Question: How long does an ERP software implementation normally take?
Answer: With ERP software implementations, there is no such thing as normal. Beware when ERP vendors make claims that an 'average' implementation can be done in 4 months, 6 months or any other arbitrary period. While there isn't an average implementation which can be baselined and extrapolated or applied across the board, there are several factors which are clearly the most influential in determining implementation time (as well as risk and cost). The most weighted criteria which will correlate to implementation time include the following:
- Software scope. The more software, the longer the implementation. While there's not a linear equation to apply, it is generally true that the time required to implement manufacturing, human resources and accounting software will be ball-parked at three times the duration of just implementing accounting software. With software scope you also need to consider software depth. Implementing supply chain software consumes more time than implementing seemingly comparable distribution software. Similarly, implementing customer relationship management (CRM) software may incur far more time than another ERP software suite due to the non-software and non-technical issues.
- Data conversion. If you are implementing new accounting software you may only need to electronically convert last years monthly trial balances - possibly a sum of a few hundred data records. However, if you are implementing a new CRM system, you may need to convert every prospect, customer, activity, campaign and sale opportunity - possibly totaling into the hundreds of thousands of data records. While data volume is one factor which correlates to time requirements, the bigger factor is data cleanliness. Chances are for the accounting system example, those prior year trial balances are perfect (or were already made perfect with adjusting entries after the annual audit). However, do you think all that CRM data is perfect? Fat chance. Most implementations fall behind early because of poor data quality which then requires an exhaustive data cleansing process. Each departmental application will have varying degrees of data cleanliness which have a significant impact on project time frame.
- Software integration. Some companies have little or no integration back to legacy systems while other companies have batch and real-time integration to several legacy applications as well as e-commerce storefronts or other system types. Some implementations also include single sign on (SSO) or other measures on top of their integration requirements.
- Software customization. This is the one factor that throws all so called averages out the window. Software customization has a very material impact to implementation time, risk and cost.
- User count. The more users, the more time invested for requirements gathering, business analysis, training and support.
- Number of locations. The higher the number of physical locations, the more time that will be required. There also seems to be a correlation that offices the furthest away from corporate tend to be the least aligned with corporate policies and culture. These types of variations can consume significant time when preparing all locations for a central and standardized ERP system.
- Political climate. Organizations with lax, informal or not well defined controls will incur much more time and expense as compared to organizations with a strong culture or control.
- Vendor participation. While the ERP vendors generally have outstanding staff and implementation experience, they may or may not become truly engaged in the clients success. I've witnessed many large ERP vendors who staff projects for no other purpose than billable revenue. I've also been involved in other projects where the ERP vendor was a true partner and committed to the clients success. In my 21 years of implementation experience, I have found this vendor commitment factor to be the most difficult to predict and the most influential in determining project success.
Software as a service (SAAS) ERP projects do remove the hardware preparedness, software installation and much of the technical services required of on-premise systems. Nonetheless, the factors above continue to apply to SAAS ERP software projects.
Question: I've noticed that several vendors use the terms "distribution software" or "supply chain management software". I'm unclear if these two terms mean the same thing or represent different types of business management software with different capabilities. Can you shed some light on this?
Answer: This is a good question. I frequently see ERP software vendors use these two business software terms interchangeably, however, most industry practitioners consider them to be separate.
The term "distribution software" generally includes the ERP software components of purchase order processing, sales order processing and inventory management. This term is often used by software manufacturers who may be more financially oriented (that is accounting software vendors with strong general ledger, accounts receivable and account payable modules, however, possibly not as strong purchase order, sales order and inventory modules).
The term "supply chain management software", often abbreviated as SCM or SCMS, includes the primary distribution software functionality but normally also includes greater capabilities such as goods forecasting, warehouse management, logistics management and supplier management (sometimes called supplier sourcing or supplier relationship management). SCM systems can be either (relatively) stand alone applications are a component of a larger ERP system.