With the start of the new year, many of us are trying to figure out how to make our businesses better and more efficient. For some, implementing a new ERP system may come into play. Having faced the terrifying process of implementing a new ERP system four times in my career, I was recently asked by a friendly competitor to share my advice.
1. If it is not working now, a new system will not fix it. Don’t delay tackling problems because you plan on getting a new ERP system and expect it to take care of things. ERP systems are based on logic. If the logic in your current procedures is broken, no system will be able to fix it. You need to solve the problem before any system gets installed.
2. Operations must own the planning and implementation. This may be a problem associated with medium-and large-sized companies with sizable IT departments. The temptation is to think of ERP implementation as an IT project, when in reality it is one of the most important operations projects your company will ever undertake.
3. Walk before you run, or “keep it simple, stupid.” There will be the temptation to get very granular as you set up your customer types and product categories. At my company, we initially set up 27 different types of customer codes because we thought it would be helpful to know all the different types of customers we had. The practical reality is that our people primarily choose four to five customer types when setting up accounts; 27 options was just confusing.
4. When in doubt, go with how the ERP system tells you to do things. Every ERP implementation, except my first time, ended up being extremely painful. Why? Because our operators insisted that they needed custom programing to make the system work for them. Usually, it meant they wanted it to look more like their old system. When it came time for up-grades or programming changes, these customizations were the source of nightmares, costing us millions of dollars. Why was my first implementation less painful? Our company was small, and we did not have the money for customizations. We changed all of our procedures to match how the ERP system was designed. It was the best decision we could have made.
5. Concentrate on the customer experience, rather than the cool reports management will receive. It’s no secret that ProBuild spent more than $300 million to custom design its own ERP system, ProEdge, based on the Oracle platform. It took more than seven years to create a horrible product that ultimately caused the demise of the company. One of its biggest flaws: It took something like 10 screen changes to ring up a customer who wanted to buy a 20-cent screw. The whole system was designed from the top down. While it was thought it would give us a competitive edge, it never was designed from the customer’s viewpoint.
6. You can’t conduct enough advance training. People will complain, and your best salespeople will tell you that they do not have time to go to training. Do not allow them to skip training. In fact, double or triple the amount you train before rollout. It is the one time you have to pull people aside and focus on the new ERP while it is new to everyone. Train, train some more, then train again.
7. Don’t disband the implementation team once you have rolled out the new system. Implementation is just the beginning. If you take all of your highly trained people and release them back to their old jobs, your ERP system will be coasting from that point forward. To make sure your company gets the most value from its technology investment, keep some people on the job or at least part of a team that continues to monitor, tweak, and expand your use of your ERP system.
8. The implementation is only the beginning. People implementing the ERP system we have used for six years ask me, “When does the pain stop?” Realistically, things get better during the second year, but you will be constantly challenged to use the system more and do a better job of it. When I came to Alexander Lumber, I was thrilled to see we already had implemented one of the industry’s best ERP systems. However, I noticed we hadn’t done much with it since the rollout. I called it our Lamborghini that we only took out of the garage on Sunday and drove 25 mph. I am happy to report we are now driving it every day and working on getting it up to at least 55 mph. Sammy Hagar might not be able to drive 55, but we are pretty sure we can.