Our introduction of the “People, Process and Technology” approach to planning and implementing technology investment has created plenty of interest amongst our clients, contacts and the supplier community.
Because ERP (Enterprise Resource Planning) systems are a particularly important area of technology for all of these stakeholders, we have asked Martin King-Turner, Director at The National B2B Centre and ERP expert, to reflect on how “People, Process and Technology” could maximise the chances of implementation success for your ERP project.
One of The National B2B Centre’s primary roles is to ensure that both clients and their IT suppliers can work together to ensure that the maximum value is generated from technology investments.
In a recent article I explained our approach to making this co-operative effort work in practice. Technology is still an important part of the proceedings but successful system implementations also require an understanding of the people issues involved (from both a client and supplier perspective) and an appreciation of the impact on business processes.
What I would like to do is reflect on how this approach has helped us work with a range of clients involved in the implementation of ERP.
What is ERP?
ERP systems are intended to help businesses operate more efficiently and effectively. They are in essence databases with functionality that allow businesses to automate and integrate core business processes such as taking customer orders, scheduling operations, and keeping inventory records and financial data.
Done properly ERP systems can offer dramatic improvements in business efficiency and enable fast business growth. However ERP systems have a reputation for being difficult to get right. This is where the” People, Process, Technology” approach comes in because ERP is an archetypical example of where too much focus on the technology can cause problems.
The key point is that ERP is more than just a software application. It is a business strategy whose overall philosophy is to rationalise and improve business processes. ERP is very people-centric. It is intended to deliver better service to customers and it is operated by your staff.
Given these circumstances it doesn’t require a great mental leap to see how taking a “People, Process and, Technology” perspective might be of use in looking at what benefits ERP could bring to a business, which solution and supplier to choose and how to actually implement ERP.
I would like to share some of my thoughts and experiences across these different areas.
As we have explored in previous articles one of the biggest reasons for IT project problems is a failure to recognise and involve all of the stakeholders. Project teams often forget that there are all manner of users, project friends and project enemies out there. ERP projects amplify this issue because they reach into lots of different corners of the business and not simply a single function or department.
My experience is that this means that ERP projects must have a board level sponsor who can deal with the management team and project manager, liaise with the board and provide a figurehead to instil confidence in the rest of the company. In smaller companies that board level sponsor’s role might also include being the day to day evangelist for the project and the project manager. ERP is about change and most people don’t like the idea of change when it is first presented to them. This means there really does need to be a “mover and shaker” who will continually espouse the benefits of adopting the system and deal with the inevitable moans and groans. A key role is to educate staff into why ERP is important to the business – this is not the role of the supplier.
What really helps to win support is to involve the people who will have to use the system or be impacted by it (not quite the same thing) in the requirements definition process. Apart from getting rid of the “not invented here syndrome” it is likely that this group will have a far better understanding of how customer oriented systems work in reality. Involve the best person from each area (not the one you can most afford to lose) and you will benefit from getting their buy-in to the project and maybe even from adopting their “unofficial” workarounds into the new system.
Suppliers are people too
A final tip on the “People” side is to make sure that your suppliers are more closely integrated into the project. Keeping them at arm’s length or restricting them to working with the core project team means that they won’t be able to develop a complete understanding of the way the business works. It also gives them less opportunity to build working relationships around the organisation, which is a problem when you need to solve problems at implementation time, for instance.
If you are researching ERP systems and to suppliers and you don’t hear the word process then you are in the wrong place.
Map those business processes
Effective implementation of ERP requires an upfront evaluation of existing processes. Somebody (you, the system supplier or a separate service provide) needs to be able to analyse, capture and document what’s going on.
What does this give you? Well I have conducted business process mapping sessions with a variety of companies across different sectors and never run a session where the outputs didn’t cause surprise, concern or wonderment. Most of the ways you work will be fine, but turning on the process spotlight will highlight poor service, bottlenecks and lack of compliance – things which usually cost money.
The great thing about understanding business processes is it provides an immediate opportunity to make improvements using existing manual or IT systems. It also makes it easier to define the selection criteria for choosing an ERP system because you will now have a clearer idea of the scope of the system and exactly what areas of the business it needs to cover or where interfaces to other systems are needed.
Processes need people
Of course the big payoff comes from using the functionality that your chosen ERP system provides to automate the most mundane activities, to remove bottlenecks and to enforce workflow rules. What’s important to remember at this point is that while the ERP application itself will simply reflect the business process steps that you plug into it, real people are going to have to enter operational information and follow on-screen instructions.
That’s why I stressed the need to get buy-in in the People section and why activities like training are so important. I have seen ERP projects fail because staff simply stop using the system and revert to the old ways of doing things.
I heard somebody say recently that “technology is the least important part of an IT investment.”
Look for an overall solution
While I might argue about demoting it to the absolute bottom of the pile, it is true that you must not choose your solution until you understand your requirements by listening to your people and understanding your processes. The right ERP solution is one that combines technology with the support services and approach that I have described above, in a package that meets business requirements and fits your budget.
Is “The Cloud” the key?
The big technology questions to consider right now centre on what type of platform to use as much as which specific system. Buying a complete software application to run on hardware sited on your premises or facilities is probably still the most popular choice (certainly for larger companies). However as we have been highlighting over the past couple of years “Cloud” based ERP systems are now a genuinely competitive choice.
Cloud ERP may be offered as a complete service for which you pay a monthly fee per user or in a format where you still purchase a standard application but it’s then run on your behalf in the Cloud and you access the application via the web.
The Cloud offers tremendous flexibility because you can add or remove capacity very quickly, and it may offer financial benefits because there is no capital outlay. Some providers claim that Cloud ERP is a cheaper option in an absolute sense too. I remain to be convinced about that because it is hard to compare like with like. To me the most important factor remains that the technology element of your ERP project won’t be the biggest area of focus or cost anyway.
For those of our clients who have seen their projects through to the end and recognised the need to take a People, Process and Technology perspective (whether by accident or design) the results have been excellent. Improvements in the ability of the business to focus on the needs of specific customer groups, faster through-put of orders, and an ability to deal with many more transactions are just some of the benefits.
But it isn’t easy. Expect an implementation to take more management time than you thought, expect there to be lots of non-technical implementation costs from suppliers, and expect resistance from staff and stakeholders as you go along.
If you are thinking about adopting ERP and want to test the robustness of your plan or your current project isn’t moving forward quite as well as expected, then the National B2B Centre could help. We have independent consultants who can make an objective review, offer unbiased advice and, if necessary, roll their sleeves up and make things happen.
Call me on 02476 620158 or email email@example.com today to discuss your requirements.