Nine pitfalls to avoid in an ERP transformation program
- Posted on June 28, 2022
- Estimated reading time 3 minutes
Many companies treat their ERP transformation as a technology project instead of what it truly is: a massive program akin to surgery on the central nervous system of your organization. The journey is riddled with pitfalls that can undermine your timeline (at best) and potentially threaten your ability to remain relevant in your industry. Make sure you understand the most common mistakes and why they’re problematic. Here are nine to consider:
1. Lack of clear and committed executive stakeholder sponsorship. You’ll be impacting how most people in the company manage their day-to-day responsibilities, and IT alone cannot drive this change. Executives from the business must make the big decisions about the direction of the business processes and solutions.
2. Lack of effective project management methodology. Without a comprehensive structure and execution roadmap for these large programs, they are difficult to see, understand, and control. And your organization can’t measure progress against plan. A trusted partner is key here, and a cloud platform such as Microsoft Azure for DevOps with Power BI dashboards will give you an executive view with the ability to drill down to the most minute detail.
3. Poor governance and issue escalation. At its core, the critical path for any ERP digital transformation is decision-making. Technology will do exactly what it’s told, but before that can happen, stakeholders must agree how a business process will work and a solution is configured – complicated by multiple user groups on a variety of applications. Because executive leadership can’t participate in every decision, strong governance will dictate delegation to those directly involved with the project and an escalation process if tie-breaking votes are required.
4. Ineffective change management program. Communicate to the entire business what’s happening and why it’s important. One of the biggest risks to these programs is that top executives believe that adoption can be mandated; however, if the right communications and training are in place to help your employees understand and get excited about these new ways of working, mandates (destined to fail, by the way) won’t be necessary.
5. Attempts to recreate the old system. Otherwise known as paving the cow path. The user community’s understanding of the new platform’s potential is paramount. At Avanade, we see users and business process owners who can’t look beyond their current legacy capabilities. They want what they have, which is completely contrary to the value of these transformations.
6. Conflicts between user departments. Often these programs are anchored in legacy platform consolidations of multiple user communities on different outdated applications. They all want to pave their cow paths, but they’re on different cow paths! We recommend that our clients find the best practice across the business units and implement it.
7. Inappropriate business resource levels. The most challenging part for many of our clients is that they need to take the best and brightest middle layer of leadership and put them full time on the project. Yet, this commitment will pay dividends. These people, who are intimate with the day-to-day details of business processes and understand the enterprise vision, must be incorporated at the right level of authority directly on the project teams for the program to be successful.
8. Failure to redesign business processes. The essence of an ERP transformation is a business process overhaul, and everyone in the organization must understand that. The business case should be fundamentally rooted in creating more efficient processes for direct business impact. Essential here is a systems integrator with the assets, tools, and methods to drive this change.
9. Failure to manage scope creep. Your business case is your value compass. The user community gets a shot at these programs once every 10 years, so they want everything up front. But just because they like a feature doesn’t mean it will produce business value. Any change in scope should trigger a revision to the business case, and if that can’t be justified, it should be rejected.
With the right leadership, resources, project management methodologies, and communication, your ERP digital transformation will reach its full potential: a driver of operational agility, producer of meaningful insights, and enabler of strategic growth initiatives.