4 Things to Know About ERP Conversions
There is good reason why an enterprise resource plan (ERP) conversion is jokingly referred to by many as a “career killer.” Many companies, leveraging their brightest leaders, boasting robust conversion budgets, and engaging the best hardware and software tools available have failed at or abandoned new ERP systems. And I’m not just referring to small and mid-size companies. Many high-profile CFOs and CIOs and their high-profile organizations have been humbled by a failure to carry their ERP conversions across the finish line. To wit:
In 1999, children everywhere were deprived of their Halloween chocolate when Hershey’s failed to deploy their new ERP system in time for their biggest sales holiday. Over $100 million in sales orders went unfulfilled despite adequate inventory reserves. (Google “1999 Hershey’s Halloween” and you’ll find many pages have been written about this cautionary tale. It’s a fascinating case study in ERP failure.)
Another memorable ERP project-fail happened five years after the candy disaster when Hewlett-Packard attempted to self-convert using their very own “Adaptive Enterprise” concept. The loss attributed was in excess of $160 million. It is often cited as a reason why Carly Fiorina’s tenure heading HP was so maligned. The worst part for HP was not the loss of revenue due to their failure to deploy information technology so much as the loss of credibility among their customers as they were…wait for it…selling the deployment of information technology.
I’ve been fortunate to lead (both in-part or in-whole) numerous successful ERP system conversion projects during my career. In the spirit of my favorite definition of an expert (i.e. the person who’s had the opportunity to make every common mistake imaginable) let me impart a small measure of expert advice on ERP conversion:
#1. HAVE AN ADEQUATE CONTINGENCY PLAN
This is what killed HP when they ran into migration issues. Parallel processing and other solutions can make sure the ship stays afloat while you switch out captains.
#2. TIMING IS EVERYTHING
In hindsight, Hershey’s admitted that their focus on looming Y2K concerns in 1999 was a primary reason they should not have scheduled a concurrent ginormous IT project.
#3. SLOW DOWN/DON’T RUSH
HP was originally given a 48 month timeline by their installation vendor. The executives demanded 30. As we now know, hi-jinks ensued. Like your average housing contractor will tell you, conversion usually takes MORE time than expected…not less.
#4. GET EMPLOYEE BUY-IN
I would probably rank this in the top 2 if I were doing a TOP TEN list of ways to have a successful ERP conversion. Most of your employees are really busy. You will be moving their cheese (via new reports and processes) and they deserve a say in that. Without this, there possibly might DEFINITELY WILL be project stonewalling.
I could on for many more pages. Next time I will list all the ways these projects can go right and there are lots of great solutions out there in 2019. Happy converting!
About the Author
Russ Gambrel is a Director on our Finance & Advisory team. He is a CPA and Controller with more than 18 years of accounting, auditing, banking, financial, and project management expertise. At Fahrenheit, he serves as interim CFO and controller, implementing internal controls, working on system implementations, providing analytics and delivering process improvements. Contact Russ.