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How to Lead an ERP/Accounting System Implementation

In my 28+ year career, I have seen countless ERP system implementations and accounting system implementations.

While some have been very successful and made a huge difference in the company, I have seen disasters.

Millions of dollars spent over budget.

Complete failure for the system implementation.

This is one of my “hot boxes” when I hear consulting clients, coaching participants, colleagues, and companies in my network considering new systems.

If you follow my steps on how to lead an ERP system selection process (included in this blog), then you will save thousands to millions of dollars depending on the size of your company.

The biggest disaster was with a company that did not follow any of the steps listed below. Their original budget of $8 million went to over $30 million, and if that wasn’t bad enough, they lost nearly half their revenue because of that bad system implementation.

Reasons For Selecting a New ERP System

Before I go into how to lead an ERP system selection process, let’s look at some reasons for selecting a new ERP system.  I will use the term ERP to include accounting systems as well (although they can be two different things). But they do have common challenges and I refer to them as one in this blog.

There are many reasons why you may be shopping for a new system.

Some reasons include:

  • Buying your first system
  • Outgrowing your current your system
  • Entering a different industry through growth or acquisition
  • Wanting better technology

The system selection process and system implementation process can be very expensive – thus tying up you cash flow. Learn about other ways to improve your cash flow. 

Download the 25 Ways to Improve Cash Flow

Mistakes Made During ERP System Selection Process

Over the years, I have seen or been involved with so many different systems being implemented. While I am not an implementation expert by any means, I have been involved with enough of them that I feel very strong about the right way to implement a system. When I have seen failed system implementations, they all have many common variables.

So, I came up with my list of “must haves” for a system implementation.

As a financial leader, you need to be spearheading the ERP selection process.  You want to make sure it is done right because it is well documented that a system implementation gone wrong can cost millions of dollars of over run and precious time.

11 Tips on Avoiding a Failed Implementation

Critical items that will spare you from a failed implementation:

  1. Do not set arbitrary dates for “Go Live”; be flexible
  2. A new system is NOT an I.T. project. This is a very common mistake made. Do not allow your I.T. Manager to serve as the project manager. They will have some involvement, but it must be measured.
  3. Go through a System Selection Process
  4. After you select a system, make sure the implementer blue prints your process and system, and you sign off on it
  5. Be open to changing how you operate/process; if you do not, then you will want the system to fit your process and this will cost you dearly in customization fees
  6. Have a designated Project Manager that represents your interest, not the software company’s
  7. Avoid customization; remember, you will pay up front for customization, and you will pay again when ever there is a update in version or technology because now you are stuck with a customized system
  8. Test the system, and process thoroughly in a sandbox environment; do not proceed until the system does what you want
  9. Consider running parallel old system and new systems for at least 1 or two closes
  10. Provide substantial training to your employees
  11. Be prepared to change your go live date

Go Through System Selection Process

There are many firms that do the system selection process for you.

They come in and evaluate your requirements for this system.

Then they narrow down the choices from dozens to a handful.

This not only helps the company not get overwhelmed by the number of choices, but it also helps the company find solutions they may not have known to look for. These system selection firms are experts in this field. If you want to do it right, then hire an outside firm.

It is worth every penny and will likely save you a lot of money in the future.

Assign a Project Manager for ERP Implementation

Because this is a huge undertaking, it cannot be managed by someone who…

a) does not represent your interest

b) is in your I.T. department

c) does not understand your operation and processes.

This can be someone for your organization, but you might have to hire someone from the outside.

Run a Blue Print / Test Before ERP Implementation

The Blue Print designed represents your operations and process, so you must fully understand it and sign off on it.

This is part of your contract for the new system.

Once you sign off on it, the burden is on you.

Test your new system in a sandbox environment. This testing can also be incorporated with training your staff. Making errors in the sandbox environment will not affect your business.

Errors post Go Live will affect your business.

Be Open to Change

While you are working with the system selection firm, you may not check everything off your list. While it’s tempting to just say customize it, it may be better (and less expensive) to change the way you do things to fit the system. When you customize these systems, you increase the chances of it breaking when there are updates, requiring more support, and being harder to adjust when you need it to.

By customizing your system, you are significantly increasing the cost of the implementation and future maintenance of the system.

Be open to change how you do things today and try to adapt to the system.

Provide Expensive Training

Now that you have invested in the system and started the actual implementation, you need to provide extensive (and expensive) training for your team BEFORE YOU GO LIVE.

The training should be on site, not remote.

They will always offer remote training because it is cheaper, but it is not the same as on site training.

The last thing that you want to run into is not investing in training and no one using the system.

This training will not be given in a couple hours; it will probably take weeks. Invest in it to get the greatest return on investment. Or you risk them using the system and making mistakes because they were not properly trained. I have seen way too many examples of systems implemented and little to know remote training.

Run 1 or 2 Closes Parallel

What I recommend to every client and company implementing a new system is to run 1 or 2 month end closes parallel. This will help avoid disasters by getting rid of the existing system prematurely and smooth out any kinks or breaks in the new system.

I always get the same response… “this is a lot of work and will cost me more man hours”.

Yes, it will.

But you will avoid a blow up in the future.

Running 2 systems for 2 months can be costly – restricting your cash flow. To find other ways to improve cash flow when leading an ERP implementation, click the button below to download our 25 Ways to Improve Cash Flow whitepaper.

Download the 25 Ways to Improve Cash Flow

Be Flexible with the “Go Live” Date

Many times, the CEO or another executive driving the investment sets an arbitrary “go live” date.

I have seen many cases where a CEO wants to launch the new system January 1 and has 50 people working around the clock…

That’s a sure way to create a disaster.

Have a goal… But do not have a hard deadline because there will always be something you did not plan for. 

I recently spoke to a CFO of a successful company, and she was telling me about their recent new system implementation. I was ready to hear another horror story… But she surprised me!

She told me it was a great experience. They had no real big issues and stayed with in the budget and timeline.

I asked her to please tell me what they did to be successful.

She basically listed the items 1-11 above.  It is a coincidence that I have listed those items for years now.

But it proved my point.

Implementing a new ERP system is expensive, so if you’re company isn’t cash rich, then you may need to improve cash flow in other areas of your business to keep you afloat. Download our 25 Ways to Improve Cash Flow whitepaper and start making a big impact on cash flow.

ERP Selection Process, ERP System Selection Process 

ERP Selection Process, ERP System Selection Process 

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Choosing New Software

See Also:
Technology Assessment Criteria
How to Evaluate IT Systems
How do You Know When it is Time to Buy New Software
Technology Strategy for Small to Medium Sized Companies
Five Reasons To Pay Attention To CRM Software
How to Ensure Redundant Data Communications Links

Choosing New Software

Choosing new software is a big deal for any business – large or small. People agonize over the decision for weeks, months, and even years. As software dealers, we have first hand experience with helping hundreds of organizations make the software decision. Naturally, we have some suggestions that we hope will make this process a little less painful.

First, software isn’t the most important selection you’re making. It’s easy to start with what you think you want the software to do when, in fact, your most important choice is the dealer. For great information about selecting a dealer please take a moment to read WikiCFO article, How to Choose a Software Dealer.

Now let’s talk about choosing new software. Essentially you have two basic choices – industry specific or ERP software.

Download The Internal Analysis Whitepaper

Choosing Industry Specific Software

When choosing industry specific software, remember this software is designed to address some of the issues of your business. Usually, this type of software has great strengths in areas that are unique to that industry. The up side is this type of software does an excellent job at the tasks it is designed to handle. The down side is this type of software usually isn’t designed to manage the whole business. In other words, industry specific software is generally designed to perform limited tasks. Much of the time industry specific software will not integrate or “talk to” other types of software leading to the need for making double entries of data.

ERP Software

On the other side of the spectrum, Enterprise Resource Planning (ERP) software is focused on running a wide set of tasks that are necessary to manage a business. The up side of this approach is that the software addresses accounting, inventory control, manufacturing, order entry, purchase orders, and host of other modules. ERP software integrates all of the systems producing single entry for data, comprehensive business reports, and is adaptable for multiple industries. The down side is an ERP system tends to be more expensive than choosing industry specific software.

Selecting the Brand of Software

In the today’s marketplace, there are several excellent choices in software. We believe that researching the publisher is a great idea before choosing new software. Asking questions like:

  • How long has the publisher been in business? Longevity is important here. If the software is good, then the company probably has been in business for many years.
  • How frequently is the software updated? If the publisher is spending money on Research and Development, then that’s a clear sign that they will be supporting and upgrading the software for years.
  • How many installations are there of the software you are considering? With a large number of installations, the publisher is clearly aware of any glitches and has already fixed them or is in the process of fixing them.

Talk, Talk, Talk

The next step in choosing new software is to talk – a lot. Talk to people in your industry. Find out which software they chose and why. Ask how it’s working for them. Would they recommend the dealer they used? While you’re at it, ask for tips on what they would do differently.

Talk to people who have been through the software purchase and aren’t necessarily in your industry. They are going to have a fresh perspective on what may or may not work for you. By the way, ask them the questions above, too.

At this point you may want to start preliminary talks with some dealers. Begin with the recommendations you got from the people you have already talked with. Remember, these talks are preliminary. Tell the dealer you’re just beginning your search and ask about the software they recommend and sell. Then check out the software publisher’s web site for the nuts and bolts on their programs.

And finally, talk with the people in your organization who are using the current software or will be using the new system. See the WikiCFO article How Do You Know When It Is Time to Buy New Software for ideas on how to move through this process along with a plan for discovering the Cost to Do Nothing.

A Lot Less Talk and More Action

By now you’re probably ready for some action. Unfortunately, there’s going to be more talk before the action starts. Forming a Software Selection/Implementation Team (SSIT) within your organization to investigate and evaluate your software and dealer options will share the work load, give you a variety of perspectives, and get part of your team invested in changing your software system. We’ll talk about getting “buy in” from your employees in another article. While you may not be an active member of this team, your support and involvement is critical to the success of this project.

Creating a work plan is the SSIT team’s first task. You have probably organized this type of project and are very familiar with the process. Stating the obvious, some of the items the team could consider are:

  • The cost to do nothing – discovering within the organization exactly what the cost if to continue doing business in the current manner.
  • Needs Analysis – here’s where you can choose to use the Wiki approach to getting information and have the dealer(s) do the Needs Analysis.
  • Short list of dealers – compiling a list of the dealers you want talk with in a preliminary fact finding call.
  • Committee with time allocations – our experience indicates that the chart below is an accurate representation of the time allocation for the team members.

Role – Percentage of time

Steering Committee – 5%

Project Manager – 50%

Leader of the Project Team – 50%

Member of the Project Team – 25%

Project Advisor – 5%

  • Creating an evaluation sheet – so that everyone is evaluating on the same criteria, an evaluation sheet is a great tool. This sheet is a living document and is subject to change during the process.

Request for Proposal (RFP)

One item you won’t see on the list for consideration is a Request for Proposal (RFP). Creating an RFP is a huge amount of work that we feel doesn’t pay real dividends. In an RFP. your team will spend vast amounts of time listing everything they want the software to do. Then that To Do list is placed in the hands of selected dealers for bid. The missing step here is that the dealer is only addressing what’s on that list without the benefit on understanding your business, work flow, and the unique challenges you face daily. In understanding why you want to do something rather than what or how you want to do it the dealer can almost certainly save you time and money with informed recommendations. Now take a moment and read that sentence again. Better yet, let’s separate it for easier reading.

In understanding why you want to do something rather than what or how you want to do it the dealer can almost certainly save you time and money with informed recommendations.

When you change to a new software, it can uncover weaknesses in your company. Click here to download our free Internal Analysis whitepaper to check each area of your company for weaknesses to resolve (and strengths to enhance).

Choosing new software, Choosing Industry Specific Software
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choosing new software, Choosing Industry Specific Software

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