How to Maximize the Long-Term ROI of Your ERP

How to Maximize the Long-Term ROI of Your ERP

Many businesses are paying for 100% of their software, but only using a fraction of its features. It’s like buying a high-performance sports car just to listen to its radio.

There’s a simple reason for this problem: change fatigue. Once users get through the stress of go-live and finally get comfortable in the new system, momentum dies, users get comfortable, and nobody wants to upset the status quo again. Underutilization of a resource is not a good strategy for any business.

To truly maximize the return on investment of new ERP software, company leaders must take a strategic approach to implementation.

Implementation in 3 Phases

Software implementation is so much more than simply setting up the system. It’s the moment when a company establishes the habits and the culture surrounding the new system. Will users become comfortable with change and improvement or does everyone settle into a “set it and forget it” attitude.

Go-live can be overwhelming due to the enormity of the changes taking place. It is essential to proceed at a rate that is comfortable for everyone and to work in phases because change presents challenges at every level. Businesses achieve the greatest success when they approach implementation as a three-phase process.

Phase I: Get Back to Normal
When a company implements new software, the number one priority is getting back to normal. Everyone is going to be a little shaky with the new system, so normal processes will probably be slower for a bit of time. So, the first goal of go-live is to get back to doing “one day’s work in one day’s time.” Employees need to be able to serve customers and fill orders with the same speed and ease they had in the previous system. It can take employees anywhere from six months to two years before they feel as comfortable in the new system as they did in the old. Be patient!

Keep in mind new software should deliver benefits even if you don’t dramatically change your processes. For instance, if all departments are integrated and everyone is using live data, it should inherently reduce mistakes, save time, and improve order fulfillment. In this early phase, even with those major improvements, most companies are only using a fraction of their platform’s capabilities.

Phase II: Master the System
Once employees have mastered the fundamental features needed for their job, businesses can start leveraging more advanced functionality in their software. Keep in mind you aren’t merely asking employees to learn a new feature or new report. Implementing advanced features frequently involves making big changes to core business processes. You need to make sure your users are ready.

For example, some ERP platforms can do demand-forecasting and make purchasing recommendations. For buyers used to calculating buying needs in their own Excel spreadsheet, this represents a big change. Instead of introducing suggested purchasing as part of go-live, give them a chance to familiarize themselves with the basic purchasing elements of the system (i.e. Phase I). Once they’re able to run reports and enter POs as easily as before, introduce the suggested purchasing features and come up with a transition plan.

Phase II is where a company really experiences the serious gains in their business. Employees can do more in less time with fewer mistakes. Businesses have new opportunities to reduce waste, improve service quality, and grow profitability. Time to take that sports car out on the open road.

Phase III: Expand the Horizon
After mastering the advanced features of a new ERP, it’s time to explore new opportunities to modernize, transform or even overhaul the business. You’re optimizing this investment, let’s look for the next stage. A company might want to explore solutions such as WMS, dispatch/logistics, CRM, or e-commerce. Ideally, Phase III is driven by employees rather than leadership. If an organization successfully creates a change culture in phases I and II, employees will have open and excited minds about business innovations.

A word of caution: before investing in additional technology, it is imperative to successfully complete Phase II. If you are underutilizing your current resources, the pattern will repeat with the next system. You will spend an increasing amount of money and only realize a fraction of your investment’s value.

Moving Forward

All businesses start their implementation with good intentions. Most of them get stuck in Phase I. They never leverage the more powerful features in their platforms.

Why? Because creating a culture of change is hard. Once employees learn the new system and finally feel comfortable again, there is little appetite to tackle more changes. These are some strategies for keeping up the momentum around your system.

Revisit your strategy
Companies need to build a long-term strategy around their technology investments. A technology leadership team should meet at least once a year to evaluate performance, set priorities, and create plans. This group identifies which advanced functions to implement in Phase II and the order in which to implement them.

Stay informed
Software vendors constantly add new features to their platforms, and adopting these features is key to maximizing the value of your system. The system administrator needs to stay on top of software news, read the release notes, and pay attention to product updates. They need to alert department managers to new enhancements that may benefit their teams and help implement them if necessary. During the annual strategy meeting, they should provide a summary of the key enhancements to the system, giving leadership a high-level view of what’s available.

Get to know your provider
Actively engaging with your provider makes it easier for them to help your business. User forums, trade shows, and customer conferences are all opportunities to communicate your needs, learn relevant news for your business, and get faster access to helpful resources. Good software companies build active relationships with their customers and are delighted to have customers engage with them.

Marathon Mentality
The maximum value of a new ERP doesn’t materialize immediately or by accident. It is an on-going process for the life of a business. The reality is “go-live” is just the first in a series of thousands of transformative moments. Small, constant changes rather than extreme or spontaneous decisions allow businesses to leverage the full value of their investment.