ERP Strategy & Alignment Podcast – Part Two

DAN MITZENMACHER: Welcome back to part two of the ERP Rescue and Recovery Digital Journey Series. I am Dan Mitzenmacher, Managing Director of Digital Advisory Strategy and Transformation Services, and I'm rejoined by Jim Holman, Director of Strategy and Operations, as we continue our discussion about ERP implementations and rescue and recovery.

DAN MITZENMACHER: Last time we talked about some of the key indicators of troubled projects and signs of a project heading south. This time we'll talk about ERP strategy and alignment as well as stakeholder management and change management aspects of a project.

JIM HOLMAN: Last time we discussed key indicators of troubled projects and some signs of issues on ERP projects. Today we'll unpack initial ERP strategy and alignment concepts and talk about how to prepare for an ERP project.

JIM HOLMAN: The organizations we work with, most of the time when they're looking for new ERPs, are in an area of rapid change—whether it's by acquisition, organic growth, or new investment. When putting their strategy together, they should not look within a single entity. They need to look across their organization—not just where they are but where they're going.

JIM HOLMAN: The roadmap looks at your ultimate destination, which may be some period of time in the future. You're not implementing a solution that's only going to work at six months post go-live; you're planning ahead.

JIM HOLMAN: Another area is the multi-entity approach: what is your current inventory? It's not necessary or practical for organizations to wholesale replace every piece of software they're running. If you're growing by acquisition, a smaller, more recent acquisition may be using a best-of-breed solution that is worthy of consideration.

JIM HOLMAN: You need to understand what you currently have and what your licensing position is. We've run across projects where clients were behind on licenses or had licenses lapse, and while they thought a platform was acceptable, it turned out they couldn't actually use that solution.

DAN MITZENMACHER: Are there any risk mitigation strategies organizations should play as they look for a new ERP?

JIM HOLMAN: Yes. From a risk mitigation standpoint, it's about preparing the organization—both having the right people to support the project and the long-term life of the ERP, and having your data ready. You're likely moving systems, and data readiness for migration can start upfront in the project lifecycle. So key areas up front are having your people and your data ready to kick off a project.

DAN MITZENMACHER: The ERP project is in it for the long game. What are some best practices to ensure an ERP system remains strategic for clients long term?

JIM HOLMAN: The expense and disruption for an ERP implementation, when it goes well, is significant. It's a major investment in human capital, physical capital, and intellectual property. The best way to maintain that investment is to receive and apply regular system updates and provide required maintenance.

JIM HOLMAN: We still see a portion of ERPs in the upper mid-market and public sector that are either on-premise or in a private cloud, which means organizations must be responsible for keeping those systems up to date.

JIM HOLMAN: Even in organizations with low turnover, make sure users are trained through a proper curriculum from the provider as well as industry best practices. What we often find is users are trained by other users, who were trained by other users, and that leads to significant drift from how the software was implemented, which decreases process efficiency.

JIM HOLMAN: When organizations ask if they're finally done with the ERP implementation, the answer is you're never finished unless your business stops changing. You must constantly review and realign with why you implemented the system and whether you are keeping up with training, support, and the feature roadmap. New platforms constantly bring out new features, and without continued investment in knowledge, you'll fall behind.

DAN MITZENMACHER: I'll go back to the people portion. Building capabilities in-house—understanding your process and how ERP technology enables that process—is vital to maintaining this strategic asset. ERP must be a business-led project. While configuration and maintenance are essential, the business should own the ERP and build the skill set to support optimization of the technology and business processes.

DAN MITZENMACHER: What advice do you give clients about defining and documenting their organization structure and key business processes before embarking on an ERP project?

JIM HOLMAN: Process mapping, discovery, and analysis lead to thousands of potential requirements. We don't want organizations to get bogged down in minutiae—like every detail of how to process a journal entry. That level of detail can determine project success or failure, but you need enough analysis to focus the organization on key elements that truly matter for platform selection.

JIM HOLMAN: Clients often get wrapped around an immaterial feature or piece of eye candy. Next, look at how data flows and integrations move between systems. It's likely you will not replace every piece of software, so you'll have in-place solutions—human capital management, sales and marketing automation, or CRM systems that remain. You must know where the system of record is and which system owns which data going into the project because vendors need clear instructions.

DAN MITZENMACHER: What roles and responsibilities should be established to set an organization up for success?

DAN MITZENMACHER: People are critical. Upfront, have the organization structure around the project, both with project management and with key subject matter experts representing critical business process areas. Finally, have an executive steering committee that is empowered to make decisions, accountable for project success, and provides leadership on strategic vision and direction.

DAN MITZENMACHER: Define roles and responsibilities clearly and identify the right resources to lead each area.

DAN MITZENMACHER: Let's talk more about change management and stakeholder engagement. Jim, how do you help clients communicate ERP benefits to stakeholders to ensure buy-in and minimize resistance?

JIM HOLMAN: We're always going to move someone's cheese in this process. There will be pride of ownership and areas where people don't realize things are removable until you start. We strive for consensus; that doesn't mean everyone gets every feature they want, but it means a targeted communication plan.

JIM HOLMAN: When the C-suite decides to invest in a new ERP platform, don't keep that within the C-suite. Communicate early and transparently about the decision and the benefits for the organization. If communicated early and sincerely, most key stakeholders are willing to make sacrifices for the greater good. If stakeholders are ambushed with short notice, there will be much more objection.

JIM HOLMAN: While there will be pain, there is net gain—often in areas such as visualization, data and analytics, forecasting, and planning. If you're coming from a manual environment, it's sometimes hard to sell the benefit to someone who has been doing it on pen and paper or in Excel. You need to explain that the systematic tool will help them do their job and help subordinates manage work when they're on vacation.

DAN MITZENMACHER: Is it important to engage stakeholders throughout the process, and how do you keep everyone on the train?

JIM HOLMAN: Stakeholders should be engaged from kickoff so they understand the timeline, strategy, vision, and reasons for the project. During design, configuration, and build phases—when decisions are being made—stakeholders should feel knowledge and ownership of those decisions. Engagement is most critical in the rollout phase, when work processes are highly impacted. Engagement at each project phase is incredibly important to successful implementation.

DAN MITZENMACHER: Jim, what role does executive sponsorship play in ERP success, and how do you advise clients to ensure sustained leadership support through the project lifecycle?

JIM HOLMAN: Coming from a place like Cherry Bekaert, where historically our relationship is through the CFO, we've found it's healthier for clients to have broader connections across senior leadership. Not all C-suite members have the same goals and objectives, so work with clients to clarify what's important to each C-suite member, what their objectives are, and how they are measured.

JIM HOLMAN: Finance and accounting no longer solely drive ERP selection while operations choose another part. Selection tends to be a collective organizational decision. Understand top-level business goals and how C-suite members can support those goals with their contributions.

JIM HOLMAN: Resourcing is critical. Different project phases require different levels of lift, and top leadership must ensure that individuals below them have enough time to do their day job and work on the implementation. For some individuals, that could be 20 to 30 hours a week in addition to their day job.

DAN MITZENMACHER: Communicating priorities and importance is crucial for getting the right people on board. Organizational leaders play a key role by communicating the vision and priorities and balancing resource allocation to support the project.

DAN MITZENMACHER: Jim, what strategies foster a culture of continuous learning and improvement during an ERP implementation?

JIM HOLMAN: Since the advent of cloud ERP, there's a mandate to subscribe to the ERP providers' learning channels. Organizations that make training continuous beyond go-live and leverage official training and certification content from ERP providers do well.

JIM HOLMAN: At contract renewal, some companies try to save money by dropping the learning channel or sandbox, and that's a mistake. Whether it's Microsoft, Oracle NetSuite, Infor, or Epicor, providers spend a lot to keep content online and up to date.

JIM HOLMAN: Gone are the days of buying textbooks and manuals. Users shouldn't learn solely from other users. Software solutions are configurable, and while we try to avoid customization in the modern cloud ERP world, users will have ideas for process improvements through user acceptance testing or post-live training. Provide a vehicle for users to make suggestions.

JIM HOLMAN: Many screens have context-sensitive help that enables users to learn about capabilities in the windows they use daily. Even users who aren't particularly computer savvy often have smartphones, so there are opportunities to improve learning continuously.

DAN MITZENMACHER: What's the best way to keep people motivated as they hit milestones and reach goals?

DAN MITZENMACHER: From a project team standpoint, make sure everyone is incented for the same goal: completing the project on time, on budget, and in scope, aligned with the project's vision and goals from the onset.

DAN MITZENMACHER: Also understand you can't complete everything in a first transformational go. There will be future phases for optimization. Use a parking lot for future improvements and prioritize them so you can address optimization efforts in another phase.

JIM HOLMAN: That approach helps sustain motivation and focus on long-term value.

DAN MITZENMACHER: Thanks again for today's discussion on ERP strategy and alignment, stakeholder buy-in, and change management. Stay tuned for part three, where we'll continue this ERP Rescue and Recovery series. Please reach out to Jim or me to discuss your ERP implementation project. Check us out at cb.com/digital for the most up-to-date content.

DAN MITZENMACHER: Thanks for tuning in to the Cherry Bekaert Digital Journey podcast. Be sure to like and subscribe to follow along.