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When companies are looking to scale and struggling to keep up with the volumes and complexities of their business, they tend to throw people at the problem.
However, if growing companies wait too long to implement the proper technology solutions and operating systems to manage their end-to-end processes, it will impede their ability to generate profitable growth.
As part of my general best practice for when to implement Enterprise Resource Planning (ERP), I tend to use revenue as an indicator. Companies approaching $5M in revenue should be considering ERP, as customer relationship management, invoicing, bill of materials, purchase orders, cost and quality become very difficult to manage using spreadsheets.
At this stage, I would recommend the lightweight implementation of an ERP system. Many companies wait until they are almost out of control at $10M in revenue and then scramble to implement something! As a company continues to scale, there comes another inflection point where the current systems are not adequate and a more sophisticated technology solution is required around the $100M revenue mark.
My tips for implementing ERP are probably not what you would expect but my experience stems from successful and not-so-successful ERP implementations over the course of my career, more recently working with industry Information Technology (IT) leaders:
1 | Recent experience: ERP implementations have changed from 20 years ago. If an executive thinks they know how to do it, they likely don’t. Hire a person that has the experience of a recent implementation and can refer to best practices.
2 | Agile development: Classic project management using the waterfall method is not progressive enough and results in disappointment when the final solution does not meet needs or expected outcomes. Utilize an agile development approach.
3 | People first: Ensure you have the right people and processes in place before ERP implementation. If you think technology is going to solve all of your problems, you will be unpleasantly surprised by a difficult implementation, cost over runs and a sub par final solution. People first, process second and then bring in the technology.
4 | Leadership endorsement: Make sure you have the right executive sponsor. ERP has to be brought in from the top with appropriate leadership supporting the project, in order to get the buy in and commitment required for intensive periods of an ERP implementation that can pull heavily on resources.
5 | Implementation support: Change management structure – as difficult as this can be – needs to support the implementation. ERP implementations are transformations and need to be managed as such. This is grounded and complemented by strong communication support.
Colleen Kelley is Vice President and Practice Lead of Business Operations at Stratford Managers. She is a seasoned executive with over 25 years of experience in both high-tech OEM and contract manufacturing sectors. She is an engaging leader with substantive skill in profit and loss management, customer orientation, program management and supply chain management. She also brings significant experience in merger and acquisition activities, as well as leading organizations through substantial transition. To discuss how Stratford Managers can support your business as it achieves scale, contact Colleen.