ERP Strategy: Points to note during ERP roll out to child entities

Last meeting of our small group brought an interesting question to the fore when one of the members stated how they ended up customizing the ERP to a large extent when rolling out the solution implemented at their parent organization to one of their plants in China. Also, the solution, even after implementation, was not acceptable by the local team as it took away a lot of comfort from them and the performance of the system was painfully slow reducing their efficiency as a result.

They are now thinking to hire a consulting organization once again to do an assessment study on how could they improve the solution and what is the time-period and cost of the modified solution will come. It was coming out from the discussion that their organization as well as the service provider did not spend time on documenting and understanding the requirements of the child entities before finalizing the solution for the parent organization. This, though, did not hurt them during the 1st implementation but as soon as they tried to roll out the solution in their other plants, lot of issues started popping and after initial muscle flexing, the parent organization had to succumb to their demands of a better solution and hence more expenses.

What do you think are the points that are required to taken care of, while rolling out ...
the solution to your child entities or subsidiaries so that the ERP objectives of standardization, upgradeability, least customization, transparency and end to end visibility are not compromised? I pondered over them and came out with a few points that we all need to look at before rolling out to subsidiaries:
  • Best practices of an ERP Solution: Each solution in ERP will be different from the other one even if the ERP product is same but the key design principles like below should be given utmost importance while finalizing the solution even if you do not have to roll out it further (who knows what lies in future and your organization makes an acquisition)
    • Make sure that the solution is scalable. It means that:
      • It has least number of customizations and highest leveragability of standard functionalities  of the ERP product
      • All custom components are compliant to coding standards for easy upgradeability
      • Extendable design parameters are there to accommodate future mergers, acquisitions and de-mergers
    • The solution should be a standard solution and should have high level of automation
    • It should have optimized and standard processes mapped to ERP for uniformity across business functions and geographies
    • Reduction in manual touch-points and handoffs to reduce revenue leakage, reduce staff cost and improve process efficiency should be one of the target areas
  • Document and do a first level study of key subsidiary processes: In case you already know that this solution is going to be rolled out to the subsidiaries or other child entities, then it will be worthwhile to document the inventory of processes, pain areas and important functionalities of the existing system. Keeping in mind, these points will help you design more standard solution that can be rolled out to the other entities too
  • Design your strategies at least 2 years ahead of time: Almost all large ERP implementations take an year to complete and by the time, they get implemented some obsolescence in the strategies starts coming in and this becomes more visible in subsequent rollouts as these happen further down the line
  • Manage change in parent organization, most effectively: The world is small these days and information spreads faster than fire. If the implementation in parent organization had some issues and brought some unrest in the employees about what will happen after this, then this will flow to the subsidiaries too and please expect to see lot of resistance in your rollouts which will make your job tougher
  • Use carrot and stick judiciously: Yes, carrot is required to reward the change agents and best performers in the ERP implementation process and at the same time a tick is required to snub the unjustified resistance. All ERP deployments world over have seen not only the change management issues but also the resistance to the fact that it takes away the subjective decision powers from few corrupt executives. We need to keep an eye on those business functions and executives and act accordingly
  • Keep the solution integration friendly: While most good ERP products takes care of this aspect but a sub optimal solution can still take away this benefit and the system is rendered difficult to integrate. This brings lot of issues if any of the subsidiaries, is using a best of breed system or a system which will not be replaced after the rollout, then rolling out the solution will become not only tougher but also tedious.
I am sure there must be more things that we need to keep in min while rolling out the solution to the child entities and let us include this as a task in our project plan for our current implementation.

No comments:

Post a Comment

Your thoughts are welcome