ERP Selection & Implementation (Pt 1)

Mastering ERP Transformation: Key Insights from 25 Years in the Trenches

With over a quarter-century dedicated to the ERP domain, I have guided numerous sectors through the adoption of systems such as NetSuite, Oracle, JD Edwards, SAP, Epicor, and Salesforce. My path has been a blend of triumphs and trials, witnessing the entire range from outstanding achievements to significant challenges. In a lighthearted reference to the iconic Clint Eastwood film, my experiences could be categorized as “The Good, the Bad, and the Ugly.”

My role has extended beyond mere implementation; I’ve spearheaded various initiatives, contributed to Executive Steering Committees, and informally acted as a counselor for private equity (PE) firm partners and their portfolio company CEOs. These stakeholders pour millions into these projects, hoping to realize their vision of a transformative, state-of-the-art ERP system. For several lower to mid-market portfolio companies, this endeavor represents their most significant and influential IT project. From the financial sponsor’s perspective, the aim is for a swift rollout as a critical component of their value-creation strategy. Consequently, the stakes are high for everyone involved.

Drawing from these experiences, while sparing the horror stories, I aim to share 10 crucial insights:

The Dilemma: PE firms often ponder whether to overhaul the existing ERP system of a newly acquired company or postpone the issue for future owners to resolve.

Selection Fatigue: The exhaustive process of selecting ERP software and an ERP integrator, characterized by lengthy RFPs, is both draining and time-consuming. Unless you enjoy a 20-page, 200-question RFP process — maybe I’m exaggerating a little, but you get the point!

Misplaced Expectations: Believing a new ERP system will fix every issue is a common yet unfounded hope. Most often, there are latent business problems (e.g. processes) that surface mid-implementation and can be addressed immediately or in additional phases post-implementation.

Sales Savvy: ERP vendors and integrators are skilled sales professionals who excel in highlighting strengths while downplaying weaknesses.

Separate Merits: A preferred ERP system does not guarantee the competence of its integrator.

Root Causes: Identifying fundamental process issues might lead to the need for additional ERP modules or third-party systems, but caution is advised before making any hasty decisions.

Data Migration Challenges: Transferring data to a new ERP system is often more complicated than anticipated.

Broad Impact: The introduction of a new ERP system affects more than just a handful of users or departments; resistance to change is common among employees.

Vendor Focus: ERP vendors and integrators concentrate on deploying their software efficiently, often using generic project management plans geared towards quick implementation and payment collection rather than tailored company needs. 20% of ERP deployments have a company “advocate” such as a program manager and process owners to work with the ERP integrators. These advocates, prioritizing the company’s best interests, play a crucial role in maintaining transparency and accountability among system integrators and vendors.

Post-Implementation Support: While ERP vendors and integrators may excel in system deployment, their post-implementation support often falls short.

These insights aim to provide a clearer understanding of the complexities involved in ERP selection and implementation, guiding PE firms and portfolio companies through the intricate journey of digital transformation. Part 2 of our article will focus on best practices for mitigating the above risks and providing a cogent strategy for a successful ERP implementation.

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