Managing the PLM/ERP Implementation

Possibly the most important issue in ensuring the success of enterprise systems is that of managing change effectively. Such systems introduce massive changes in terms of procedures and practices that the firm’s employees are used to. Large systemic changes pose a threat and raise the levels of anxiety in the firm. Figure depicts some of these issues.

Job roles are changed and redefined, the employees are trained for using the system in a manner that suits the new processes rather than what the employees were comfortable with, and the flexibility that they enjoyed, in many cases, is replaced by a rigid process.

Change management entails training staff in the new procedures, creating new teams, defining new tasks, creating new reporting relationships, and creating a new culture in which employees will work. This requires careful and sensitive handling of involved employees, right from the start of the project. Key employees from departments and groups have to be recruited for guiding the system’s implementation, and they have to be encouraged to participate freely rather than resist the system.

Although change is not easily accepted, it is achieved after employees begin to see the visible benefits of the system through reduced workloads or through the effective use of the system. The management has to tread carefully and nurture this change when it becomes visible.

The second most important criterion for the successful implementation of an enterprise system is that of the top management support. Almost all the successful cases of PLM/ERP deployments show that the top management was deeply committed to the project and supported it all through the implementation steps. The top management has to be involved from the start and stay with the project management team right through the duration of the project. They should openly take responsibility for the success of the system and announce rewards and incentives for its successful operation.

The top management is also the key ingredient for change management. Their acceptance, support, and encouragement of change make possible the creation of new cultural norms and business practices. In several large and successful PLM/ERP roll-outs, the top management spent much time talking about the project to employees, participated in meetings and training workshops, wrote on personal web pages and e-mails to staff, and spoke to news media about the project. They created a positive environment for the new system and celebrated its success.

Controlling costs is the other critical issue in ensuring the success of the enterprise system implementations. The costs of implementing and running an PLM/ERP system , depending on the size of the company.

Of the many items that managers usually underestimate, training of staff and personnel is the most frequent. Since almost all employees of the firm are affected and have to learn the new system, this cost grows as people realize the challenges of entering and using data that affects many others in the firm, and demand more help and training. 

Another area of increased costs is Customization of the package. As the implementation proceeds, many firms realize that the changes in processes being demanded are not possible or difficult and then they resort to customization, which requires extra work from the vendor and hence extra costs. Customization also leads to further demands on testing and integration, which also add to the cost. Other areas that add to increased costs are data conversion and migration (from old formats to the formats required by the system); costs of consultants who are hired to solve specific and hard problems; costs of time lost by the best employees in helping with the new system rather than working on their own tasks; and the loss in productivity immediately after an implementation as employees have to work with an entirely new system.

Project Management and Vendor selection are also key issues for the success of the project. Project management entails that the management and the implementation team have to keep a sharp tab on the deadlines and milestones. If these are missed, it is certain that later milestones will also be missed. Delayed implementations cause loss of morale and a poor image with all stakeholders. Key to the success of the project is the implementation partners. Few firms have internal skills to manage an enterprise system implementation on their own. They invariably rely on the vendor to do the implementation or a third party, who act as consultants. The selection of this partner is very important as the partner needs to have the necessary skills, experience, and a cost structure that matches the expectations of the client firm. There are many examples of lawsuits against implementation consultants by clients as the project went sour or failed totally and wasted millions of dollars.

Reference:  MBA course material

Best Regards,

Anil