RSM Resources

A new enterprise software package can deliver significant cost and efficiency benefits to a midsized company. However, those systems can also create big headaches unless business leaders take time to carefully evaluate the purchase and develop an effective implementation plan.

"Two of the biggest mistakes companies make in software purchases and rollouts are a failure to analyze existing processes and a lack of planning for the installation," says Joe Pytlick, a program manager for Microsoft/Great Plains in Fargo, N.D. "If a company’s processes are bad today, a new system will not by itself make things better."

Industry experts say that most businesses underestimate the time, change management and contingency planning needed to effectively implement a new software system. In fact, in a study of more than 9,000 software rollouts in 2004, 71 percent either failed or were late and over budget, according to The Standish Group, an international IT research firm. Even worse, a 2003 study by Gartner Research revealed that nearly four in 10 major software purchases ended up as "shelfware" — purchased but never registered as an active product.

Clearly, there is a link between a software installation’s size and complexity and the preparation time needed to do the job well. A major enterprise system change, such as an ERP (Enterprise Resource Planning) installation, will require a significant upfront investment in staff time and planning — over and above the dollar cost of the software product. A key part of that investment, Pytlick says, is taking time to get key staff members on board with the need for change before a switch is actually made.

"You need to determine the appetite your company has for change and how you can help your people handle it," he says. "For example, can you go from a lot of manual handwork to a paperless office in one big step? Not every company can make that jump, and those that do need serious preparation."

Is your company considering a major software investment? If so, consider the following basic guidelines for product evaluation and implementation.

Assess issues with current systems. The need for change is often rooted in existing legacy or purchased software solutions, which may no longer deliver desired business results. Pytlick, who develops software implementation methodologies for Microsoft/Great Plains, said smart managers will rank how the performance issues affect major business imperatives and determine if outdated software —rather than inadequate computer hardware or training — is the actual problem.

Secure an executive sponsor and project manager. If a new software solution is required, the next step is to win support from a senior executive who can help advocate the project’s strategic value with other key leaders. In addition, Pytlick says this is the time to identify a lead member of a project team who would serve as the "go-to" person for day-to-day decision-making.

Review team skills and build a process transition map. The executive sponsor and project manager should collaborate to recruit a software implementation team, which ideally would include representation from business units most affected by the prospective change. Pytlick says potential recruits should also be screened, in part, for any prior experience in similar software implementation projects. Once a team is in place, he advises that the group identifies key elements of the old system to be kept and map out how those elements can be bridged to the new software package.

Establish relevant benchmarks. When the systems assessment and project map is complete,team members will be in a good position to develop key goals for the new system. Done well, this step will help a project team measure the new system’s performance after implementation. On the other hand, an incomplete benchmark process can lead to confusing results.

"I worked on an implementation project where the client originally said the benchmark was to fulfill 70 percent of their orders on time," Pytlick says. "Later, he changed that to a goal of having orders that were 98 percent accurate when shipped. When you look at things like percentages, you really need to know if what you’re measuring is relevant."

Investigate options to tailor your RFP. In recent years, an increasing number of software vendors and third-party consultants have created online RFP (request for proposal) templates, which can be filled in and distributed with minimal effort and research. While that seems more expedient, experts say such an approach will not result in project proposals that address your company’s specific processes and needs.

When you are developing an RFP, project teams can seek insights from trade associations or peer companies that have been through a recent implementation process, Pytlick says. This research can also help the team determine if third-party assistance in screening and selecting a software provider might make sense.

"You can call another company that’s been through it and say, "I don’t want to know how you did it. I just want to know who you used and how that service worked out,’" he says.

Coordinate implementation process and schedules with key business areas. Experts say complex software projects often fail when a project team establishes a rigid implementation schedule that upsets overall business operations. That’s why it’s critical for the group to regularly communicate with affected business areas, providing updates on product selection and anticipated benefits. This process provides dual benefits — employees can participate in decision-making on implementation schedules, and project team members can use the sessions to reinforce buy-in and support for the change.

Develop effective training tools. A solid, well-designed training program can help employees maintain acceptable levels of productivity while the new software system is implemented. For example, many experts favor a "practice-feedback" approach, which allows workers to use animated simulation tools to test a software product’s most critical features. These tools will guide an employee on the use of an actual application, correcting errant steps while demonstrating the right way to perform important transactions or procedures.

While a high-tech training approach has benefits, Pytlick says that the most important step is to help employees reduce their fear of change. In several recent product releases, Great Plains modeled the design of new software packages on the Microsoft platform — largely because most people are familiar with that page layout.

"To use the car analogy, the ignition switch is almost always in the same place. If you got into a new vehicle and the starter were under the seat, you probably wouldn’t even take the car for a test drive," he says.

Have a contingency plan. Given that a high percentage of implementation projects fail to live up to planned goals, experts agree that all implementation project plans should be flexible enough to allow for the unexpected. For instance, if a planned single-step rollout of a major software package fares poorly, the project plan should have an alternative strategy that allows for a phased implementation. Similarly, if the training process is not helping employees reach specified performance targets, a backup approach should be available to ensure continuity of critical business functions.

By keeping these basic project management steps in mind, you can maximize your company’s return on a major software investment.