When deciding whether to move ahead with an ERP project, a CFO should enlist the support of the company’s executives and assess the potential project from business, technical and organizational angles, according to an ERP consultant.
One key to success for a CFO when planning an enterprise resource planning, or ERP, project is to make sure the project has buy-in from the executives in the company — especially the chief executive officer, said Chris Wojciak, senior consultant at Panorama Consulting Solutions in Denver.
“You’ve got to have support, and you’ve got to understand the organization behind you that is spending those dollars,” he said. “The project’s never going to win, and you’ll really be up the creek, if you don’t have that buy-in — really making sure that the executives in the company are aligned. It’s a top-down thing usually. If your boss isn’t doing it, then you’re not going to do it.”
When helping a company decide whether to move ahead with an ERP implementation, Panorama generally uses three assessments: the business case, a technical assessment and organizational readiness.
With a business-case assessment, the consultant breaks out all the costs and expected benefits, based on its experience with other ERP implementations.
“You come up with that payback; where are you going to see a savings. If you used to have to walk a piece of paper across the building to get finance’s approval, you might spend 10 hours walking back and forth in a month,” he said. If the new ERP automates that process, then the business case analysis quantifies the savings.
For a typical ERP implementation, the goal is roughly 30 percent of the payback of the project cost is expected in the first year, 60 percent within the first two years and 100 percent of the project’s cost paid back within three years, Wojciak said. Within 18 months, typically, the full benefits of the new ERP are realized.
The technical assessment looks at whether the company can handle an ERP with what it has, or does it need to upgrade its hardware and network capabilities first. The organizational readiness assessment looks at whether the employees at the company are happy with the current setup or there is an appetite for changing it.
“At the root of all these projects is the people, and if the people aren’t into it, then it’s going to fail,” he said.
Pain, or unhappiness with current systems, is one factor that creates employee enthusiasm for change. One of the most common pain points is disparate systems, where the employees are trying to manage information in several different places — such as with multiple spreadsheets — and frequently struggling with questions about which source has the most up-to-date and accurate information. Disparate systems also cause communication issues.
Wojciak said that all of the companies he has worked with on ERP projects use on-premise ERP systems, not cloud-based solutions, probably because they are sensitive about security and the data is so critical to their success. “If you have an ERP system, man, that’s important data. That’s your company’s lifeblood. It’s hard for people to let that go out.”
Once a company or organization has decided to move ahead with an ERP installation, sometimes the software vendor will do the installation, but more often it is a technical VAR, or value added reseller. The VAR usually offer ongoing maintenance services, which includes installing software upgrades and patches and providing a help-desk function to the client company, Wojciak said.
Several ERP software companies have come out with interesting iterations lately, he said. Oracle’s JD Edwards software has an innovative graphical user interface that is laid out by process flow in a map, where the user can click and drill in to see the steps, instead of the more typical Windows folder setup.
Infor has a “cool centralized tool for collaboration” similar to a Facebook interface where users can post documents and comments, and the history of who looked at it and what they posted is readily accessible, Wojciak said. Other ERP software makers have or plan to have similar tools, including Epicor 10, which is due to be released in early 2014, he said.
Microsoft Dynamics has an excellent task-recording tool that is very useful for training, Wojciak said. The tool captures every mouse-click, scrolling, selections and other actions of the user, and then produces a Word document with the step-by-step procedures of what the user just did.
Training on or standardizing use for an ERP system across an organization is a major challenge, and the advantage of having a document of procedures created by someone who is knowledgeable on the system, as opposed to a training video, is that the user can skip directly to the step he or she is unsure of, Wojciak said.