To minimize the chances of failure, organizations should abide to a set of principles governing an effective ERP implementation:
Define clear business goals:
Endeavor in an ERP system must be driven by a clear business case, i.e, organizations must know the objectives of the investment in an ERP solution. ERP implementation is actually a business project not an IT project since the ERP system is intended to support business processes. Yet, very often, companies focus too much on the technologies capabilities and forgetting the business itself. So what matters is how you want to run your business, and how you translate your business processes to standard best practices as defined in the ERP. The ERP helps achieve your business metrics which must be defined beforehand.
Top Management involvement and support:
This represents one of the most critical success factors for any ERP implementation. ERP projects must be overseen by a steering committee which should periodically review the project status and resolve issues that may affect its implementation. Also, both the business and the IT teams should participate.
Milestones definition and roadmap planning:
As it is critical to the business, each ERP implementation requires a detailed roadmap with clearly defined milestones.
Existing business processes analysis and target processes definition:
ERP systems are designed to optimize business processes. So, organizations should set up a comprehensive business process model, considering processes dependencies and removing useless activities from the current business processes. Then, preparing the "to-be" or target process, by adopting best practices. The famous gap analysis needs to be carried out to compare new processes with those available in the ERP. A detailed change management program should be used to help transition the business processes.
Full change management program:
Business roles may have to be changes or reassigned depending on the processes defined in the ERP. To help theme accomodate the changes, employees must be given comprehensive training to enable them to fully understand the benefits of the ERP system and how it will improve their day-to-day operations. Thus, communication is the key.
Setting Up clear performance metrics:
How would you measure whether or not the project is meeting expected results? By using specific performance metrics! Instead of general performance metrics such as "customer order process time reduction", organizations must have rather defined performance metrics such as "customer order process time reduced by 50%"
The total costs of the solution include components such as software, hardware servers, support and maintenance services, IT training, application customization and development services, implementation services. etc. These costs are then compared with tangible benefits obtained, in order to determine the ROI. Business benefits are the true indicators of ROI. Examples could be related to reduction of operational costs, shorter shipment time, reduction of defects. Yet, selection of experienced software service providers and building quality in the ERP implementation will have a huge impact on the ROI. Remember that ERP implementation is a journey towards continuous improvement.