Adoption of enterprise resource planning (ERP) software for manufacturers has become a necessity in today’s competitive market. However, many organizations make major investments in ERP systems only to find themselves asking, “Where’s my return on investment?”
The benefits of a properly implemented ERP system are well documented — but too often, complex integration, waning focus and lack of buy-in from key players results in lackluster results.
Getting the most out of your ERP system requires more than just choosing the right software. Here, we’ll outline several best practices related to the three main phases of an ERP’s ROI lifecycle to help you maximize results, along with factors to consider when selecting or upgrading your ERP.
Phase One of ERP Implementation
The first phase of the ROI lifecycle that manufacturers need to embrace is often the most difficult — paying for it. Once you’ve researched your options and, just as importantly, the vendors, you’ll make your initial investment and sign a purchase and service agreement. Early expenses include the license, software and hardware acquisition, contracted services, network integration and other costs associated with “going live.”
After making an initial investment in an ERP system, it’s easy for those not involved in the research and selection process to believe there should be some kind of “on switch” that produces instant results. However, it typically takes around three months to fully implement an ERP system when the right processes and planning are in place. Consequently, when the full scope of a project isn’t properly managed and implemented, it could take more than a year. Such an extensive implementation process can significantly delay ROI, not to mention diminish the enthusiasm of those who anticipated streamlined processes, improved visibility and cost savings.
What many companies fail to realize — and what many ERP providers fail to properly prepare them for — is that once a system is in place, the journey’s just begun. And, like any journey, it takes time to get to your destination (usually with a few bumps in the road and maybe a detour along the way). Identify a dedicated project leader with strong project management skills, and surround this person with a team that is eager to facilitate change, set expectations and keep things on schedule.
Phase Two of ERP Implementation
Admittedly, phase two needs to happen in cooperation and conjunction with phase one. Getting the most out of your ERP system relies just as much on users’ willingness to use the technology as it does on the technology’s capabilities itself.
This is where dedication to the process and complete buy-in from everyone is critical, especially company executives. This requires educating leadership about how ERP can transform a company, building consensus and setting expectations.
In addition to your project management team (who will solidify the vision before implementation and integration with existing systems), you’ll want internal champions who will help create a sense of anticipation. These key players will need to clearly articulate the benefits of the ERP implementation and create buy-in. Frequent communication about the project timeline early on will help prepare users for what’s ahead.
ERP training cannot be an afterthought. Once in place, users need to undergo thorough training and continual encouragement to fully leverage the ERP’s functionalities. It’s important, however, to not overwhelm users and to provide “just enough” training at the right times. Some employees will need more training than others, so be sure to include a training schedule as part of your implementation timeline to help users learn at an acceptable pace that doesn’t lead to frustration.
Phase Three of ERP Implementation
Ideally, in the third ERP implementation phase, you finally achieve enhanced organizational performance. Unfortunately, after spending significant dollars on implementing an ERP system, many manufacturers do little to improve or ensure its usage. Others simply focus on day-to-day tactical impacts that don’t fully leverage the system’s capabilities, and many fail to use the valuable data they receive to champion change, improve outcomes and strategize for the future.
Modern ERP software has pre-built workflows to automate processes, and you can set up custom dashboards for each department and unique users to maximize the system’s performance. Selecting one that’s easy to use and empowers users is critical when thinking about potential ROI and user adoption.
What manufacturers need to understand early on is that the implementation process is never “done.” If a vendor puts the greatest emphasis on choosing their product and getting it installed but fails to make training and ongoing optimization a main focus, it should be a red flag.
An ERP system needs to be treated like any other business asset that must be used properly to achieve desired outcomes. Like other assets, it can depreciate and requires preventative maintenance, updates and continual optimization. Choose a solutions provider that puts an emphasis on a long-term business partnership and will be there to support your organization as needed for years to come.
To learn more about this partnership approach that can help ensure ERP success, contact the specialists at Wipfli today.