Critical success factors in ERP System

How does one increase the likelihood of ERP success and ERP benefits realization? Many assume success or failure is the fault of the software you purchase, but in reality, 95% of a project's success or failure is in the hands of the company implementing the software, not the software vendor. Here are just a few ERP implementation critical success factors that we have seen:

1.       Focus on business processes and requirements first. Before reviewing how the new system performs business functions, organizations should not only review their current processes but define their ideal process. Current business processes may have been designed to fit a particular system; you may support the system but do nothing for your business needs. Once you have your future processes defined you can perform a fit/gap with the new software measuring against where you want to be rather than where you have been.

2.       Focus on achieving a healthy ERP ROI (Return on Investment), including post-implementation performance measurement. This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live. This is the only way to maximize the business benefits of ERP.

3.       Strong project management and resource commitment. At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring you have a strong project manager and your "A-players" from the business to support and participate in the project. Strong Project managers know the project inside and out, they always think beyond the scope of the project. They are able to think far ahead and map out potential risks.+ They create and seek opportunities (whether it is efficiency gains, increased team spirit, cost reduction) to improve themselves, the team, the project or the outcome.

4.       Commitment from company executives. Any project without support from it's top-management will fail. This is especially true with a program that affects the functional area of the organization. Top managers must not only offer moral support to ERP development, they must offer functional support through planning time for cross-functional development teams. Support from a CIO or IT Director is fine, but it's not enough. No matter how well-run a project is, problems arise (such as conflicting business needs), so the CEO and your entire C-level staff needs to be on board to drive some of these - Motivational incentives are often necessary to get employees in each department to accept changes in their work flows and job processes.

5.       Take time to plan up front. An ERP vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. Too often, companies jump right in to a project without validating the software vendor's understanding of business requirements or their project plan. The more time you spend ensuring these things are done right at the beginning of the project, the less time you'll spend fixing problems later on.

6.       Ensure adequate training and change management. Changing software means changing processes, procedures and even policy. Organizations willing to change are most successful with ERP implementations. Change must be accepted and communicated from the top of the organization to the bottom. So, ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

7.       Make sure you understand why you're implementing ERP. Similar to other prominent 21st century enterprise-wide business systems like customer relationship management (CRM) and supply chain management (SCM), ERP success begins with the establishing of clear objectives. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. Perhaps process improvement, organizational redesign, or targeted best-of-breed technology will meet your business objectives at a lower cost. By clearly understanding your business objectives and what you're trying to accomplish with an ERP system, you will be able to make a more appropriate decision on which route to take, which may or may not involve ERP.