How do you measure success in ERP implementations?
Simply surviving an implementation and going live on your new solution is not enough. A true ERP implementation success means that all objectives originally defined in the scope of the project were met and exceeded.
Measuring success can be fairly objective, and in many cases opinionated. In this article, we’ll look at some of the factors we at Visual South consider to be ERP implementation success factors. While this isn’t a complete list, these are the five most common factors we come across.
1. You align your timeline and budget
On time and on budget really have very little to do with the overall success of an implementation; it’s more about correctly assessing the time you need with the budget you have. Finishing on time does not necessarily mean it was done right.
Every company has a different budget, so if you were limited by a minimal budget, it’s possible corners were cut, or proper training and process development was left out. By no means does this mean you won’t be successful though. Visual South has many customers who dedicated their internal resources and time to make implementation successful with a small budget. This is not easy to do when trying to run the business at the same time. It also means the timeline is longer than a typical ERP project. When you align your time with your budget to do every step of the implementation right, you are successful.
Don’t take any of this to mean timeline and budget aren’t important. The important takeaway here is that both the timeline and budget need to be realistic. Setting proper expectations for the team allows the team to accept the expectations and that increases the chances of meeting them.
2. Your inventory accuracy is at or near 100%
Inventory problems are one of the top reasons a lot of companies start looking for ERP solutions. This is typically more of an issue with process than software. Any good, modern ERP solution will have the tools necessary to maintain accurate inventory – from robust material planning or advanced planning and scheduling functionality, to easy-to-use inventory transaction recording.
However, the best software in the industry will be useless without a foundation of clearly defined procedures, along with automated checks and balances (workflows) to validate those processes regularly, and you’ll still struggle to maintain inventory accuracy. ERP implementation success is a newfound confidence that what the system is telling you is on hand, is actually on hand. You no longer need to walk out to the shop to ask someone if a certain item is in inventory – or actually looking for it yourself.
The important take-away here is that software – on its own – doesn’t solve issues. Software is a tool; and how well that tool is integrated into your processes and procedures determines the success of the project. Companies achieved inventory accuracy before computers and ERP software. Computers and ERP software make it easier for companies to maintain accurate inventory; they don’t create accurate inventory. ERP doesn’t need inventory locked down to function; but you may determine your processes and procedures require it.
3. You have one system of record
Spreadsheets! Everyone loves their spreadsheets. You can create some fancy pivot tables and charts, you can do all kinds of mad formulas for your status meetings, and you can even link multiple spreadsheets together and perform some wild VLOOKUPs. And if you’re a finance aficionado, you might turn green if someone tried to take your spreadsheets away!
But spreadsheets are not always a good thing. For one, they are silos of information that usually only one person is in control of. The data is manually inputted, so there’s also the risk of typos (to say nothing of the time involved to manually enter the data). And a spreadsheet is very specific to the person who created it, which means if someone else comes along, they won’t know what to do to keep it living – so they create their own. There are folders and folders full of spreadsheets that are not centrally controlled. Sure, this can work in small environments, but it usually becomes unmanageable once the business grows.
Everyone we work with understands the downsides of spreadsheets. So why does everyone use them? First, most people understand how spreadsheets work. They understand the tool, so they apply that tool to business problems they are dealing with. Second, even with all the problems, using a spreadsheet is better than the alternatives. The lesser of all evils, if you will.
Successful ERP implementations provide a single system of record for all of your critical data. This means information is automatically tabulated, with easy access to extract that information from one solution. You can still use spreadsheets to view, chart, and pivot your data (although a good ERP system such as Infor CloudSuite Industrial will even export into a pivot format), but the difference is that the data is now coming from a single source of information into your spreadsheet, not manually entered and maintained.
Keep this in mind: Spreadsheets were used extensively because it was a tool the employees understood. You want better results, so you bought a better tool (ERP). For that tool to become a “go-to” solution, employees need to be comfortable using that tool. That’s where training comes in.
Other examples of disparate systems that can be brought into a single system of record would be solutions such as CRM, Quality Assurance, Time and Attendance, Human Resources, etc. Having a modern ERP solution that incorporates all of these normally third-party solutions into a single, robust solution would be a clear sign of a successful implementation.
4. No more overtime!
Overtime is usually a product of too much work and too little time, right? It’s simple math. We have 10 hours of work to do, but only 8 hours to do it in. The easy solution is to have some folks in the “bottleneck” areas work 10 hours a day. Problem solved – or is it?
I like to use an example from a case study on ERP implementation success—one of my first implementations many years back with a very large sheet metal shop. Prior to implementation, they worked a lot of overtime to keep up with demand. They believed their bottleneck was the stamping department, since that seemed to be where most of the materials were piling up. Their solution was to buy a state of the art, automated shearing and laser cutting machine. To everyone’s dismay, this did not improve throughput at all as it only shined a light on the next bottleneck in the process that could not keep up with the speed of the new laser cutter.
Once we implemented their new ERP system, we had a much better way to identify what the bottlenecks really were. Hint – it wasn’t the laser cutters after all. And even better, we could use “what-if” scheduling scenarios to determine if running 10 hours a day in a certain area would truly improve output. In many cases, capacity wasn’t the metal shop’s bottleneck at all. Material availability was the culprit, which no amount of overtime could fix. A proper planning process was the solution.
In short, it’s very likely that some, if not all overtime may be completely unnecessary. Gaining the ability to see effects of adding overtime is one of the common ERP implementation success factors.
5. You make promises you can keep
One of the most difficult positions in an organization is the customer service representative (CSR). Every promise they make to a customer turns into an often-futile exercise of trying to keep that promise. Most CSRs truly see a broken promise as a personal failure on their part, even if the ultimate reasons for it were beyond their control.
Providing customer service with the ability to easily and quickly get the information that will allow them to give or keep a promise to a customer is a big part of a successful ERP implementation. Everything in the manufacturing process development is geared toward providing accurate data for the production and planning schedule, which allows the CSR to simply click a button to determine if dates and quantities for a product can be met. And if not, when can they be?
If I could choose only one characteristic of a successful ERP implementation, this would be it. The ability to keep a promise to a customer means that just about every other facet of the manufacturing process is a success.
ERP implementation success is a long-term goal!
True ERP implementation success should be measured in years, not days, weeks, or months. Anyone can be successful immediately after going live on a new solution. The true measure is how well the processes hold up over the years, and how well they withstand inevitable changes, such as employee turnover, business expansion and mergers, and other potentially unsettling events.
Ensuring the success of your investment in a new ERP solution starts with understanding what NOT to do also! See my other blog post that explains the common characteristics of an ERP implementation failure, so you can improve your odds of success.