ERP Consolidation: What are the most common issues and pitfalls?

Posted on Jan 2021

Learn more

Interestingly, the issues when consolidating ERPs are rarely technical. It's either the programme processes, the organisation, or people change issues that are generally the biggest problems.

It's a case of starting out with developing a really good understanding of what you're trying to achieve and having strong and consistent executive sponsorship. I have been in different programmes, where the difference has been made by the executive sponsorship and the consistency of that.

I led the technology separation of Birdseye from Unilever when it was bought by Permira. During the process the CEO of Birdseye was absolutely adamant that every single person in the organisation needed to understand that the number one objective was separation from Unilever. Yes, we had to keep the business running, yes we had to maintain the profitability, but the number one objective for everybody was separation from Unilever. There would be no other technology projects during the period of the separation programme. He was adamant about that and this was one of the key success factors in delivering that programme, which had a budget of over £70m. We actually delivered it early and under budget.

Inappropriate incentivisation can also be an issue. I was asked to lead a project with a PE-owned company, which had never actually integrated the ERP systems from the different acquisitions they had made. They had grown quite a lot through acquisitions, and they needed a transformation programme to go to a single platform, because the dispersed systems environment was inhibiting further growth. The CEO incentivised all executives purely on current year EBITDA. As the integration programme was not going to improve EBITDA until the following year at the earliest, whenever there was any contention for resources between delivering this year's budget and delivering the programme, resources were pulled away from the programme. I ended up parting ways with the programme as it was impossible to deliver under those circumstances; the project eventually overran by a year. They spent all of the budget and they only actually implemented the new systems in a small part of the business, (about 5% by revenue).

The programme also shouldn't be too long. Yes, it must be achievable but it must be achievable within a maximum two year timeframe. One of my favourite project quotations is ‘a two year programme will take three years, a three year programme will never end.’ There is a certain truth to that. If it takes too long, you'll never get it finished, it will be near impossible to maintain the momentum amidst a changing business environment.

Resource planning can be another issue. Make sure you have enough resources and don't use entirely external resources to deliver the programme, because people will feel it's being done to them rather than with them. You have to get people bought in. You should have a team of people from across the whole business to help create the new business processes and get ownership across all parts of the business. You also need to embed some knowledge of the new systems into the permanent staff. So, free up key resources to take part in the programme by backfilling with contractors.

Another key lesson from the various ERP projects I’ve been involved in has been: we should have paid more attention to the data. The effort and time required for cleansing and migrating the data is almost always underestimated. If you don't get that right, then you won't get the benefits of the new systems if the data isn't good when it goes in there.

Branding helps communication of the programme. It's another psychological way of getting buy-in to it. If it's got a good name people want to be part of it, and they feel ownership of it.

You have to keep telling people about it - you have to tell them it's coming, it's happening now, what the changes are, and you have to engage them.

It's sometimes surprising how the changes can be perceived positively even if you thought they were going to be negative.

One of the biggest ever transformation programmes in a $30Bn telecoms company, where I was part of the global leadership team, is a good example of this. I was concerned that we were replacing locally optimised systems all around the world, with a single version to be used everywhere. We were moving onto a global SAP template and I was concerned that it wasn't going to be optimised locally like the previous systems and would likely make employees’ jobs more difficult. I saw that as being a potential disincentive to them.

In fact, they loved the new system. What I hadn't realised was, because of the way the new processes were written, the way we embedded them into the system and the way we showed them, the staff could suddenly see how their job impacted delivery to the customer. They could see the processes end to end for the first time. Whereas before all they knew was what they were doing and they then ‘threw their output over the fence’ to Fred down the road and he was doing something with it etc. They had no idea how what they did impacted the customer. I had hugely underestimated the value of that new process visibility to people. Being able to see how they made a difference was amazingly positive.

You never stop learning with these projects.

Sign up for our Newsletter. Thought leadership, fresh insight, and future trends direct to your inbox.

Sign-up for our Newsletter