The incorrect introduction of ERP software or even the failure of a project can quickly put a company in financial difficulties. In most cases, the cause is not primarily to be found in defective software, but rather in the approach to the project. To avoid such stumbling blocks, it is crucial for companies to focus on specific success factors for an ERP transformation.
What can be learned from the risks and difficulties of projects with ERP implementations? No one can guarantee an immediate and smooth implementation of an ERP implementation. Nevertheless, responsible parties can avoid the major pitfalls by observing the following four success factors:
1. Clear Business and Project Goals
The starting point lies in clear and precise corporate goals from which project objectives can be derived. It is crucial to define precisely in which departments, divisions and processes the software is to support the achievement of corporate goals in the future and how it can contribute to value creation.
2. Commitment and Support of the Management
Once the goals are developed and defined, the entire management must commit to these goals. It is important that all employees:inside the company can see that senior management fully supports these goals and the project. Senior management must provide resources and make key decisions when challenges arise. In a large project such as ERP implementation, if it is not clear to employees that management is actively driving the effort, they will not engage either.
3. ERP implementation as business change
An ERP implementation is a transformation project that primarily affects the business and the business organization. Although at first glance it is about implementing software and IT infrastructure, the focus is on redesigning and adapting business processes and often organizational structures.
4. Culture of Cooperation and Leadership
The basic idea of ERP software, especially SAP S/4HANA, is the meaningful integration of business units along end-to-end processes. However, the full potential of these systems only unfolds when not only data, but also people collaborate across the enterprise. However, many corporate cultures are still stuck in the industrial age and organized in vertical hierarchies. This organizational structure was quite efficient in the days of Taylorist industry. Modern ERP software, on the other hand, maps the dynamics and complexity that companies need in order to cope with rapidly changing market conditions. This includes sufficient networking both internally and externally. Unfortunately, such networking density and collaboration culture is not always sufficiently supported and exemplified by the management levels. There is still potential for development here in many companies.
Competencies – Will – Permission
Despite the trend toward digitization, people remain the most important factor in companies. Even if computers and machines will take over many things in the coming years, without the curiosity and creativity of people, neither business ideas nor innovative products will emerge. Every entrepreneurial activity should therefore have one goal: to give employees the opportunity to do what computers and machines cannot. To do this, they need workplaces where they are largely freed from routine tasks, for example by ERP systems that relieve them of these tasks. They need information and analyses for their work, and here, too, a suitable ERP system can provide support. All of this promotes the competencies of the employees.
A motivating work environment with an inspiring learning culture and personally challenging goals spurs employees on and fosters their will. They are committed to the company when their own goals are aligned with the company’s goals. They actively seek out colleagues with whom they can tackle projects and overcome challenges.
Management creates a framework in which permission becomes the rule. Making decisions, trying things out, taking risks, taking alternative paths, making mistakes – all this is not only tolerated, but encouraged.
When all these factors work together, the ground is prepared for the successful introduction of an ERP system that is appreciated by all parties involved, integrates seamlessly into the company processes and thus continuously increases the value added.
We at mgm consulting partners are at your side with our expertise and experience to support you in this demanding process.
Further information for a successful SAP S4/HANA transformation can also be found in our reference book Business Transformation with S4/HANA.