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ERP Implementation Challenges In Small and Medium Enterprise

Scott Smith, consultant and interim CFO

Scott Smith, currently a consultant and interim CFO for various companies, was involved in two implementations of enterprise resource planning (ERP) systems during his career as a full-time finance chief. He has the battle scars but also lessons learned for his peers. He shared the during a discussion at ProformaTECH 2013, Proformative’s corporate finance, accounting, and treasury technology conference in San Francisco.

The first implementation, for a small startup, was relatively simple – a basic QuickBooks migration to Great Plains (now Microsoft) Dynamics system. The project lasted a couple of weeks, the cost was extremely modest, and one employee did the data migration into the new system by hand. By soliciting vendors and making decisions on how the project would move forward, Smith was “a one-man band,” as he put it.

The second one, for a large global company with thousands of customers worldwide, was an upgrade of Oracle Financials to the next big release. The quote-to-cash solution had to be implemented across the entire business, so the process was done in stages for more than a year.  Dozens of employees were involved for an extended period, which made a significant impact on operations across the board. Smith, who led a 40-person finance team at the time, was the executive sponsor of the process, and his role was as a strategic supervisor.

While the processes for ERP implementation at startups and at Fortune 500 companies may be very different, they are similar in a very important way: CFOs need to know what they’re getting into from the start. Smith’s main piece of advice to finance departments of any size about to experience their first ERP implementation: “Be afraid. The horror stories you hear are there for a reason.”

At ProformaTECH last month, Smith spoke about how finance departments should plan an ERP implementation, get through it quickly, and come out at the other end with successful results.

He shared the lessons he learned from both ERP experiences so that CFOs can not only survive the process but thrive afterward.

1. Focus on the front end. Smith said this part is critical, and it can’t be overdone. “You need to understand the end state of what you’re trying to get,” he said. “What are you trying to accomplish? What do you want to end up with?

2. Get internal support. It’s great to have executive sponsorship of the implementation, but you also need internal buy-in across, and up and down the organization. “These projects cross many internal and external constituencies, so focus on communication with them, and design it in to the process,” Smith suggested.

3. Pick the right external partners for the project. The best way to find them is through your informal and formal networks. “This is a great time to lean on your peer networks,” Smith says. All of them will have dealt with vendors and partners, so use your contacts aggressively to find partners that will be a good match. If they handled implementations, get advice on what went well, what was bad, and how they addressed any problems.

4. Balance the top-down and bottoms-up perspective. CFOs are looking to get more data, quicker closes, better processes, and things done in ways that suit their needs. But that focus won’t help you have an effective implementation. “It can’t just fit your needs and your vision. You have many users involved, and it will impact or change the way they do their jobs,” Smith said. “So balance the perspective of your key strategic objectives with making sure the implementation is efficient and makes work better for the people who use the new system. If you implement from the top down, you’ll have problems.”

5. Schedule realistically, not aggressively. It’s important not to overload people who are devoting a lot of time in the process. After all, they have their day job to handle, too. “Design a schedule that won’t set you up for failure,” Smith said. “Best-practices change management has to be part of your project from the start.”

6. Build feedback loops into the process. In short, hold regular meetings to make sure you’re on course. During his big Oracle implementation, Smith had biweekly sit-down meetings with key players. Even if they were traveling, they had to call in by phone. Just as important: Listen to what they tell you. “Don’t disregard it when someone says, ‘This is an issue,’ or ‘We have a concern,’” said Smith. “Listen to what’s being said and act on it. If you don’t, the project will get bogged down more and more until boom, you’re at the end of your budget and you’re still not ready to go.”

7. Consider the strategic and tactical issues: When he had time, Smith attended planning meetings for the Oracle implementation to see what people were doing and how the process was working on a more detailed level. “While I was responsible at a strategic, senior level for the project’s success, I needed a feel for the day-to-day basis to understand how the implementation would affect my department, the company, and the business moving forward,” he said.

So before you start your first implementation, or move into a bigger one, Scott bluntly warns that “there will be blood.” He told ProformaTECH attendees, “There’s going to be challenges, setbacks, complexity, difficult workloads, and organizational changes. It will be ugly, tough slogging. But part of the battle is being prepared for how difficult the process will be.”

Do your pre-project diligence, think through the process, and communicate, monitor and manage it closely. Do all that, Smith said, and your chances for success will be much improved.

Vanessa Richardson is a freelance writer based in San Francisco. For Scott Smith’s presentation from ProformaTECH, go here.

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