Factors which influence the success of ERP project implementation - Part 1

Saturday, April 2, 2011

Enterprise resource planning (ERP) system had evolved over the period of last two decades. By ERP, I wish to look at ERP system with user base of at least 200+ with more than a million dollars in investments. I believe Oracle Application, PeopleSoft, SAP, Baan, MFG PRO etc would qualify into this league. ERP implementation has its own challenges from the stage of conceptualization to actual usage and beyond. I thought of sharing my views as what can primarily contribute to success of ERP implementations.

This would be the first of my series in writing about factors which contribute to success of ERP implementation, which is more from management perspective.

Management support and confidence: This is the first and foremost factors which determine success of ERP project. Any entity or business has to put effort and time in analyzing the need for an ERP system, before a decision to go for an ERP system. An entity, which is capable of investing more than a million dollar would definitely have some kind of legacy system, which would be doing the ERP function to an extent, hence its important as a first step to perform the following.

    1. Cost Vs Benefit Analysis.

    2. Return on investment.

When cost of implementation is considered, apart from license and consulting cost, it is important to consider the maintenance cost for post implementation and this, also varies upon on size of implementation.

Both needs to be worked out and I would suggest only if management is happy with above estimates & expectation there is need for a new ERP system.

Choosing the product: If decision is taken towards ERP implementation, then the next step is to find out the ERP product which would suit them better. Few factors, I believe which is essential to be considered for choosing the product.

Product suitability to its business, support the seller provides, future upgrades & scalability, cost & availability of consultants to provide support in future needs to be considered apart from pricing before choosing product.

Implementation Approach: ERP’s can be tailored to suit a business needs, this is commonly referred as ‘customization’. Customization can plug the gap from business solution perspective. However, its always better to avoid customization or at most keep customization to a minimum considering the following factors.

• Additional cost involved in development and testing.

• Maintenance cost even after deployment in production.

• Any business process change might empact customization and this woulr require enhancement of the customization and thereby cost.

• When upgrade happens in future, the customization has to be upgraded as well which would incur cost.

On all the above factors, management need to play important role towards success of the implementation and they can be considered as preliminary phase or phase 1 of the ERP prject implementation.

Will continue with other factors at shortly, till such time happy reading and happy to receive your comment.

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