.

When introducing organizational changes at an international level, there are several factors to consider:

• Language Barriers. While most managerial types in countries outside the US speak English of some sort, not all front-line employees speak English or speak it well. Therefore, getting key messages across regarding organizational or process changes is a delicate and complex issue. It often involves translating messages into their native languages and reiterating the same message via different channels depending on the culture of the audience (e.g. email, phone conferences, meetings, etc.) .
• Culture and Values. Not all people in the world value or are motivated by the same things as Americans. Many western European countries value history, tradition, and work-life balance, while many developing Asian countries value hard work, entrepreneurship, and teamwork. Managing change in these very different environments requires differing approaches and messages.
• Propensity for Change. More established and developed countries have business operations that have worked well for a long time, while many developing countries have less mature operational models. Therefore, it is often common to see more resistance to change in developed countries versus those that are still emerging. For example, a small company in India that is struggling to keep up with new demand with a very limited staff and manual processes may be more welcoming of an operational improvement than a large office in the UK that has refined its operational model and implemented automated processes over a long period of time. On the other hand, the small office in India may be much less available to assist with a change effort due to a lack of employee bandwidth.
• Consideration of Local Requirements. Global changes that are pushed to the local level by corporate headquarters often do not adequately consider local needs and requirements. Each country has its own regulatory, resource, and employee constraints, so it is important to plan accordingly when implementing the changes. Obviously, completely localizing a global initiative defeats the purpose of having a single global change, but no solution is going to work for 100% of the world, no matter how well-designed it may be.
• Varying Degrees of Understanding of Best Practices. Employees in different countries have different levels of understanding of business and technical best practices and methodologies, which may affect the amount of change management required to "sell" the ideas to affected employees. Employees in eastern Europe are often less likely than Americans to understand the value and benefits of Six Sigma or business process management methodologies, which increases change management effort.
• Buy-in Is Important. This is true for even domestic change, but it is even more true for global initiatives. Involving affected employees across the globe early in the process will help identify and address some of the issues mentioned above. It also helps overcome potential pockets of resistance by ensuring that employees across the globe are involved in the decision-making and planning surrounding the particular change.

By incorporating these aspects into an overall project and organizational change management plan, executives are much more likely to ensure that their respective change initiatives are embraced across the globe. This ultimately leads to increased business performance on a global scale.

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ERP Vendor Selection : Choosing Software that is Right for your Company

ERP vendor selection can be a daunting task, and one that is often not given the appropriate attention. CIOs or other executives in charge of making such major decisions often make decisions based on perception or faulty information. For example, the business media often highlights companies that experience failure implementing a specific package. However, information such as this does not necessarily reflect what is appropriate or inappropriate for your specific company.

In choosing an ERP or IT software package, executives need to make decisions based on objective and unbiased information rather than gut feel or limited information. In particular, companies should consider the following:

• Why Do you Want to Implement ERP? Unfortunately, this question is the toughest to ask once you're already on the ERP bandwagon. Many times, ERP is not going to solve your business problems. If your business strategies or key business processes are flawed, even the most advanced IT system is not going to help. Before making a decision as large as implementing a system that will cost millions and affect your entire company, it's important to have a clear understanding of what you want to accomplish by taking on this challenge. There may be more cost-effective and lower-risk options such as improving processes, redesigning your organizational structure, consolidating your global supply chain, or implementing a performance management system.
• What are your Business Requirements? Once you have decided that ERP is the route you need to take, it is important to begin by looking at your desired operational model and using that as a starting point in determining which software to implement. Executives should define and document key business requirements for any package they may select. This includes not only nice-to-haves, but also requirements that are "deal-breakers" if the software is unable to accommodate. And executives should also use ERP business requirements as an opportunity to improve current operations, efficiency, and effectiveness. The last thing a company should do is implement software to automate the same flawed business processes.
• What is your Business Case? This is where many companies fall flat. Even if you complete the first two items discussed above, it is important to understand and document what your costs will be, as well as your anticipated business benefits. This is important in gaining approval from other executives or your Board of Directors, and it is also helps ensure that you realize the potential benefits of implementing the software. All costs, including hidden costs such as internal project resources, data conversion, and lost productivity immediately following go-live, should be included in the business case and ROI calculation. And benefits should be reasonable and not overly aggressive. Ultimately, your business case should be a tool to manage business costs and benefits going forward, not just as a sales tool to justify a decision that's already been made. And if the resulting ROI does not make sense or meet minimum investment criteria for your company, then it's probably not a good idea to undertake the project.
• Who will Be Your Implementation Partner? Have you thoroughly assessed all of your options in evaluating potential external implementation teams? Software companies aren't always the best at implementing their software. You can often find third-party vendors and consultants that can implement ERP more successfully or at a lower cost.
• Do You Have Enough Resources to Commit to the Project? Even if ERP is perfect for your company and you have chosen the perfect software, things will head south very quickly if you don't have enough money or employees to dedicate to the project. It doesn't matter if you have assembled the best team of consultants and implementation partners; it's your employees that will ultimately make the project succeed.
• What's the Contingency Plan? No matter how well-run your project is, you should be prepared for failure. We've all read of the technical glitches that shut down shipping at Fortune 500 companies for weeks at a time, so it's best to acknowledge that something bad could happen. If the project does fail or if the software is not implemented correctly, what is the backup plan? Will users be able to access legacy systems? Will certain processes be performed manually until the system is up? Dramatic failures are not common, but they do happen on occasion, so companies should be prepared for the "what-ifs."

www.panorama-consulting.com