Top 6 Factors for ERP Success

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PeopleSoft Ohio Regional Users Group: Top Six Factors for ERP Success Presented by: Ocie Anderson March 17, 2016

Transcript of Top 6 Factors for ERP Success

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PeopleSoft Ohio Regional Users Group:

Top Six Factors for ERP SuccessPresented by: Ocie Anderson

March 17, 2016

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Background

Ocie AndersonDirector of Consulting Services

Navigator Management Partners

• Reside in Atlanta, GA

• Education:– Georgia Tech: BS Industrial Engineering ‘96– Purdue University: MS Industrial Engineering ‘00

• Experience:– 18+ Years in Supply Chain and ERP– PMI: Project Management Professional– Prosci® Certified Change Practitioner– APICS: Certified Supply Chain Professional

• Employment History:– General Motors/Delphi Automotive Systems– Arthur Andersen LLP– IBM Business Consulting Services– Deloitte Consulting LLP– Navigator Management Partners LLC (current)

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Top 6 Factors for ERP Success• Many people focus on the technical aspects of a project

‒ too much scope‒ not enough time‒ too few resources‒ poor quality‒ high risks‒ extensive customizations‒ poor testing and training

• While these things require our attention, I would like to explore the root causes of these problems on ERP projects.

• E.g.: Customizations ‒ should be viewed through the lens of business value ‒ some provide efficiency or competitive edge‒ should be included in the scope and have adequate resources allocated ‒ prolific or extensive customizations occur when there is no clear direction

for the team on how to define business value, or the business and solution requirements to attain them

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Top 6 Factors for ERP Success

1. Engaged Executive Sponsorship

2. Experienced Implementation Team

3. Aligning Scope and Expectations

4. Partner Collaboration

5. Unlocking Business Value

6. Leadership Through Change Management

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Engaged Executive Sponsorship

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Engaged Executive Sponsorship

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Engaged Executive SponsorshipSet the Tone and Vision for Project Success

It is important for a sponsor to communicate why a project is important and to do so in a manner that arms the team with direction that they can use to make everyday decisions. A good sponsor will present a clear vision for the project.

“We will identify opportunities to improve our processes, eliminate waste, and become more efficient in our supply chain processes.”

“We will transform our business through major improvements in people, process, and technology that provide us with world-class capabilities and

improve our process maturity.”

“We will move quickly from our legacy systems by implementing industry standard processes and tools while maintaining our competitive

advantages in order to avoid a catastrophic legacy outage.”

Vision will arm the team that is trying to decide details such as how much scope to include in the project such as: new applications or modules, process change, customizations, and organizational transformation.

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Engaged Executive SponsorshipDevelop Realistic Scope and Expectations

If success is defined as the attainment of something desired, then it’s important to fully define what that “something” is, otherwise, you might attain something else!

The same project can be viewed as both a success and a failure by two different stakeholders if the proper and consistent expectations of what the project will provide is not set.

Expectations are the business capabilities that stakeholders expect to have at the end of the project that they do not have currently. They must be analyzed for viability, confirmed as part of the project scope, and communicated to the team for implementation.

• What processes will be in scope? • What new functionality is expected? • What other enabling technologies are needed?

The answers to these questions are vastly different on a transformation project than they are on a technical upgrade project and can make the difference in the approach taken by the team.

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Engaged Executive SponsorshipCommunicate with and Empower the Team at All Levels

An engaged sponsor will talk to everyone on the project team as frequently as possible. The sponsor will communicate the vision, and set boundaries for scope and expectations. The sponsor will also talk to the team about how they are doing and their perception of how the project is going.

• What concerns do they have? • What is keeping them up at night? • What problems aren’t getting resolved?

Engaging with the team in this way is the best way to get a true pulse of how the project is proceeding.

The complexity of an ERP project requires hundreds of decisions to be made that change how the business will operate. A sponsor cannot make all of these decisions, they can only provide the scope and direction. The team needs to hear from the sponsor that they are empowered to change how business is done.

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Engaged Executive SponsorshipBe Accountable for the Project and Team Success

• An engaged sponsor is accountable and is answerable for the project success, for achieving the projected savings, and for providing opportunity for the professional success of the team members.

• To achieve this the sponsor must communicate and know what the trajectory of a project is. It is also the responsibility of the sponsor to ensure performance is measured in order to document improvements.

Accountability to the professional success of the team members is also critical. An ERP project often takes people out of their full-time roles for the duration of the project. These team members must be provided with an understanding of what is to come after the project is completed.

• At the end of an ERP project, these team members often know more about how the business operates than anyone else! How valuable a commodity is that?

• An engaged sponsor will provide these employees with opportunities to shine and take on new and rewarding challenges after the project.

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Experienced Implementation Team

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Experienced Implementation Team

“Who would you rather have to define how your business will run for the next decade?”

1. Someone who has operational knowledge of your business based on years of experience succeeding and excelling in what they do; the best that the business has to offer.

2. Someone new to your business who is not as knowledgeable, or whose performance has not met expectations; someone that the business can “spare to lose” for a period of time.

In these terms it may appear to be an obvious choice. But these are real issues that companies and organizations grapple with when staffing an ERP project. When making these decisions it’s important to consider the following:

• Running the business in the short term is tactical• Designing the business processes for the future is strategic

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Engaged Executive SponsorshipHow do you secure the best internal team members?

1. Plan. Provide the business with as much lead time as possible to allow them to source, back-fill, and train replacements.

2. Communicate. Change management methodologies tell us of the importance of communicating the strategic importance of ERP projects, their alignment to overall company strategy, and the critical nature of project execution. What we are doing is not as important as why we are doing it.

3. Acknowledge. Be understanding to the business. Acknowledge the potential impact to efficiency and performance as a risk and engage in risk mitigation strategies. Provide additional resources to the business to enable risk mitigation.

4. Engage. Make decisions that will help the business operate and minimize outside impacts. The organization may experience inefficiencies but steps should be made so that customers are not affected. Hiring extra staff or carrying additional inventory are ways to minimize the impacts of inefficiency.

5. Support. Resources on an ERP project will need support and understanding of how time spent on the project and away from their jobs will impact their personal career goals. If the project is perceived to be of real strategic importance to the company, the best resources will desire to be a part of it.

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Engaged Executive SponsorshipWhat about the external team members (aka the consultants)?

Another challenge that many clients face is how to determine that external team members have the necessary experience for project success.

• Interviewing potential consultants is a practice that is not always done. When practical, I highly recommend that clients interview potential resources. For critical roles on the project they should interview multiple qualified individuals and choose the best resource.

• For large projects, the number of consultants and the deep technical skills they bring may be a challenge if the client does not have the time or the technical knowledge to properly interview them. Here are some simple questions to ask of your consulting partners regardless of your ability to properly interview them:

‒ Which of the people that we have met will actually be on the team?‒ What does each person bring to the project?‒ Do your leads have a good mix of industry, solution, and process expertise? ‒ Are they experienced facilitators? ‒ Do the project team members complement the strengths of their leads?

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Experienced Implementation TeamThe best ERP project teams are made up of the best of the best project leads and experienced project team members who understand the business, the industry, the processes, and solution design. Together, these teams will bring the best practice methodologies, business processes, and creative solutions for the industry that is tailored to the unique requirements of the business.

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Aligning Scope and Expectations

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Aligning Scope and Expectations

“If you complete the scope of work within the constraints of time, cost, and resources with

high quality, how is that not success?”The statement of work or the scope statement forms the definition of an ERP project. We ask a lot of questions when developing the scope of an ERP project:

• What processes are in scope? Which modules will be implemented?• How many custom reports, interfaces, conversions, enhancements are required?• How many users are there? How many locations?

Cost, time, quality, people, hardware, software, telecom…all are resources and constraints to consider when scoping an ERP project. However, there is an equally important aspect in between scope and success that must be aligned, and that is expectation. Expectation is a belief that something will happen or be the case in the future. It is similar to scope but requires different types of questions to be asked in order to determine what they are.

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Aligning Scope and Expectations

“Different stakeholders can know the same scope of work, see the same project outcomes,

and come to different conclusions as to whether or not a project was successful.”

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Aligning Scope and ExpectationsMitigating the impact of different expectations requires a different set of questions to be asked:

1. What does success look like to you? Not everyone is concerned with being on-time and on-budget (although some certainly are). Some stakeholders have needs for game-changing functionality that makes the business more competitive.

2. What will we be able to do that we couldn’t do before? When a company spends millions of dollars on a new ERP system, they expect to have new capabilities. Those expectations need to be discovered and aligned with the scope. In some cases, hiring new talent may also be required to achieve the capability.

3. What will we know that we didn’t know before? This question is similar to the capability question but is focused more on information. What are the business intelligence and analytics capabilities expected? What is the expected frequency and speed of information required? Real-time or periodic updates?

4. What is the expected timing for establishing new capabilities? There are several “gotchas” on ERP projects and one is timing. The new functionality may be implemented but it may be missing data in order to be used. Some functionality requires transaction data or historical data. In some cases this history can be converted but in others it doesn’t exist. Waiting for 6 months or a year before exercising new capabilities is not a success for a client that isn’t expecting to do so.

5. When scope changes, do expectations? This is another “gotcha” to be mindful of on ERP projects. You develop the scope, you discuss expectations, and then you realign the scope to meet the expectations. However sometimes scope changes. When scope changes, it is important to reset expectations and make it clear what will be gained or loss.

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Partner Collaboration

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Partner Collaboration

Everyone should be willing to do what it takes to make the project successful. Collaboration is about creating a team with a “get it done” attitude who will not resort to saying “That’s not my job”. I’ve identified three things that will foster the right environment for collaboration on ERP projects:

1. Strong leadership from willing implementation partners

2. Open lines of communication between implementation partners

3. Defined roles and responsibilities for implementation partners

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Partner Collaboration1. Strong leadership from willing implementation partners

“Leadership should be responsible for making sure that contractual obligations are in line with ERP success

and allow team members to focus on being successful.”

• Collaboration must be part of the culture of the implementation partners, driven by the leadership.

• Leadership must set the tone for collaboration. Whether it’s the customer, vendors, or consultants, the team needs to hear from their respective leadership that collaboration is expected.

• Disputes regarding contracts, statements of work, work product, etc. should be handled by the leadership amongst the leadership.

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Partner Collaboration2. Open lines of communication

“Establishing times when teams will communicate and using tools such as web meetings, video calls, and conference calls will minimize the disadvantages of

having global teams.”

Open communication means knowing understanding:• With whom we are communicating: who gets contacted for

which types of issues• How we are communicating: email, customer service call, direct

phone, PM tools• Process for escalation: when the process doesn’t yield results

how do we escalate

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Partner Collaboration3. Defined roles and responsibilities

“The best designs come from the collaboration of ERP partners with the customer, applying

their unique business requirements that provide a competitive advantage to proven best

practices and industry standards.”

The flip side of “That’s not my job” is team members should be careful of trying to take the lead in areas that should be led by others. Everyone should know what knowledge, skills, and abilities they bring to the table and play to their strengths, while being a willing helper in all areas where they can be helpful.

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Partner Collaboration3. Defined roles and responsibilities

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Unlocking Business Value

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Unlocking Business ValueValue on an ERP project comes from improving capabilities and becoming more efficient. Taking the time to define the areas where the business should focus will ensure that the right capabilities are implemented for a better impact to the business. These six steps provide a path for defining value and infusing value through in the implementation stages.

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Unlocking Business Value

Determine the Business Value Drivers:

• The first step to unlocking value in an ERP implementation is to understand what value

means to your business.

Set the Strategy and Direction:

• Set the strategy and direction by identifying the areas where you would like to improve the

business.

Determine the Business Requirements:

• Spend more time on the processes related to the Strategic Areas of Improvement, than on

all of your other processes.

Design Business Processes to meet the requirements:

• All processes are not equal. Don’t treat them as such.

Design and Build the Solution to the new processes:

• Where value attainment is concerned, if your process delivers true value, it will be worth the customization. If it does not, the customization

should be eliminated.

Implement and Train users to new processes and solution:

• If you want to unlock business value from ERP, you not only need the tools, you need the

people to use them properly.

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Leadership Through Change Management

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Leadership Through Change Management

“The secret to successful change lies beyond the visible and busy activities that surround change. Successful

change, at its core, is rooted in something much simpler: How to facilitate change with one person.” *

You cannot manage change at an organizational level until you know how to manage change with a single individual.

* ADKAR: A model for change in business, government and our community by Jeff Hiatt

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Leadership Through Change ManagementOrganizational Change Management (OCM) is a framework for managing the effects of changes in an organization. These changes can be related to new business processes, organizational structure, technology, or cultural changes.

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Leadership Through Change ManagementProsci® is a specific OCM framework that addresses the people side of change management through a set of processes and tools designed to move individuals through the stages of change defined as the ADKAR® model (Awareness, Desire, Knowledge, Ability, and Reinforcement).

Leadership through Organizational Change Management is the act of aligning OCM with executive sponsors to proactively lead their organizations through these stages of change. This puts Change Management on equal footing with Project Management as being critical to achieving and sustaining project success.

Successful execution of change management leads to business value by affecting the human factor of each individual involved in the change in the following ways:

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Leadership Through Change Management

Speed of Adoption

What is Expected

Project implementation plan = adoption plan

Phased roll out of system = phased adoption

What Actually Happens

Adoption is based on how quickly people get on board

There can be passive resistance or active

resistance

How Adoption Can Be

Improved

Through effective communication

Through sponsorship and coaching

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What is Expected

Implicitly assumed to be 100%

There may have been an analysis to estimate utilization

What Actually Happens

Some people “opt out” of new way

Can result in any breakdown of

ADKAR (Awareness, Desire,

Knowledge, Ability, and Reinforcement)

How Utilization Can Be

Improved

Through reinforcement of “Why”

Through resistance management

Leadership Through Change Management

Ultimate Utilization

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What is Expected

Assumed ongoing

improvement from the solution

Comes as a result of new processes, technology,

behaviors, etc.

What Actually Happens

Proficiency is determined by competence of each individual who is doing

their job a new way

How Proficiency Can Be Improved

Through effective training

and training reinforcement

Through resistance

management

Leadership Through Change Management

Proficiency

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Summary: Top 6 Factors for ERP Success

Setting the foundation for ERP Success

• Set the tone and vision for success• Develop realistic scope and expectations• Communicate with and empower the team• Be accountable for the project and team success

• Best of the best with knowledge of the business• Mix of process, industry, solution experience

• Define the project scope• Define expectations: what does success looks like• Revise expectations when scope changes

• Strong leadership from willing partners• Open lines of communication between partners• Defined roles and responsibilities for partners

• Determine the value drivers for the business• Identify improvement opportunities for value drivers• Focus resources on improvement opportunities

• Speed of Adoption• Ultimate Utilization• Proficiency

Engaged Executive Sponsorship

Experienced Implementation Team

Aligning Scope and Expectations

Partner Collaboration

Unlocking Business Value

Leadership Through Change Management

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Q&A.Ocie D. Anderson

[email protected]

www.navmp.com