The 3 worst mistakes companies make when adopting a new ERP system
What had once been a CEO-sponsored sacred cow back in the day now lumbered across the enterprise like an intoxicated dinosaur. An IBM-legacy, DOS-based system (let’s just call it T. Rex for short) that had very limited reporting capabilities, no flexibility, and little to no capability related to cost accounting.
I mean, come on. Who doesn’t want to know how much it costs to do what employees do?
Writer Oscar Wilde once noted “Nowadays people know the price of everything and the value of nothing.” Heck, yeah, Oscar. In my years as a trusted business advisor for companies around the world, this particular sacred cow of a system was sucking the life out of the company, dollar by dollar, day by day.
IBM no longer supported T. Rex so the company was paying for a third party to feed and take care of the big lug. All the while, the antiquated system frustrated new users and had legacy users unaware of how time-consuming and cumbersome the process had become. To top it off, the system was not capable of offering any insight to the management team on how to be more efficient or drive profitability.
It took me six months to convince the CEO to let go of his pet system and four months to implement a whole new system. Suddenly, we knew what each employee spent on each operation on each part number. We understood our best and worst margins. We saw what happened on the shop floor. When we put T. Rex down, we revealed the company in astonishing, liberating ways. And, yes, the four months of implementation were a LOT of work. The first six months after we went live were harder than what would be the new usual day-to-day. But I heard for the next four years from the CEO that changing the ERP system was a great decision and that it allowed for the business to grow.
Learn from other people’s failures (much less stressful than learning from your own). Here are the three worst mistakes businesses make when implementing a new ERP system.
1. NO INTERNAL CHAMPIONS.
Assign an owner to the project. No outside consultant will substitute (not even me!). It needs to be someone that is there day in and day out and who knows the different areas and processes of the business. This oversight came into play for another one of my clients. I started working with this client to help them with their exit strategy. They had just gone live on a new ERP system. The system itself was great; it had all the bells and whistles, and was easy to use. Yet the implementation was botched. There had been no internal project owner who had worked closely with the ERP consultants to make sure the setup matched the existing processes and needs of the company. The training had been random and insufficient. Long story short, an internal champion was identified and I worked alongside him to get the system revamped and set up before the first month-end.
Ask: Who will rally the troops, deal with challenges, and lead the ERP victory?
2. INABILITY TO LET GO.
“Let it go . . . let it go . . .” (Sorry if the “Frozen” theme song taunts you the rest of the day.) The point is: We all have a hard time letting go. When you adopt a new ERP system, you want a start-from-scratch mentality. You want to transform, not translate. You want to kick the old system to the curb. The romance is over. It’s done. Time to move on. You do NOT want to sacrifice function for form. This happens all the time because we are all humans and we react to change. People are used to a certain sequence in the system, a way the information is entered and processed, and how reports are made. Those same people then (even if subconsciously) are trying to see the same steps in the new system. Those steps just aren’t there.
Ask: What’s my desired end result? How can my new system get me there?
3. THE NEVER-ENDING ERP STORY.
A project – any project – will take the exact number of hours you give it. ERP adoption is no exception. An ERP that takes more than eight months is a formidable waste of time (and I mean it). I’ve heard this one before: “We’ve got to stop everything, take a year to set up the new system, then run the systems in parallel for awhile, then go live.” For crying out loud, noooooooo. Challenge your team as well as software vendors and consultants on the timeline. Understand that elongating the project not only increases ERP-related costs, but also takes a huge toll on the organization. Either commit to changing systems or do not waste your money.
Ask: How can we see the light at the end of the tunnel BEFORE we enter the tunnel? What does it take to do this in six months?
GABBY’S BIG TAKEAWAY:
Kill the sacred cow. Embrace what works NOW.