A debate is raging between some politicians and public health officials over the timing of reopening the economy. Noisy arguments in the news media, on Facebook or Twitter aside, the fact is that corporate executives need to be thinking seriously about the status of planned ERP software system upgrades or proceeding with projects that were slowed or put on hold during the COVID-19 emergency.
A recent report from McKinsey & Co. suggests that a corporate reopening strategy needs to include shifting IT and technology to what amounts to a restart mode. Prime among them is accelerating digital transformations to ensure they reflect the needs of customers, employees, and the status of an entire supply chain.
McKinsey writes, “The IT infrastructure (including ERP) must be relevant, secure and able to meet emerging (and changing) expectations … Executives will need to draw up a business-led technology road map to accelerate their digital transformation with urgency.”
This speaks directly to issues surrounding ERP software systems during and after COVID-19 and why users should at least consider fast-tracking projects regardless of whether lockdown restrictions are eased.
Assess, Measure, Recalibrate
Granted, any technology project must reduce a company’s costs during and after the emergency. Yet investments in the right ERP technology can contribute significantly to growth during the recession which shows no near- or intermediate-term signs of recovery.
The key is to ensure that the project is relevant to an organization’s digital ecosystem in whatever comes during and after the pandemic.
If the contract for an ERP software system is negotiated and drafted – or redrafted – properly, and performance of the vendor and integrator is monitored closely, once it comes online the system should help enable the user to restart successfully and cost-effectively. Here are five things a company needs to keep in mind as it considers fast-tracking at least portions of a new or upgraded ERP software system sooner rather than later.
1 – Business has changed. What ERP consultant Eric Kimberling calls the “next normal” will require another major change as dramatic as the one when the lockdowns were ordered. ERP users will continue to face a raft of unknowns that won’t be clear for some time to come. The user’s operation may be functioning in one location but not in another. Supply chains will continue to be disrupted or new sources being onboarded. Access to markets may be restricted.
2 – Recalibrate your ERP strategy. For most ERP users, what was a solid technology strategy in February 2020 may not be valid or even practical today. After the broad corporate strategy and direction are recalibrated, do the same with the ERP strategy because it may need to be altered or modified. This does not mean that an integration needs to be deferred. Rather, it might be necessary to change the requirements that led to upgrading a legacy system or installing a new one prior to the pandemic. ERP vendors and integrators are much more likely now to be willing to renegotiate the terms of a contract.
3 – Create a new implementation roadmap. One of the reasons so many ERP integrations fail and end up in a prolonged court battle is that the user did not start with a clear idea of the implementation process and how milestones would be measured and monitored. Not doing this always has been an expensive mistake but in the time of COVID-19, it can lead to disaster for the company with an impact on not just operations but the bottom line. Whether or not you used a consultant at the beginning of the project, retaining one now is critical to restart or launch an ERP project.
4 – Include a change management program. Everyone in your organization has been affected by the pandemic, whether something simple like wearing masks and stay at home orders or because their pay was reduced and their job redefined. Just as senior management needs to work closely with IT to monitor the progress of an ERP project shifting back into high gear, they also need to collaborate with HR to create an effective change management program. Many employees still are in a kind of shock from the effect of the pandemic on their daily lives. No matter how relieved they might be at escaping the worse effects of COVID-19, without an effective change management program in place they are likely to revert to form fairly quickly and try blocking any significant shift in how they do their job.
5 – Executives can control the change as they restart ERP projects. Despite the many unknowns over the next six-to-12 months, senior management can find ways to control restarting ERP software system projects effectively. Doing so requires understanding how the project will fit into Kimberling’s “next normal” and what the system needs to deliver now, however the business has had to change.
Restarting ERP With Care and Caution
A problem that has plagued many ERP projects is a slow decision-making process and seeing ERP as a technology solution rather than a management tool.
Put bluntly, right now slow decision making is the same as not deciding. A plan-ahead team is needed to identify and work through potential stumbling blocks.
One way to avoid possible problems is to work with counsel to renegotiate contract provisions that need reconfiguring to the corporate reality of today. As we mentioned, vendors and integrators are in a vulnerable position at the moment. In particular, certain deliverables and the detailed responsibilities of the user, the vendor and the integrators need to be very specific. Spell out what work will be subcontracted, and which party will be responsible for third-party performance.
Having spent our professional life dealing with ERP contracts, we’d be happy to share our thoughts on restarting a project. We can also refer you to independent, technology-agnostic consultants to advise on the business issues involved, and to oversee the work of all of the participants. Feel free to call or send an email.