Crafting a Winning Technology Strategy for ERP Implementation

Crafting a Winning Technology Strategy for ERP Implementation

An enterprise resource planning (ERP) implementation is a significant investment for any organization. A well-designed technology strategy is essential for successful ERP implementation. A technology strategy outlines an organization's approach to adopting and utilizing technology to meet its business objectives. In this article, we will discuss what a technology strategy looks like in the context of ERP implementation and its components.

ERP implementation is a complex process that involves multiple stakeholders across an organization. A technology strategy for ERP implementation should align with an organization's overall business objectives and consider various factors, such as budget, resources, and timelines. The following are the essential components of a technology strategy for ERP implementation.

Goals and Objectives

The first step in creating a technology strategy for ERP implementation is defining the goals and objectives. This involves identifying what the organization aims to achieve by implementing an ERP system. For instance, an organization may seek to improve efficiency, streamline processes, increase profitability, or enhance customer satisfaction. By defining clear and measurable goals, the organization can evaluate the effectiveness of its ERP implementation and ensure alignment with its broader business strategy.

Needs Assessment

Before selecting an ERP system, the organization must conduct a needs assessment to identify its specific requirements. This involves evaluating existing systems and processes, identifying gaps and opportunities for improvement, and defining user requirements. A comprehensive needs assessment will help the organization select an ERP system that meets its specific needs and streamline implementation.

Software and Vendor Evaluation and Selection

The next step is to evaluate various ERP systems and their respective vendors. We think it is important to separate the two activities. Once you identify the appropriate software a second level of evaluation should be performed to compare vendors for that software. This involves researching and comparing various ERP systems, assessing vendor capabilities and expertise, and reviewing proposals. The organization should also evaluate factors such as cost, customization, scalability, and support to select a system that aligns with its goals and objectives.

Implementation Planning

Once the organization has selected an ERP system, it must develop an implementation plan. This involves defining the scope, timeline, budget, and resources required for implementation. The organization should also identify key stakeholders and establish roles and responsibilities for each team member. A well-defined implementation plan will help the organization manage the implementation process and ensure alignment with its broader business objectives.

Data Migration

Data migration is a critical component of ERP implementation. It involves transferring data from legacy systems to the new ERP system. The organization must establish a data migration strategy that includes identifying data sources, mapping data to the new system, and testing data integrity. The data migration strategy should also consider data quality and ensure the data is accurate, consistent, and complete.

Testing and Training

Testing and training are essential components of ERP implementation. The organization must develop a comprehensive testing strategy that includes unit testing, integration testing, and user acceptance testing. This will help identify any issues or bugs in the system and ensure it functions as intended. The organization must also provide training to users to ensure that they can use the system effectively and efficiently.

Go-Live and Post-Implementation Support

The final component of a technology strategy for ERP implementation is go-live and post-implementation support. This involves transitioning to the new system, monitoring performance, and providing ongoing support to users. The organization must establish a go-live plan that includes data validation and system testing. Post-implementation support involves addressing any issues or bugs that arise, providing ongoing training and support, and continually evaluating the system's performance to ensure alignment with the organization's goals and objectives.

To better illustrate the concept of a technology strategy in the context of ERP implementation, let's take a hypothetical example of a manufacturing company that has decided to implement an ERP system to streamline its operations.

The company's technology strategy for ERP implementation would involve several components, including:

Defining business objectives and requirements: The first step would be to define the company's business objectives and requirements. This would involve analyzing their existing processes, identifying pain points, and determining the areas where an ERP system could provide the most value.

For example, the manufacturing company has to continually change production schedules due to the lack of raw materials. Not only is it frustrating for the plant manager and floor supervisors, but it also results in missing customer orders, increased costs in the form of unplanned overtime, and high shipping costs. Their business objective would be to reduce missed customer orders to nearly 0 and lower shipping and overtime costs. To help achieve this goal, the manufacturer will need an ERP system with a strong planning component, that forecasts raw material needs based on the sales orders and projected sales. This system would require inventory, purchase orders, sales orders, sales forecasts, and vendor and raw material replenishment functionality. essentially this is referred to as supply chain management

Selecting the BEST ERP system: Once the business objective and requirement are defined from above, the next step would be to select the right ERP system. This would involve evaluating different software platforms based on their functionality, scalability, and cost-effectiveness. For a definition of BEST see this article “Choosing the BEST technology solution”.

For our manufacturing company example, they may evaluate several ERP systems that specialize in supply chain management, such as SAP, MS Dynamics, or Oracle. They would need to consider factors such as the current IT infrastructure strategy. Do they plan to move to the cloud or keep things on-premise, or embrace a hybrid model? How many of the requirements are met out of the box? What is the system's ability to integrate with their existing IT infrastructure, the level of customization required? How much money is the software company investing in research and development? 

Select the best ERP Vendor: after choosing the system, evaluating a few providers that help implement the software is also important. The vendor should have a similar value system. This vendor will become a crucial partner for the next 5 or more years. It is important that the relationship can survive any rough times.

Back to the example, the manufacturer has a small IT staff with very little to no experience in managing an ERP system. The software provider should have a track record in supporting customers for the long term. You want to check with references that have been with the company for many years to see how they help support the company ongoing. The manufacturer will also require a lot of hands-on support for the first year. Many providers are not equipped to provide that level of support long-term.

Planning and implementing the ERP system: With the ERP system and vendor selected, a plan is needed to stay on track. Begin by establishing an internal implementation team with an internal project manager that has the appropriate amount of authority to allocate resources to the project as the detailed project plan requires. The project plan would need to account for any potential issues that may arise during implementation, such as data migration or system compatibility issues.  The project plan should be accompanied by a change management plan for the entire organization. Implementing an ERP system will impact how the entire company functions and should be managed properly.

The implementation team led by the internal project manager will work closely with the ERP vendor to ensure the system is configured and customized to meet the needs of the organization. 

Testing and training: Before the ERP system goes live, a comprehensive test plan should be developed and followed. This would involve testing the system's functionality, data accuracy, and user experience. This may be the most important portion of the project from the organization's standpoint. It is used to validate that the functionality desired is included in the system. Do not take this part of the project lightly.  Most problems found after going live could have been found during testing.

Training is the most critical component to the successful adoption of the system.  Training efforts should start near the beginning of the project and are expected to last up to a year after the implementation with a process created while onboarding new employees. The company would need to provide comprehensive training to all users, including superusers and subject matter experts, to ensure they can effectively use the system.

Ongoing support and maintenance: The ERP system goes live, and now it becomes a living part of the organization. The ERP system is a digital representation of the organization as the company grows and changes. The ERP system must also change. There needs to be a plan in place to monitor the system's performance, modify the system to adapt to business changes, and address previously unidentified issues from the implementation project. 

By developing a comprehensive technology strategy for ERP implementation, the manufacturing company can ensure a successful implementation that meets its business objectives and drives value for its organization.

 As Alan Lakein says “Failing to plan is planning to fail”  It is without a doubt true when it comes to ERP system Implementations. A well-designed technology strategy should align with an organization's overall business objectives, consider various factors such as budget, resources, and timelines, and include essential components such as goals and objectives, needs assessment, vendor evaluation and selection, implementation planning, data migration, testing and training, and go-live and post-implementation support. By following these best practices a successful implementation is in your future.

Until Next Time…