Slide 1

Implementing an ERP System for

Your Organization
What the CFO and Project Manager Need to Know Before They Start

Jennifer Nicholson CPA, CA

Many-time CFO
CFO Thought Leader

My name is Jennifer Nicholson. I am a professional accountant and have had a successful career
as a CFO and senior executive in various industries including mining, shipping and utilities. I
have also taught business students many different courses for almost 20 years. Today we are
going to talk about how to choose an ERP system for your organization – what the CFO and
project manager need to know. I recently chose and implemented a new ERP system in a large
private company where I was the CFO so I have firsthand experience with this process.
Slide 2

The
The
process? cost? Which
vendor?

Cloud or
on-
premise?

I had
questions

When I started looking for a new system I had a lot of questions about how the process would
work, how much it would cost, who to hire, and what systems were appropriate for my
company. It was difficult to find information that wasn’t sponsored by and therefore biased
towards a specific vendor. This course is based on my experience with this project and I hope it
will help you with your project.
Slide 3

Course preview
1. Defining ERP
requirements
2. Different
deployment models
3. Initiating an ERP
implementation
4. Getting vendors and
people aligned
5. Data cleansing
6. Testing and training

In this course we will talk about what an ERP system is, what it is, benefits of a cloud vs. on
premise platform, and the various steps covering all the relevant and practical considerations
you’ll find your self confronted. Everything from initiating your project, to selecting a vendor
and getting a team in place, to the hands on matters of data cleansing and [testing and training].

If you are in the process of changing your systems or contemplating a change in your systems,
then this is the course for you. I’m excited to share my knowledge and experience with you.
Slide 4

Implementing an ERP System for Your Organization

LESSON 1: What the heck is an ERP

Emergency Elementary
Response Reporting
Plan ? Project ?

Lesson 1 – What is an ERP System?

Hi everyone – I’m Jennifer Nicholson. Thank you for joining me to learn about choosing and
implementing an ERP system for your organization.

First of all – what the heck is an ERP system? I’m sure you have all heard the lingo – especially
since you are taking this course – but do you really know what that is?
Slide 5

Enterprise Resource Planning!

DATA ERP REPORTS

• Collect • Store • Interpret

• Organize • Process • Report

ERP is short for Enterprise Resource Planning. It is typically software that consists of a group of
integrated business management programs that an organization can use to help run its
business. This type of system can collect, organize, store, process and interpret and report all
kinds of data and can be customized to meet your specific business needs. Does your business
need an ERP system?
Slide 6

Business = Lots of Processes

Well, all businesses are comprised of many different processes and you are likely operating a
number of independent systems at this time. The benefit of an integrated ERP system is that
everything flows together. It reduces manual entry and the risk of errors that come with it.
Enter a transaction once – or better yet have the computer enter it - and this transaction will
flow through to A/R, A/P, sales, costs, inventory etc etc. These systems also have tons of
potential for data analysis which enables you to manage your business better.

Do you really need it though? That depends on a lot of factors which we will talk about today.
There are endless options that run the gamut from relatively simple and inexpensive to very
complicated and costly. Many factors will determine what type of system makes the most sense
for your organization.
Slide 7

ERP Modules

Financial
Accounting
Module

What can an ERP system do?

Many people think of an ERP system as accounting software – Accounts Payable, Accounts
Receivable, General Ledger and Financial Statement preparation. That is one component of an
ERP system but only a tiny part of what is available to help your business operate more
effectively. ERP modules are separate organizational systems that are linked together to
facilitate the flow of information between business functions and manages connections to
outside stakeholders. Some of the common ERP modules are as follows:

Financial Accounting is a core module any ERP system. An ERP system will automate and
integrate your financial processes and result in error free transaction processing. This was an
earth shattering transformation for my previous organization where we had been operating
with an accounting system from the 1990s - prehistoric days in today’s fast changing
environment.

This is often the catalyst for implementation of an ERP system and a natural first phase of your
process. Start with the accounting system and add on in stages.
Slide 8

ERP Modules
Financial Management
Accounting Accounting

Management Accounting – An ERP system can help with your budgeting process by having each
department head prepare his or her own budget and then consolidating for the entire company.
Progress against budget can then easily be tracked and results can be manipulated to look at
information in numerous different ways. Activity based costing can also be used and
monitored.
Slide 9

ERP Modules
Financial Management Human
Accounting Accounting Resources

Human Resources – The ERP system can be used to control many HR functions including time
and attendance and vacation tracking, payroll processing and calculating remittances. My
previous organization had significant training requirements for employees due to the dangerous
nature of the work. Our ERP system was able to track training by employee and flag areas of
concern.
Slide 10

ERP Modules
Financial Management Human
Accounting Accounting Resources

Manufacturing

Manufacturing – An ERP system can manage and monitor all stages of a manufacturing process
including engineering, scheduling, capacity, workflow management, just in time production etc.
and feed this information into the management accounting model to determine costing.
Slide 11

ERP Modules
Financial Management Human
Accounting Accounting Resources

Order
Manufacturing
Processing

Order Processing – Today’s ERP system can do everything from order entry, credit checking,
inventory control, shipping, sales analysis and reporting and sales commissioning. This
information can be linked to the manufacturing, supply chain and accounting modules to ensure
you have the inventory required when it is required and that sales are appropriately recorded.
Thorough data analysis is available to monitor sales trends to determine where adjustments are
required throughout the supply chain.
Slide 12

ERP Modules
Financial Management Human
Accounting Accounting Resources

Order Supply Chain

Manufacturing
Processing Management

Supply Chain Management – Speaking of supply chain – planning, scheduling, purchasing,

inventory and warehousing can all be easily managed through your ERP system.
Slide 13

ERP Modules
Financial Management Human
Accounting Accounting Resources

Order Supply Chain

Manufacturing
Processing Management

Project
Management

Project Management - project costing, resource planning, billing, time and expense
management can all be tracked through your ERP system.
Slide 14

ERP Modules
Financial Management Human
Accounting Accounting Resources

Order Supply Chain

Manufacturing
Processing Management

Customer Other
Project
Relationship Modules
Management
Management …

Customer Relationship Management – most ERP systems offer CRM modules or can be easily
interfaced with popular off the shelf software such as Salesforce. CRM systems allow you to
track all customer interactions in real time, record results of meetings, schedule follow up etc.
Thank you for joining me – in the next lesson we will talk about what type of systems are
available.
Slide 15

Implementing an ERP System for Your Organization

LESSON 2: Choosing a Deployment Strategy

Cloud ? On-premise ?

Lesson 2 – Choosing a deployment strategy

Now that we understand better what modules are included inside our ERP box, in this lesson we
will talk about the deployment options. I’m Jennifer Nicholson.
Slide 16

Cloud
Deployment

On-Premise
Deployment
Your
Company

Cloud vs. On-Premise ERP system – What You Need To Know

There are two types of deployments for ERP systems that you can choose. Before you make any
decisions about what vendor to use or what modules to implement, you need to decide
whether you are going to go with an on-premise or cloud solution.

On-premise solutions are those that you physically install on your servers and that you maintain
and support with in-house IT staff.

Cloud solutions are hosted by the vendor’s server and managed by their employees. Your
company then subscribes to this service and accesses it on-line.

There are significant long-term differences between these options so the decision can’t be
made lightly.
Slide 17

Cloud
Deployment

Ongoing subscription cost

On-Premise
Deployment
Your
Hardware,
Company
Physical space
IT staff

Ownership Costs
There are significant upfront costs with an on premise ERP implementation. The hardware
must be purchased, you must ensure you have sufficient fire-proof, secure, well-ventilated
space to store the hardware and IT staff must be hired and trained to manage the hardware and
software. On an on-going basis, staff must be on-site to ensure the system is always running,
that the maintenance is maintained and that upgrades are completed as required.

In contrast, with a cloud system, the hardware is stored and maintained at the vendor’s site.
The vendor should have a sophisticated support department that can remotely trouble shoot
and deal with any issues.

Many executives are suspicious of cloud solutions as they worry about security of their data and
like the idea of having the bricks and mortar of their priceless data on site. Cloud solutions have
evolved a lot over the last decade and have a lot of benefits. The ownership costs for a cloud
based deployment include some sort of subscription or all-in licensing cost.

With either platform there needs to be significant upfront planning and development.
Slide 18

Cloud vs On-Premise ERP Support and Security

System Performance and Accessibility

With on premise solutions you will have a devoted IT team that should know the system inside
and out and be able to deal with any issues that arise. If you go this route ensure that your
vendor has a sophisticated help desk who can answer questions as required. You will be quite
reliant on your in house IT team which is a risk as people change jobs and you may be left
without the support you require.

Cloud solutions are developed by some of the best software engineers in the industry and
updates are pushed out on a regular basis so you should always have the most current version.
Security is likely to be best in class as well as cloud ERP vendors take the security of their client’s
data very seriously. Disaster recovery and back up procedures should be well defined and
sophisticated.

Understanding the deployment models upfront helps to envision how the new ERP will be
implemented and run on a day to day basis. In our next lesson, we will talk about ways we
should initiate our project.
Slide 19

Implementing an ERP System for Your Organization

LESSON 3: Initiating Your ERP Project

How do I set myself

up for success ?

Lesson 3 – Initiating Your ERP Project

With the basics out of the way in our first two lessons, I want to talk about how you initiate your
ERP project. I’m Jennifer Nicholson.
Slide 20

“Implementing an ERP is like renovating your kitchen, it

always costs more and takes longer than you think.”

ERP Implementation – Steps For Success

What you Need to Know
First of all, putting in a new ERP system is a GIANT process. It will require a lot of time,
resources and money. It is like renovating your kitchen – it always costs more and takes longer
than you think it will. Even relatively simple implementations can be very expensive and time
and resource consuming.
Slide 21

Find the right project manager

ERP Implementation – Steps For Success

Project Management
There are many steps and factors that need to go well to achieve a successful ERP
implementation but I believe that a strong, dedicated project manager is the most important. A
long term employee with an in depth knowledge of the company’s processes and systems is
best if possible. This person should be seconded for as long as it takes to get the job done
properly. This of course means that he or she will have to be back filled at a cost.

This approach is usually better and costs less than hiring an external consultant to manage the
project. Using a mid-level employee that knows where all the skeletons are hidden will likely
yield a better result at a lower cost than an uninitiated consultant at an hourly rate.
Slide 22

Get Executive Support and Commitment

ERP Implementation – Steps For Success

Executive Support and Commitment
Having a committed executive group is an important key to ERP implementation success. If
everybody in the organization can see that the C-level are aligned around a successful ERP
launch, they will behave the same, which will allow you to focus your attention on other key
success factors. Everyone fears change and ERP implementations have a reputation for being
high risk. Frequent consistent communication and clear messaging about the thought process
behind your decisions will increase the likelihood of gaining support. I have been there and
without executive commitment and support, it makes it very difficult to move the process
forward.

It should not require an enormous effort to achieve and maintain leadership commitment but
as we all know executives like to get their way and it can be hard to achieve consensus on the
must haves versus the nice to have features and modules. Everyone’s area of responsibility
becomes the most important. Strong leadership and project management are crucial to keep
the project from going out of control. The fact that there is an ERP project means that there
was sufficient interest and commitment to fund the strategically important initiative in the first
place so hopefully the needed support is there.
Slide 23

Get Executive Support and Commitment

1. Communicate!
2. BIG picture view
3. Get feedback & change

ERP Implementation – Steps For Success

Executive Support and Commitment
So, to ensure that leadership remains confident and supportive of the ERP effort you should
take these proactive steps:

• Try to be the first to communicate process change decisions. This is not always easy;
especially if you are on routine monthly or bi-weekly review cycles. Make use of emails
during the intervals. The critical point is to make certain that decisions are explained in
terms of sound business judgment. If your explanation is not compelling, it may not be a
good decision.
• Try to always present executives with a bigger picture narrative when possible. To the extent
that you can arrange numerous tactical ERP decisions into a strategic picture with
implications, you will engage executives in their comfort zone.
• Solicit executive feedback and do not be defensive if you receive it. Your goal is to remain
tightly aligned with the executive leadership, and that will only happen if they are confident
that you can listen to and respond to their concerns. Also, this keeps them involved in
decision-making; you want them to think of these as “our decisions” not “your decisions”. If
your executive leadership remains steadfastly committed, everyone else will follow along.
This in turn, allows you to focus your time on more productive tasks. Keep your leadership
group aligned around and enthused about the project, and your probability of success goes
up significantly.
With the right project management and the executives on board, we are now ready to start
talking to vendors.
Slide 24

Implementing an ERP System for Your Organization

LESSON 4: Selecting a vendor for your ERP

Which vendor Should I hire

should I a consultant
choose ? to help me?

Lesson 4 – Vendor Selection

In this lesson, we are going to talk about vendor selection for your ERP project. I’m Jennifer
Nicholson.

At this point, I’m going to assume that your business has already developed a robust
understanding of its needs. This assessment will vary considerably between organizations. You
need to consider not only your existing business model, but other possible changes in the
future. For example, if you are acquiring other businesses, how will these new businesses be
integrated to the new ERP. The business needs analysis is very important to hammer out prior
to talking with vendors.
Slide 25

Finding the right vendor can be like shopping at an open

market, so many choices and you can’t try them all!

ERP Implementation – Steps For Success

Vendor Selection
The choice of vendor for your ERP software is critically important to the success of your project.
And all vendors lie – you heard me – all vendors lie. According to their sales people – whatever
you need, they can do it. And they can do it more quickly, easily and at lower cost than anyone
else.

A good fit for your industry and business ensures a relatively smooth transition from old to new.
Solutions which are efficient and intuitive speed up the learning process, foster the sense of ERP
being an improvement, and contribute to organizational confidence.
Slide 26

VENDOR

Does their ERP product fit?

Does their culture fit?

ERP software vendors need to be evaluated along dual pathways:

• The first is the more obvious one; is their ERP product the right fit for your industry and
business model?
• The second is less tangible, and therefore more difficult to evaluate: is the vendor’s culture
the right fit for your culture?

Determining the fit of the software product for your business is the more important decision,
but should also be the most objective. Using an off the shelf product with minimal
customization is usually the best idea as most of the bugs have already been fixed. Your vendor
should be able to put users in front of you from your industry who make you feel positive about
the strengths of the product. You may not find exact industry overlap but process similarity is
really the most important thing.
Slide 27

Create a Vendor Evaluation Scorecard

ERP Implementation – Steps For Success

Vendor Selection

I can’t stress how important verifiable references are here. You need to talk to people who have
implemented the same system – with the same staff members – to ensure that this really is the
right system for you. And ensure some of those people have used the system over time and
that all the bugs have been worked out.

Construct a basic numerical scorecard around the critical features/deliverables you need, and
use it –and trust it - when comparing products. This will help you defend your choices to your
executive and Board as this is an objective measure of what is appropriate. Be careful when
someone with no particular track record in your industry tries to buy market entry with a
noticeably low asking price, and remember that there is no amount of money in your company
sufficient to fix a bad ERP solution. Pick a vendor who you judge will survive for the long term,
and supports on-going development for your business.
Slide 28

Pre-sales!
Create a Vendor Evaluation Scorecard

ERP Implementation – Steps For Success

Vendor Selection

Bear in mind that there are going to be two very distinct phases to your relationship with your
ERP software vendor.
• During the sales cycle, you will be the most important person in the world. There will be no
request too large, and no question too small that does not elicit an almost obsequious
response.
Slide 29

Post-sales!

ERP Implementation – Steps For Success

Vendor Selection

After the sale, though, the actual business relationship begins, and that is the relationship that
you must do your best to gauge. You should feel positive about your vendors; that they are
ethical, honest, and would never intentionally mislead you. You should feel like they consider
your wellbeing important, and that you will be able to work together through unexpected
problems.

Selecting an ERP vendor is a big, strategically important decision. Involve as many peers and
viewpoints as you can possibly manage. Feel good about being able to articulate the reasoning
for your choice, numerically if possible. Don’t expose yourself to risks without commensurate
rewards. Picking the right software vendor is a huge step toward to ERP success.
Slide 30

Hire an ERP Consultant?

• Help choose a vendor

• Supervise the
I’m an experienced
implementation ERP consultant

• Do the
implementation

ERP Implementation – Steps For Success

Use a Consultant
When trying to pick an ERP vendor, I strongly recommend hiring a consultant who really
understands your business, what you really need, what software is available to meet your needs
and can work with the vendor on your behalf to get the best price and service possible. We
used a team from one of the big four accounting firms to help us choose a system for us.

Depending on the size and scope of your ERP implementation, you may also want to use an
independent consultant to help during your implementation. Not every ERP project requires a
full time consultant team. Whether or not you need consultants depends on how much in-
house knowledge you have about your ERP software (and to what extent that software can be
self-taught); how much time you have to complete the project; and how many modules and end
users you are trying to implement at one time.

At this point, you’ve got your external resources aligned. In the next lesson, we will begin
discussion how we align our internal team for the ERP implementation.
Slide 31

Implementing an ERP System for Your Organization

LESSON 5: People Before Technology
Who do I want
Will our team
on the
embrace the new
implementation
ERP system ?
team ?

Lesson 5 – People before technology

In this lesson, we are going to spend a moment talking about the people aspect of the ERP
implementation. Without the buy-in of the employees, the ERP implementation will be a
failure. I’m Jennifer Nicholson.
Slide 32

Change Management
Overcoming this reaction…

ERP Implementation – Steps For Success

Change Management
A wise and consistent investment in change management will be one of your most important
contributions to your project’s success. ERP is so large, and touches so many people that you
must have a well thought out, methodical approach to educating all your stakeholders about
the change that is about to occur and the steps and timeline in the process. People naturally
jump to “Am I going to lose my job?” This is a legitimate concern as one of the reasons we
increase automation is to reduce human interaction with transactions. Try to be sympathetic
about their concerns and help them understand its business reasons.

But what exactly is Change Management? How do you ensure people are ready for a project
and system that is potentially going to consume a significant amount of their work time over the
next six months at a minimum and then once implemented will change the way they work.
That’s when we realize we don’t really have a clue about what change management is or how to
accomplish it. The good news – and most critical thing to remember – is that the way people
come to believe things and form opinions is both consistent and predictable. By managing to
those predictabilities in terms of timing and content, the normal discomfort associated with
change on the scale of an ERP project can be reduced to manageable levels.
Slide 33

5 Steps to Deal with Change Management

1. Identify everyone that will be affected
2. Communicate to the group what changes
will be coming
3. Establish why this new system is necessary
4. Explain what you need from them in order
for success
5. Give frequent project updates

ERP Implementation – Steps For Success

Change Management
The key steps on your journey to change are
• Identify everyone who will be affected by the change and recognize this is probably a bigger
group than you will initially think
• Communicate to this group what change will be coming
• Establish the compelling business reasons that make ERP necessary
• Explain how they must behave in order for the project to succeed and
• Give frequent project updates, always reiterating steps two through four. If it ever feels to
you like you are over communicating, or that your audience could give your presentation
because they’ve heard it so many times, you are exactly where you want to be.

There is no question that on one level, ERP is a technical project, requiring intelligent design,
seamless logic, and sophisticated math. But no matter how robust the solution, ERP will only be
successful if people embrace it and use it as designed. That behavior will not occur without
change management effort.
Slide 34

Get the Right ERP Implementation Team

ERP Implementation – Steps For Success

Team Talent
To cite “assembling the right team” as a key ERP success factor seems as obvious as saying the
key to growing your business is to increase your revenue, or the key to wealth accumulation is
to earn more than you spend. Yet every ERP project manager will have to fight – and usually
compromise – for access to the right talent. The talent an organization assigns to its ERP team
demonstrates to a large degree its commitment to, and comprehension of, long term
organization health. Five years after the implementation of a mediocre ERP system, it is of no
value to regret assigning mediocre talent to the effort.

A talented implementation team sees the big picture more completely, appreciates the
implications of the strategic plan better, evaluates decisions not only in terms of what is today,
but what is likely to become tomorrow, and has the professional capital and organizational
respect to sell difficult, but necessary process changes. So what are some of the indicators of
good talent when evaluating individuals for implementation team participation?
Slide 35

1. Promotable
2. High Team
Intelligence
3. Depth of
Understanding
4. Good listener & Who do you need?
adaptable
Who do you want?

ERP Implementation – Steps For Success

-First, if possible, individuals should be seen as promotable. People who are promotable have
less allegiance to the status quo, and will later populate the organization’s higher ranks with
fundamental understanding of how the business processes were designed.

-Secondly, an individual who has high personal intelligence is nice, but an individual who has
high team intelligence is a necessity. Being personally smart has nothing to do with – and can
occasionally interfere with – being team smart. Being team smart means you recognize the
point of consensus, and do not belabor a conversation beyond that point; it means that you do
not steer conversations in interesting, but unimportant directions; it means that the quality of a
decision is evaluated solely on its effect to the organization; it means that whatever personal
ego you have is left at home where you can conveniently pick it up after work.

-A third attribute is depth of understanding. Talented people not only understand “what” is
required, they understand “why” it is required, and this comprehension is incredibly valuable
when it comes to determining what business practices are subject to change and which are not.

-And finally, the most intangible, is the ability to listen to multiple points of view, and assimilate
the best parts of all into a solution that is better than any. If you assemble a strong team,
everything about the project goes better. Change management is more effective because the
team members have credibility. Testing goes better because the test scenarios are chosen
wisely, and executed intelligently. Fewer milestones are missed, as team members are used to
accepting additional responsibility, and pitch in to help wherever needed. There are many
factors that influence the success of an ERP implementation, and team talent is one of the
biggest. A highly talented team alone does not ensure that your implementation will be world-
class, but mediocre talent alone will ensure that you have a mediocre implementation.

In our next lesson, we are going to start talking about the work that needs to be done.
Slide 36

Implementing an ERP System for Your Organization

LESSON 6: Data Cleansing Before Your ERP Conversion

Is my data Will my existing

ready for a data jeopardize the
conversion ? implementation?

Lesson 6 – Data Cleansing

In this lesson, I’m going to discuss the importance and an approach to ensuring that we have
good, solid data to populate the new ERP system. I’m Jennifer Nicholson.
Slide 37

Cleansing Your Data

CLEAN Master Data

Testing Training Go-live

ERP Implementation – Steps For Success

Data Cleansing
Ask any veteran of an ERP implementation to cite critical success factors, and you will always
hear “data cleansing” near the top of the list.

What is “data cleansing?” you ask. It is the tedious process of finding and correcting errors in
your data to ensure each item is only included once and is correct. Different users can enter the
same piece of information several different ways. This then results in the same customer, part,
vendor etc. being recorded numerous times and makes it hard to find the correct data when
searching.

Master data completeness and accuracy is crucial to ERP implementation success. Many people
vastly underestimate the scope and complexity of data cleansing.

Let’s talk about why data cleansing is important to ERP success, and some tips to improve your
approach. Data cleansing is a huge factor in ERP success because it is leveraged in every phase
of the operation.
- An ERP implementation will be exactly as successful as its testing execution, and the only
limitation on testing execution is master data completeness and accuracy.
- An ERP implementation will be exactly as successful as its training program, and effective ERP
training requires master data completeness and accuracy.
- An ERP implementation will be exactly as successful as its synchronization of business data at
go-live, and that synchronization requires master data completeness and accuracy.
Every success that occurs has complete and accurate master data as a prerequisite.
Slide 38

Data Cleansing – Prepare, Prepare, Prepare

Challenges Approach
• Multiple system, • Make progress where
data dispersion you can
Address Field • Iterative process • Schedule routine review
South Main St. • Hard to measure meetings
progress • Establish an aggressive
South Main Street completion plan
S. Main Street • Assign the right people
to the task
S. Main St.

ERP Implementation – Steps For Success

Prepare, Prepare, Prepare
There are three primary reasons that people underestimate the task of data cleansing, which, if
avoided, will make your ERP implementation better:
• Because master data is usually dispersed among multiple systems in legacy, people rarely
appreciate how much of it there is;
• Some data cleansing ends up being an iterative process, which creates a bit of a Catch-22 –
you can’t test without master data, and the reason for the test is to evaluate master data;
and
• It is extremely difficult to objectively measure progress on data cleansing, particularly in
light of number 2; data that you might have considered cleansed and complete does not test
well, and suddenly it becomes “uncleansed.”

But to be forewarned is to be forearmed, so with this knowledge, there are lots of steps you can
take to improve the data cleansing process:
• Make progress where you can. Some data will take time to accumulate, but in the
meantime, you can recognize that you have addresses on “South Main Street”, “South Main
St.” and “S. Main Street” and “S. Main St.” and work on fixing those. Look for zip code and
city mismatches.
• Schedule routine data cleansing review meetings, and be relentless about probing for
bottlenecks and problem areas
• Establish an aggressive completion plan – which you probably will not hit – but invest the
time to understand exactly why you are not hitting it.
• Assign the right people to the task. Smart, hard-working, detail-oriented people – match
the right skills with the job need.

Unlike most of an ERP implementation, the lessons learned, and the processes created for data
cleansing become part of an organization’s DNA; complete and accurate master data will be as
essential for success two years after go live as it is on day 1. Make it part of your ERP success
story. In our next lesson we will talk about testing.
Slide 39

Choosing an ERP System for Your Organization

LESSON 7: ERP Testing Strategy

How will the Will it do

new ERP what we
work ? expect ?

Lesson 8 – ERP Testing Strategy

In this lesson, we are going to discuss the testing strategy phase of our ERP implementation
plan. I’m Jennifer Nicholson.
Slide 40

Testing,Testing… 1, 2, 3…
Is this thing on?

ERP Implementation – Steps For Success

Testing
It would be easy to expect that after tens of thousands of business implementations, ERP
software ought to be mature enough to just run the “install wizard”, go get a cup of coffee, and
come back to a completed ERP system. Unfortunately, ERP systems are so flexible and complex
that a huge success factor for an ERP implementation is aggressive and extensive testing.

Testing requires more than just assigning manpower. It is an iterative process, which means not
only testing, but evaluating problems, and fixing things. It means having valid master data
available to support the test, and understanding the process you are testing. It means testing
development objects, and how they interact with everything else. It means having a dedicated
test client, which can be controlled and monitored. Each test leads to a bigger test, so there is a
natural progression of testing sophistication over the course of an implementation.
Slide 41

Transactional Validity Testing

Integration Testing

User Testing

Rehearsal Testing

ERP Implementation – Steps For Success

Testing
After initial configuration is completed, all planned transactions are tested for simple
transactional validity: I can enter a sales order; I can report production; I can place a purchase
order. Some problems will emerge from these tests requiring revision and re-testing. This level
of testing is done on an individual basis, with each functional team understanding that all of
their transactions need to be successfully tested by a given milestone date. Shortly after this
milestone date, the first round of integration testing should be scheduled.

“Integration testing” in this case, means testing an entire business process, from initial input to
final output. An integration test is a scripted arrangement of the ten to sixty sequential
transactions required to execute a specific process in the real world. The key to making this
phase successful is to identify the right fifteen to thirty scripts that represent 90% of the
business processes, and working hard on process improvements until they all execute smoothly.

The next round of integration tests involves subject matter experts and super users. During this
round of tests, random but real world data is introduced. The randomness ensures that the right
processes were identified in integration test one; using real world data allows business
participants to help evaluate the output. During this round of testing, master data must be well
developed, because the ability to enter real orders with real customers means that master data
is available to feed the process.
 Subsequent rounds of integration tests try to rehearse and execute a go-live, including
synchronization of inventory, sales orders, purchase orders and production orders, and
replicating one hundred percent of the activity of a business for a given time period. Every test
cycle teaches, uncovers problems, and makes go-live more manageable. Eventually, an inflection
point occurs during testing which is incredibly important for a team’s morale and attitude; it is
the realization that the team is certain of a successful go-live. That knowledge and confidence –
which can only come from repeated and successful testing - is essential to an implementation’s
success.

The next step is to set up user training, which I’ll describe in the next lesson.
Slide 42

Implementing an ERP System for Your Organization

LESSON 8: ERP Implementation Training Strategy

How will I get

everyone to use
the new system ?

Lesson 8 – ERP Implementation Training Strategy

. I’m Jennifer Nicholson. In this lesson we are going to talk about a strategy to get everyone
trained and successfully using the new system
Slide 43

User training must be carefully thought out and

delivered in time for the Go-live

ERP Implementation – Steps For Success

User Training
One of the best ways to increase the likelihood of an ERP implementation success is with an
effective end user training process. There are several levels of escalating contribution that can
result from a well executed end user training program. Ensuring that on day one, everyone can
logon to the new system, get to the transactions they need to do their jobs, and have the
knowledge to execute the transactions by themselves is the most basic level of success. Without
this baseline of competency, there is no question the effort would fail. This level of competency
can only occur if the end users have received effective educational instruction, and have been
asked to practice applying what they have learned.

The second tier of end user training success is to have some end users sufficiently trained so
that they can participate effectively in volume testing leading up to go live. These people
contribute beyond their task participation because they bring real world eyes to problems to
which the implementation team may have grown blind. They recognize what areas of training
are going to be especially problematic. Also, they can look at system output and in a glance spot
common sense errors that a team unfamiliar with the day-today data might overlook.
Slide 44

Identify and maximize your

“problem solvers”

ERP Implementation – Steps For Success

Find Your Problem Solvers
The highest benefit of end user training is to increase the effective size of the problem-solving
team at go-live. “Problem solvers” are helpful, positive energy contributors to an effort; much
more valuable than the more common “problem identifier”, who are content to throw a
problem over the wall to the implementation team, and then walk away from it.

The best way to increase the number of problem solvers is to identify individuals during training
who either show unusually quick comprehension of the material, or unusual curiosity, and to
give those people additional training and mentoring. All of these levels require a consistent and
logical education process. Everyone in the organization who will touch ERP must be identified by
name and job function. Every transaction required for that function must be identified, and
assembled into an appropriate security role.

Training material must be prepared, and sufficient practice problems set up so that everyone
can engage in hands-on practice. Different types of transactions require different amounts of
preparation and master data. With five valid customers and five valid materials, you can create
dozens of different sales orders, but you can’t report production unless you have a work order
and sufficient inventory of all components.

Instructors must be enthusiastic, knowledgeable, and patient. Training must be timed shortly
before implementation, or else retention goes down dramatically. Getting the maximum
number of people competently trained in ERP for go live is an incredible boost for success. The
need to conduct training occurs during the exact same time frame that anxiety about go-live is
peaking. Keep everyone focused on the prize; training is a key success factor.

In our next lesson, a few ideas on managing the ERP budget.

Slide 45

Implementing an ERP System for Your Organization

LESSON 9: Managing Your ERP Budget
How should I set
and manage the
ERP budget ?

Lesson 9 – Managing your ERP Budget

In this lesson, I’m going to talk about a few ideas on managing the ERP budget to maximize the
likelihood of success without running out of money. I’m Jennifer Nicholson.
Slide 46

Watch the budget

Expect overruns and delays

ERP Implementation – Steps For Success

Spending Wisely
It has been said that an ERP implementation will cost you twice as much as you planned for by
the time you are finished. Without a doubt, it is easy to overspend an ERP budget. If you follow
the rules outlined above however and plan, plan, plan the chance of this happening is greatly
reduced.

Plan the project, plan the testing and plan the training and implementation. Make sure you
estimate your spending over time and budget accordingly. Spending all of your budget in the
first few months may be a career limiting move and the meeting to request additional funding
from your steering committee may be horribly painful for you. Make sure you budget for what
you think it is going to cost, add a generous contingency on top of that and then increase it even
more. Get approval for the high number up front and you will come out a superstar when you
complete the project significantly under budget.

Monthly spending is overwhelmingly a function of people, and the easiest way to make
adjustments is to reduce consultants and add highly talented people from within your
organization. Generally speaking, you will be able to pay two or three internal people for every
consultant you can do without. Lastly, use that final twenty-five percent surplus budget in the
last six weeks before go-live and first six weeks after.

There will be unexpected problems, and that is when you need the flexibility to spend money
aggressively, and wisely, in order to quell rumors, and find speedy resolutions to emotional
problems. Once people recognize that problems are being corrected quickly confidence soars,
and the probability of success takes a huge jump up.

No one wants to spend any more than they have to on an ERP implementation, but its better to
have an ERP cost a little more and be successful, than to have a cheap ERP implementation that
fails.

In the final lesson, we will look at advice for maximizing your successful ERP implementation.
Slide 47

Implementing an ERP System for Your Organization

LESSON 10: Defining ERP Implementation Success

How can I How can we

win ? win?

Lesson 10 – Defining success

In our final lesson, we are going to look at some ideas on setting yourself and your team up for
success. I’m Jennifer Nicholson.
Slide 48

Define what success looks like

ERP Implementation – Steps For Success

Defining Success
Defining success for an IT project seems to be inherently more difficult than defining successful
financial expectations, or manufacturing objectives. Yet without an articulated set of post go-
live expectations, the success of an ERP implementation becomes a matter of opinion – and in
the worst case, a matter of infinite opinions. If an organization is lazy, and adopts a default
metric of how many people are complaining about the new ERP system, then almost all
implementations would be deemed failures. It is essential for the focus of the implementation
team, for the health of the organization, and for appropriate allocation of resources that a set of
measurable criteria be put into place prior to go-live which are the final arbiters of ERP success.
Slide 49

Think achievable!

ERP Implementation – Steps For Success

Think Achievable
The litmus test of a sufficient definition is one that, no matter what else additional happens or is
said, you will feel the implementation was well done. For example, a simple success statement
could be “Convert over to ERP”. But if you couldn’t ship anything the first two days, would you
be disappointed? If so, how about “Convert to ERP with no significant business disruption”.
That’s better. How about “Convert to ERP with no significant business disruption and no
negative impacts on external customers.” That’s even more specific, and leads to discussion
about whether the correct phrase is “no negative impacts” or “no ERP-related negative
impacts”. It is also perfectly acceptable if success criteria are time phased, and represent a
sequentially higher bar over time.
Slide 50

Implementing an ERP System for Your Organization

Course Wrap Up

1. Failing to plan is planning to fail

2. Stay intimidated every day
3. Surround yourself with people
good people
4. Get everyone involved

ERP Implementation – Steps For Success

Conclusion
If you’ve read and thought about each of these success steps, you are probably feeling a
combination of intimidation and disbelief. Intimidation because this stuff is hard work, and
almost none of it is something for which many people have natural skill or previous training.

In this final lesson, let’s review a few key takeaways from this course as you embark on your ERP
journey:

First, if you take nothing else from this course, believe that these success steps are real and
necessary. Underestimating the difficulty of an ERP implementation is a big mistake. Find people
who have been down a road like ERP before, and whose opinions you trust – IT professionals,
consulting partners, software vendors, other project managers – and ask them if the items on
this list are critical for your project success.

Second, stay intimidated every single day of your implementation project. Do not be paralyzed
with fear; just remain respectful of the multitude of ways in which your project can derail, and
use that respect to motivate the effort to make sure it doesn’t.
Third, learn early on who you can trust without reservation to help you with these steps, and
lean on these people heavily. By now, you recognize that these success steps are much more of
a philosophical anchor than task items than can be crossed off a “to do” list.

Fourth, you need to make sure everyone can see you staying involved in the change
management, data cleansing, and business process change efforts. The paradox you face is that
even though you have no training or previous experience – really no qualifications at all –
people expect that you will have a successful implementation. The only logical way out of this
paradox is for you to assimilate as quickly as possible the cumulative knowledge of the many
who have also done what you are doing, and by doing so, begin building your qualifications.

Because an ERP implementation is difficult does not mean it cannot be both fun and create an
enormous sense of accomplishment and satisfaction.

Thank you for your time and interest in this topic. My name is Jennifer Nicholson. Please feel
free to reach out to me if you have any further questions on this topic.