ERP Go Live – Defining Your Success

Does your organization have a mutually-agreed upon definition of the math that defines “success” or “failure”, and all points in between, for your ERP implementation? Or does that assessment depend solely on the relative number of positive and negative anecdotes after ERP go-live? If it is the latter, be prepared for a disappointed organization and a demoralized team, because even though getting an ERP system up and running successfully is a highly challenging task, expectations around how it should operate on day 1 are almost always unrealistic.

Are Your Measurements Artificial?

For instance, will part of your implementation plan be to (a) run ahead and bill as much as possible the week before ERP go-live (b) try to reduce work-in process inventories to the lowest practical levels and (c) shut down business operations for a three day weekend at ERP go-live? In general, these are things that help the quality of an ERP implementation, simply by making the problem queue smaller, but think further about the financial ramifications of each. Item (a) artificially increases revenues in the last month of running the legacy system, and artificially decreases revenues in the ERP go-live period. If sales are normally $5MM a month, and you bill $6MM the month before go live, and $4MM the month after go-live, will your organization say that everything is normal, or that as a result of ERP, revenue is down 33% (or even 20%, if you point out that $6MM is not normal)? Item (b) reduces your working capital to unrealistic levels; when it returns to normal, will it be viewed as an increase in inventory investment caused by the new ERP system? Without clear and proactive communication, item (c) can easily be misrepresented in the field, with cause and effect getting juxtaposed. Instead of it being said that a business stoppage was planned to ensure the quality of the ERP implementation, the story will be that the ERP implementation was so problematic that all business came to a halt for three days.

The fundamental problem with ERP performance expectations goes all the way back to the project approval process. The ROI justifications for obtaining investment funding are real, but not realistic on day 1, nor on day 100. Yet, no ERP software vendor or implementation partner is going to articulate as part of their sales pitch, “Look, just making this transition is a success. It’s going to be three to five years before you understand how to make money with it.” So instead of setting the expectation that being able to ship orders on day 1 is a solid success, vendors show mock-ups of executive dashboards and real time financial performance, and when that is not available on day 1, it is inferred that the implementation has fallen short.

The fact is, there is almost nothing sexy about ERP on go-live day 1. But a solid implementation on day 1 becomes the foundation for the very real ROI that comes later. If you can set that expectation, everyone will be more satisfied.