New ERP implementation timing recos?
July 16, 2019
by a searcher from Harvard University - Harvard Business School in San Francisco, CA, USA
I'm nearing close on an acquisition and would value feedback from CEO's who have acquired businesses and implemented new ERP systems. I've decided a new ERP system is a must - the question is really around the timing of the implementation. I'm weighing the pros / cons of 1) doing the implementation on day 1 and completely cutting over to the new system when I take over, or 2) sticking with the existing systems and processes that the company is accustomed to, and then doing the implementation down the line (perhaps after the seller is transitioned out). On the one hand, as this is an asset sale, I am starting with a clean slate anyways, and since I know a new ERP is coming, why not do it ASAP. On the other hand, the announcement that the business is sold and a new owner is coming in will likely be a big shock to the system, so shouldn't I do everything I can to keep everything else about the day-to-day "business as usual" for the employees? Thoughts?
Additional context:
- manufacturing business, so inventory tracking is a big piece of this (which is currently non-existent)
- currently on quickbooks for accounting and a mish-mash of other systems for quoting, work orders, job status tracking
- 6+ month seller transition
- 3 primary users/inputters of the ERP system (although everyone in the company will be impacted with changes)
Thanks in advance
from The University of Texas at San Antonio in Atlanta, GA, USA
Many ERP implementations fail to return the intended value due to unforseen environmental challenges that arise during implementation. Considering it will require a significant investment to implement, I would highly recommend focusing on process excellence / optimization after you've had sufficient time to complete a thorough review of current state processes and craft a vision/strategy for where/how you plan to derive value from a new ERP system. I've seen more than a few organizations that under-estimate the importance of this step and run into unexpected cost/schedule overruns mid-implementation.
Another consideration, should you choose to do it Day 1 is the impact the change will have on your employees. New ERP systems can be seen as a threat to the job security of the SMEs of the prior system(s)/processes so targeted Change Management activities should be factored into the scope of your implementation.
In summary, I would recommend you identify your target operational model and processes Day 1 and only afterwards proceed in selecting/implementing technology solutions that will enable your vision.
Hope this helps - happy to chat more offline!
Regards,
Andre
from The University of Chicago in Chicago, IL, USA
As far as the implementation, the new system is only as good as the fundamental system now in place (automated or not). Do hourly workers now measure their job-by-job or product-by-product labor on the shop floor? Other than bills of materials, does the business have documented machine routings and tooling sequences? Is overhead capitalized within inventory valuation? Most likely some of these answers are "no." If so, your ERP implementation will be a blend of "new system" and creating the underlying infrastructure. That calculus typically results in a costly disaster. Make sure the infrastructure is in place or fully planned out prior to system implementation. Lastly, I would suggest you use a third party systems advisor who is independent from the company that is selling you the ERP system. It would be money well spent.