As a part of an overall digital transformation strategy, many organizations have implemented Enterprise Resource Planning (ERP) systems to replace multiple legacy applications for consolidation into one unified platform.

While this is a noble endeavor, according to Gartner, over half of ERP initiatives will ultimately fail. I considered this statistic when looking to start our ERP selection and implementation process. I studied the causes of these failures and interviewed other organizations to maximize the possibility of our success. Below I will share my personal experiences with this process, which led to the most successful software implementation of my career.

What is an ERP?

There are many definitions of what a software package must do to be considered an ERP. We defined the ERP as one system for all HR, Finance, and Payroll functions for our organization. Some include other modules like Point of Sale and Supply Chain Management. However, our most significant pain points were around many manual processes in HR, Payroll, and Finance that were time-consuming and error-prone. We knew we needed something better that could scale with the organization’s rapid growth and replace over a dozen legacy systems used for these functions at the time.

Is Your Organization Ready?

The first question I asked before embarking on this adventure was, “Is the organization ready to implement an ERP?” I knew that this project would be a defining moment in my career and wanted to be sure that we knew what we were getting ourselves into before making this leap. I knew that our organization had the maturity level to do this large-scale project; however, it had taken several years to get to this point.

When I first became the department head seven years ago, the organization had little appetite for formalized project management. I remember being in a meeting addressing our ability to open new retail locations rapidly. In the meeting, our CEO said, “Execute, execute, execute!” I thought to myself, “Couldn’t one of those be plan?”

The CEO was talking about our ability to open new retail locations rapidly. The Phoenix population was growing, so there were many opportunities to open new stores and generate additional revenue. The team responsible for opening stores had done it so many times it was second nature. The plan was already in their heads.

First, I needed to show the organization the value of formalized project management. I had the opportunity to introduce it when we decided to implement a new Point of Sale (POS) system several years back. Because of the rapid growth, the POS struggled to support the organization. This project allowed me to demonstrate why we needed project management.

We developed requirements for the solution, conducted an RFP, and created a project charter that the C-suite signed. Bringing that project to the finish line showed how projects could be completed on time and under budget if managed correctly.

Why are we doing this?

Maybe you think that the reason for implementing an ERP is self-evident. You are the technology expert, and you know fewer systems and more automation lead to better business outcomes; however, the C-suite might not. When we started talking about doing an RFP for an ERP platform, each C-suite member had different priorities. It was essential to find consensus and agree on the “why.”

After talking with each of the C-suite individually, I combined their reasons into a list of six goals for the ERP implementation:

• Cut Costs – reduce total spending across various platforms.
• Streamline HR, Finance, and Payroll Processes – specifically, to take advantage of operational efficiencies to reduce manual and paper-based processes.
• Align With Cloud-First Strategy – by focusing on cloud-first, we could reduce our infrastructure burden. The POS implementation demonstrated how we could transition many on-premises systems to the cloud.
• Unified Platform – centralize POS, Finance, HR, and Payroll functions on one platform to simplify management and decrease the number of integrations we needed to support.
• Improve Payroll Process – consolidate HR and Payroll on the same platform to eliminate issues, as the process was manual and very prone to error.
• Enable Business Diversification – position the organization to expand retail, offer shared services, and prepare the organization for potential mergers or acquisitions.

Your ERP solution goals will most likely be different, but you must have them. You need to ensure that you have clarity and agreement at the C-suite level on what they want.

The worst thing that can happen is that you get to the end of the implementation, and one or more of the C-suite says, “this isn’t what I wanted.” The goals are your insurance if someone thinks about changing their mind during the selection or implementation process.

Develop the RFP

The next step in the process was to develop a detailed scorecard against which we could evaluate vendors. As part of this process, we needed to create clear HR, Finance, Payroll, and IT requirements that we could place into the RFP and the associated scorecard. While working with subject matter experts in Finance and HR to gather the requirements, we came up with over 500 detailed individual needs across the four functions. 

Now that we had the detailed requirements, I worked with our procurement department to create a detailed RFP to send to vendors. Finance and HR had previously vetted vendors prior to developing their requirements, so we included their selections in the process. Two vendors provided all HR, Finance, and Payroll functions. Five of the vendors only provided HR and Payroll solutions.

The organization wanted one solution for all functions. However, if the all-in-one vendors missed the mark with their HR/Payroll items, they were willing to have separate HR/Payroll and Finance systems. Also, we tried to keep the list of vendors small enough to evaluate each of their responses closely. 

Do You Have the Right People?

One of the main reasons ERP implementations fail is ineffective project management. While I was figuring out the C-suite’s goals, I talked about the need for an Enterprise Program Management Office (EPMO) to manage a project of this magnitude. At the time, the Project Management function was within the IT department.

We had successfully implemented the POS with the current team but I knew we needed more experienced project management to do this. As a result, we hired a Director of EPMO, who had experience managing similar projects. 

The EPMO was critical to our success. Some people feel like you can completely hand off project management to your implementation partner, but I highly recommend against this. You will need to manage the vendor and your internal resources to keep the project on track. We would not have been successful without a solid and experienced EPMO.

Are you ready now?

After determining whether your organization is ready for ERP implementation, consider the goals that you and your fellow executives have for this process. Achieve those goals by creating an effective RFP, with clear HR, Finance, Payroll, and IT requirements. However, all of this can only be accomplished with the right team. Evaluate your current division and its strengths, bringing in new talent to fill in any gaps.

If you have completed everything above, you are ready for a successful software selection process.