The time taken to implement an ERP system is very difficult to judge in advance of knowing the details of the company to which it is to be implemented. There are many reasons for this. But here can be highlighted a single reason above others: the preparedness of the company for an ERP system.
By “preparedness”, for small companies this means how much of the existing knowledge and existing processes are formalised. Is the company using spread sheets to handle the work or is it purely based on telephone orders and pencil scribbles on customers’ drawings? Is there a part numbering system in place already? Is the company trying to implement several other business process objectives at the same time, for instance factory layout or new machinery?
All of the above can be included into the ERP project but it is necessary to be realistic about the overall amount of objectives that are trying to be met at the same time. If the company has good basic process, has a numbering system for parts and the managers have a good understanding of ERP concepts, then a small company system can be implemented in a matter of days. This case would only normally apply when the system is being changed from an older ERP system, not from a manual system.
On the other hand if there are several training and implementation objectives to be carried out at the same time, and management have limited time to spend on the ERP project then an implementation in a small company will typically take 2 to 4 months. Any longer than this means there is some project challenge that needs to be addressed to fix the excessive use of time.
In regard to this, the following describes two different project guides, one short form and one long form. The short form is centred on core process training and migration from ready spread sheets. The long form includes time for process analysis, revision and verification.
The objectives of taking an ERP system into use are normally the following:
- Improve customer services levels such as on-time delivery
- Reduction in administration costs
- Reduce inventory values
- Reduce work in progress
- Clarify production processes by moving to lean manufacturing
- Avoid reliance of data being stored in Excel under one person’s control
The objectives for the project should be identified before beginning the work. It will clarify to all involved the reason for the work and at the results of the project can be compared with the objectives to ascertain the success of the work.
The world of ERP systems is changing from monolithic systems that have purchased licenses and are installed on servers in the customer’s own premises. The change from these client/server technologies to cloud system is affecting the way projects are implemented and the type of systems that are being offered on the market.
|
Client/Server |
Cloud |
|
On-site installation |
In professional data centre |
|
System admin organised or done by customer |
System admin by vendor |
|
Monolithic systems |
Line of business applications centred on a financial hub |
|
Customisation normally needed |
Customisation usually avoided as the product is specific to one line of business |
The cloud model has evolved that vendors typically have a contract and billing period of 1 month and there is usually a 30 day free trial period. By focusing on the need for customers to on-board quickly, often with limited resources, the methodology has changed.
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Client/Server |
Cloud |
|
1. Detailed requirement specification 2. Vendor enquiry and cross check of specification 3. Short list selection 4. Detailed negotiations with each in the short list 5. Commitment to buy 6. Procurement and installation of servers and licenses 7. Customisation 8. Data migration and training 9. Go live |
1. General requirement specification 2. Determination of who are the suppliers in this financial system’s ecosystem. 3. Selection of front runner 4. Open account for trial 5. Migrate data 6. Train key user 7. Decide to go live or not 8. Commit by going live
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In short the model has changed from:
Evaluate – Commit – Implement – Roll out
to:
Implement – Evaluate – Commit by rolling out
This has significantly reduced the lost cost of a failed ERP project. The majority of lost cost of the project is in the work time of the person evaluating the systems, and generally they will have learnt a lot about their own business processes even during their lost evaluation time.
Regardless of the above, it is much more likely that the project will succeed if a minimum of key items are formally recognised and implemented.