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Avoiding ERP Implementation Disaster: Five Best Practices to Ensure Success for Your Portfolio Companies

Nov 27, 2017

View this article and others in the January/February 2018 issue of Middle Market Magazine, the official publication of the Association for Corporate Growth.

When the topic of ERP (enterprise resource planning) implementation comes up among private equity firms, you’re sure to hear a host of horror stories. More often than not, things go badly and become costly, delaying and/or reducing the expected benefits. The more companies in the portfolio and acquisitions pursued, the greater the challenges.

Yet ERP implementation doesn’t have to be problematic or painful. In fact, for private equity firms, standardizing to a modern, cloud-based platform across all portfolio companies is an extremely savvy move—one that can yield value and drive profitability right away, not just at some point in the future.

Following are five best practices for avoiding disaster and ensuring a successful ERP implementation:

  1. Appoint and empower a portfolio CIO and make the entire portfolio implementation a priority. The most successful private equity firms start with a profound commitment to ensuring that all business units and acquisitions get on the same standardized platform and limit customization. This requires vision and decisiveness, but it also involves persistent change management to prevent the “people factor” from derailing the initiative.
  2. Identify an all-in-one business solution that’s easily expandable. Using a system that doesn’t already have the modules you might need—CRM or e-commerce, for example—will ultimately require adding disparate systems and essentially put you back where you started. By contrast, the right solution will already have all the components needed:  NetSuite® or Microsoft Dynamics 365, for example. Both solutions allow you to add users, modules, and processes to further expand the platform as you grow and your needs evolve.
  3. Identify an end-to-end standard solution up front. The goal is to consider all the features needed and “bake in” all those possibilities up front. Then you can weigh each business against the overall solution and adapt it for each unit by simply deleting what’s not needed, versus customizing and adding from scratch each time an organization is rolled up.
  4. Tie implementation to the diligence phase. After creating the platform, plan implementation in the diligence stage of acquisitions. Firms that do so gain visibility into the various business data of target organizations immediately—not two years from now—and quickly roll them up to better understand performance in the interim stage, well before the finished ERP implementation. “Consider what you want to get out of the old systems and how it might mirror your new system,” explains Michael Vaccarella, managing director, Wipfli transaction advisory services. “Beyond doing financial and tax diligence on the target, you’re setting up the first 180 days after close for systems integration.”
  5. Adopt standard, cloud-based platforms for greater automation and reduced IT overhead. For many, the strategy of the future is to keep IT overhead light and reduce the number of FTEs required. Successful firms have identified the value of relying on consultants in the short term, fully knowing that the new cloud-based, scalable solutions will allow them to run even leaner in IT going forward.


Jason Muhlstein
National Regions Leader
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