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Manufacturing ERP Article


Project Management Might be the Key to ERP Software Success

Tuesday, March 1, 2016
by Sheldon Needle

CEO and Founder, CTSGuides

sheldon@ctsguides.com

 

Over the past 8 years I have had literally thousands of conversations with manufacturers, contractors, distributors and many other kinds of businesses regarding their disappointment with, or outright failure, trying to use the ERP or MRP software they have purchased.

It’s not hard to name their typical reasons for this situation:

  1. Software does not meet the needs of the company.
  2. Software is cumbersome to use, staff gets frustrated and eventually refuses to use it.
  3. Management reports are lacking and it is hard to extract needed data through the query and/or reporting tools offered.
  4. Annual maintenance fees are very high and they get nothing in return (meaning no useful updates are delivered or support is not needed to run the system).
  5. Staff does not know how to use it properly, due to poor training.
  6. Important features or capabilities were promised but not delivered.
  7. Functions are limited or inadequate for quoting, shop scheduling, tracking work in process, MRP, shipping or cost accounting.
  8. Level of integration between the software and third party add-ons, such as for shipping, documentation management, project management, forecasting and the like, does not live up to promises.
  9. Vendor support is lacking both for timeliness and quality.
  10. Have outgrown it for functional needs and growth of business.

Management further compounds the failure by claiming that the wrong ERP system was chosen, and if it had the “right” software package it could rectify the problems and achieve the original objectives.  Yet statistics show that the purchase of a replacement system also will likely result in failure.

So what are the issues that buyers often miss when selecting and implementing software that results in abandoning the system and starting over?

Certainly it could be failure to understand and communicate their needs to the vendor, or lack of internal support, but one of the often overlooked issues will be project management. That is all the resources invested in implementing the system including setup, workflows, and training of staff. For companies $10M+ there will be usually be two project managers involved.

Project manager #1--This is the person assigned by the vendor to lead the project involving the installation, setup and configuration of the system. That can mean advice about both hardware and software or cloud vs. on-premise. That individual not only should know the software thoroughly,  but also be well-versed in manufacturing so that he knows how to adapt the system to company practices, This means he can teach best practices for various functions such as quoting, creating bills of material, tracking engineering changes, inventory management and the like.

Hopefully, the issue of reconciling business processes with how the software works will have been discussed and worked out prior to software purchase. Unfortunately this often is not the case due to company personnel being reluctant to change how they accomplish their tasks.

The necessary skill set for the vendor project manager is demanding. That person must know not only the software and manufacturing best practices, or at least know how to make the software work in a given environment, but also be skilled in actually managing the project to schedule and budget. He must be a leader in the true sense of the word.

Project Manager #2--The company that purchased the software also must have a designated project manager who is the “software champion” for the company. That individual will serve as the mediator/buffer between his company and the vendor. He must be well-versed in the operation of his company and on good terms with key staff members whose cooperation will be crucial in achieving a good outcome. He must have the necessary trust and authority delegated by management and the respect of his peers in order to get everyone to deliver the necessary data, accurately and on time during installation of the system.

It’s not uncommon for management to turn the project over to a subordinate to manage the implementation phase. A common problem is that the subordinate, who usually is chosen from the end user base or IT department, typically does not have the authority to implement necessary business-process changes.

This is where things often break down. When a project runs late is it the fault of the software, the vendor’s project manager, or the fault of the customer who failed to apply the necessary internal resources to work effectively with the vendor?

Here are some tips on reducing risk and getting more from the project-management phase of an ERP project

To assure success, manage the ERP implementation the way a contractor would manage a construction project, including:

  • Make tier project payments to the vendor based on milestones, not at an hourly rate.
  • Use contractor-like cost to complete analysis with a rolling forecast to track the ERP installation project, to match progress against the expenses incurred.
  • Ask for weekly billing to avoid big expense surprises.
  • Require stakeholder sign-offs for all milestones met to ensure auditability of the project.
  • Regenerate the project schedule weekly to show current status, and distribute to all  stakeholders.
  • Assign a single company employee final decision-making authority about project management issues, to avoid endless turf battles and staff frustration.

Inadequate project management relates to every one of the 10 usual excuses for software failure. Project management requires a wide variety of skills and expertise. It is a true management discipline that requires the ability to delve into detail while keeping a perspective on the original business goals.

Partial content of this article is used with permission of MAS-CORP.com, Mike Holland president.

 

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