Integrated Business Software Systems

Form a Project Team

As mentioned in the previous post, assembling a team with a manager is the first step in this discovery process. ERP systems touch all parts of a company and you’ll want team participation from each major area of the company. Select a team of people from key departments that work with the system day-to-day and who also have a good understanding of the business. From this group, select a project manager to drive the project. Ideally, this person knows the business, understands in general how the ERP system works, and can facilitate a project that will involve the project team for at least several months. If you don’t have someone in-house with those skills then bring in an outside consultant with experience selecting and implementing systems.

Define ERP Objectives

Discuss the objectives for the system with the project team. Properly implemented ERP systems should support your strategic plan and may include:

  • Hitting your sales and profit targets
  • Shipping product or delivering service to customers on time
  • Generating sufficient cash to grow your business
  • Provide the infrastructure necessary to grow your business and its value
  • Support compliance with external requirements like the need to trace serial numbers or lot numbers
  • Reduce the risks of upsetting customers by missed shipments or poor quality due to rushed production
  • Minimize the risk of ordering too much inventory

The project team should be charged with managing the project, while keeping top management up-to-date on its progress and apprised of any roadblocks they encounter.

In one of my ERP implementation projects, the president selected her team and appointed the CFO as the project manager. At the kickoff meeting she told the group that they had been selected because they represented the best from each part of the company and explained the objectives of the project along with how it fit with the company’s strategic plan. She asked to be kept informed of the progress of the project and of any roadblocks the team encountered and then left them to get started. It was one of the most complicated implementations I worked on and the team did one of the best jobs implementing the system that I have seen.

Define the Issues with the System

Next, gather the issues that you and the users have with the current system and drill down to causes. For example, missing shipments to customers can be caused by stocking the wrong inventory items. This in turn can cause lower sales and lower profit margins thereby impacting cash levels. Inventory turns that are lower than the averages for your industry can indicate poor forecasting, inaccurate physical counts, inaccurate bills of material and so on. Identifying the issues and causes can help define the costs and focus the efforts on the most important areas.

Identify the Costs Caused by the Issues

Each of the issues will have costs. It may be missed opportunities as with missed shipments. Or it may be reduced productivity resulting from the inefficiencies in how the staff is using the system. Whatever the issue, work to quantify the costs involved.

As soon as the project team has a clear idea of what the objectives and issues are, they should have a good foundation to continue on in the decision making process. The next post will cover which questions to ask  as you consider investing in improving your current ERP system  or looking for a new ERP solution.