Manufacturing ERP Software for SME

A series of primers for prospective implementers

Project Management - what is it going to involve?

Background

After the selection phase of a project for the introduction of a new manufacturing Enterprise Resource Planning (ERP) software system, the implementation phase gets into full swing. An outline plan including estimated resources and timescales should already have been discussed during negotiations, along with the expected approach to the handling of legacy data and processes.

The implementation phase typically includes the following activities, some of which run concurrently: - project planning, installation, legacy data and process review, process modeling (sometimes called the "conference room pilot"), data preparation and transfer, customisation and training. All of these will converge on an agreed go-live or switchover date. Sometimes a phased implementation will take place instead of the above "big bang" approach, gradually introducing system elements to business processes as an extended project - this is appropriate where an integrated business system is not already in use, otherwise it may involve the "parallel running" of two systems, which can strain internal resources. The personnel involved in this phase will usually include an internal project head and representatives from each functional area (the core internal project team), representatives from the software vendor, along with IT support and data entry staff.

Like all Business Process Re-engineering (BPR) projects, ERP implementations can disappoint if not managed effectively. However, paying attention to well-established critical success factors can minimise the risks. Key factors include: - the authority and mandate of the project leader to ensure activities are completed and milestones met; adequate preparation, for example legacy process flow documentation; re-assurance and training of key team members to reduce the fear of change and avoid resistance; thorough testing before committing to final data structures and processes; adequate time allocation for user training and practice. All of these need to be backed up by effective project review and planning, clear communications, and the avoidance of over-complication wherever possible (often called KISS - Keep It Simple Stupid!).

SME Issues

Many of the implementation methodologies in current use were developed for the larger organisation, where internal resources can be temporarily re-allocated from routine operations, and significant vendor resources budgeted for. In fact, some established management consultants expect an "Implementation To Software" (ITS) cost ratio of anything from 3:1 right through to 5:1, where the software licence cost is less than 20% of total project cost! Vendor implementation specialists can be present virtually full time for the life of a project, and project timescales can extend to 12 months or more.

For the manufacturing SME this is clearly inappropriate, as there is often no dedicated IT department and team members are expected to fit project activities around normal duties. It is important therefore to establish estimated resource requirements for the solution in mind and ensure that these are affordable. The ITS cost ratio for an appropriate solution is normally around 1.5:1, with project times of 6 -12 weeks being typical. With well-designed modern ERP software it should be possible to implement with minimal or even zero vendor on-site assistance - ask potential vendors if they can give you examples of this. There are significant advantages in sourcing sensible levels of vendor consultant time though, in terms of experience and formal methodologies, developed with the manufacturing SME in mind.