Upgrading your ERP? Here’s How to Get It Right.

ERP – What, When, Where, Why?

Many organisations struggle to achieve an acceptable return on their investment in ERP software. After implementation, spreadsheets can still be extensively used. Sometimes, management reports are of such low quality that team members must prepare additional spreadsheet workarounds to get meaningful outputs. So the question often arises—why is there so much manual activity in Finance when we have implemented full ERP software?

The Essential Ladder of ERP Implementation

At Loughridge Transformations, we like to think about implementing technology as a ladder. We believe a ladder is a good analogy, as missing one step can cause a fall. Every step on the ladder is critical to the success of the implementation. The same steps are crucial whether you implement from scratch or replace or upgrade your ERP.

Our experience working with clients in different sectors shows that clients often assume the software provider will deliver this. However, the software provider often under-emphasises and under-delivers these critical ladder steps. As a result, the implementation is less successful, usually takes longer, and costs more.

Executive & Leader Sponsorship

For a ladder to stay in place, it needs to rest on solid ground. That solid ground is effective sponsorship. Leaders like the CEO or CFO must understand and champion the ERP implementation or upgrade and provide unwavering support for each step of the ladder.

It’s hard to achieve what you cannot measure. So, in addition to justifying the ERP investment, a business case can help you measure business benefits during and after implementation. It aligns sponsors and stakeholders around project goals and sets realistic expectations.

Project Management

Strong project management is vital in technology implementations. At Loughridge Transformations, we designed the “Nine Steps” method, a comprehensive approach that leverages our consultants’ best project and change management techniques. These steps include different aspects to ensure successful implementation.

An ERP upgrade or replacement is costly and requires internal and external resources. It is a material change to operations and your people. These elements often require more time, effort, and money than technological investment. To be successful, project teams should treat ERP implementations as transformational. Of course, choosing a suitable ERP (SAP, Oracle, or one of the many alternatives) is critical for your organisation. However, thinking beyond the core ERP and focusing on the people and processes that form the entire system is equally important.

Project governance ensures the project team makes decisions aligned with the project goals, giving you a sense of control and security. Consider using a project charter to assign specific team members the responsibility of approving requests, such as customisation requests. Executives and others may make requests that increase scope and cost. You will only approve requests aligned with the organisational vision if you have robust project controls and a management-of-change process.

Product Requirements and Selection, Solution Design & Gap Analysis

The third step in the Loughridge Transformations “Nine Steps” method is Baseline Definition—a Reliable Assessment Model for the Finance Function. The assessment’s primary aim is to determine the level and effectiveness of manual vs. automated process steps and any bottlenecks or other issues related to ERP software. This step is crucial as it sets the baseline for the entire ERP implementation process.

One of the first things to do is gap analysis –every system will have gaps against your requirements. You may decide to have a third-party system address those gaps or customise the ERP to meet your needs. Alternatively, you may choose to force through the change in your organisation’s processes to align with the software set-up. Whatever the resolution, you need to identify the gaps upfront to have a realistic plan of how long the ERP upgrade will take, how much it will cost and how the system will look once implemented.

At Loughridge Transformations, we have experienced first-hand with clients that upgrading the ERP was de-prioritised because many short- and medium-term fixes could address the organisation’s issues.

When designing the solution, we advise against duplicating what is in the current system. Instead, your focus should be on the functionality of a new system and what it can do. Take the time to understand the organisation’s goals and objectives and how the ERP will add value. Well-defined organisational requirements ensure the solution design will align with the organisational goals. ERP system functionality can define most back-end processes, but other processes should be redesigned before selecting and implementing software.

Test Preparation & Execution

ERP testing ensures each module’s proper functioning and configuration per your organisation’s pre-defined requirements.

The ERP is crucial in your organisation’s day-to-day activities, and thorough testing is essential. With ERP testing, the focus is typically on each module’s functionality under specific circumstances and scenarios. The testing process could be manual or automated. However, real-life examples often demonstrate that it is a combination of both. There are three different phases: preparation, execution and evaluation.

• Preparation – this portion of the testing cycle includes setting up the test system, preparing test suites, and creating testing data.
• Execution consists of executing the test created during preparation, logging all defects, and reporting the tests’ status.
• Evaluation –  test evaluation includes analysing defects, assessing test plans and causes, preparing test suites, documenting the overall testing process, and mitigating any undesired outcomes or defects.

Typically, ERP testing consists of 5 main steps: 

1. Testing the individual components (Unit Testing)
2. Testing the entire business process end-to-end
3. Integration testing with other applications
4. Performance testing
5. User Acceptance Testing on behalf of the end-user

Following the above steps will ensure your ERP is quality-assured (QA) and its design is correctly implemented and operational before going live.

Organisational Readiness & Change Management

Many organisations do not fully appreciate the impact end-users can have on ERP implementation success. As a result, they under-invest in change management. Instead, focus on overcoming change resistance and developing a management plan with a sponsorship roadmap, coaching, and training plan.

Some organisations present a new system to employees and expect long-held practices and processes to adapt to the new system automatically. They believe technology will drive the change. Such a strategy is hazardous and is unlikely to end well. Instead, learn, document and understand the processes the ERP upgrade will impact before implementation. For example, if employees are used to pulling a specific report daily, will they still be able to? Consider even the most minor day-to-day tasks part of the ongoing operations. The most effective way to achieve this is by involving and engaging all front-line users in the organisation.

Training Deployment & Delivery

Naturally, you will want to train staff on how to use the ERP’s functions. However, equally critical to achieving a sound return on investment is educating the organisation on what team members are doing and “what’s in it for them” to access the new functionality.

Think about helping people understand the reasoning behind the ERP upgrade or replacement. Then, consider how that impacts their performance or their ability to succeed.

Solution Deployment & Cutover

At this last stage of your ERP implementation, you should have, in short: 

• Installed the ERP software 
• Designed new processes 
• Configured your system to meet your requirements 
• Moved your financial data to the new system 
• Trained users in the new system 
• Conducted testing and mitigated any defects or undesired outcomes as a result of the testing 

In our ERP implementation ladder, the cutover refers to the phase when the ERP system goes live. In simple terms, an ERP cutover is the go-live phase when your new system is deployed in production.

How can Loughridge Transformations support your ERP upgrade?

Skipping the steps on the ladder often leads to the ERP system’s supplier having to second-guess, possibly incorrectly, your requirements. Without a defined set of organisational and functional requirements, the ERP supplier can only use their experience and know-how. In addition, once an ERP system is configured with Master Reference Data, it is almost impossible to change it.

Unless you have the resources and expertise to conduct all the steps on the ladder, consider bringing in an external party with the proper knowledge – such as Loughridge Transformations.

As a process-led, people-led Finance Transformation practice,  Loughridge Transformations focuses on processes, roles, controls, and technology. We provide successful and sustainable delivery through the Loughridge Transformations’ Nine Steps to Finance Transformation.

Loughridge Transformations can offer short virtual workshops—with no further obligations—that your organisation can use as the first step in preparing for technology changes.

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