Over the past several years we have seen the far reaching impact of cloud, mobile, IoT, and other emerging technologies on enterprise resource planning (ERP) systems. While many automotive corporate executives are convinced of the benefits of upgrading their ERP systems, they remain keenly aware of the disruptive potential of major migrations.
ERP systems touch almost every part of the manufacturing operation. If your company is embarking on a major upgrade, keep in mind that staying ahead of disruption requires proactive planning, communication and collaboration.
ERP Migrations Bring Unique Challenges to Automotive Manufacturers
ERP migrations are complex regardless of industry. For auto manufacturers in particular, risk and complexity are driven by the ERP system’s tight integration of hundreds of critical business processes. From planning and production to vendor and dealer management, a proposed change in any one functional area has the potential to alter how the entire business operates. Other risk factors include:
Extra-large transactional databases: By the time of a migration, most ERP systems have been in use for years. Typically, auto manufacturers add several terabytes of data annually.
Extensive customization: While customization is valid for highly critical processes and innovation not supported by standard ERP functionality, it increases technical risk and the need for extra resources. Executives should attempt to minimize age-old customization by using the latest industry best practices for most of its core business and maximum standardization for non-core business processes.
Complex software applications landscape: Use of multiple ERPs, HR, PLM, MES, bespoke, portals systems and digital innovation (e.g. connected cars/IoT) adds to the likelihood of disruption. This can cause parts of the business to stop abruptly if not properly tested.
365 x 24 x 7 operations: Production systems with minimal downtime allowance are extremely challenging for major system migration which require at least some downtime.
Talent shortages: Migrations are complex exercises and many organizations lack the in-house expertise to successfully drive a major effort. Any implementation plan should include an abundance of training for business analysis, security and development teams.
Addressing these challenges upfront often means the difference between a successful outcome or one that leaves stakeholders frustrated and disappointed.
Avoid Disruption: Seven Steps to Take before Implementation Begins
ERP providers plan for minor and major upgrades/migrations to create new opportunities for improved time-to-market, faster access to real-time data analytics, enablement of digital transformation and operational efficiency.
Yet, despite the ongoing value ERP systems offer, many organizations still underestimate the level of work and planning required for a successful implementation. Below are early steps your team can take to help minimize disruption throughout the migration process.
1. Design a detailed roadmap. A well thought out roadmap brings predictability to your project, creates transparency, and helps proactively manage and eliminate risk. Your roadmap should address agreed-to phases between business and IT teams, alignment among stakeholders on technical and functional scope, and key business performance indicators linked to the newly migrated version’s functionality. For a more agile approach, ask your systems integrator for the option to conduct a “proof of concept” with a specific critical functionality or department. An element of agile methodology or steps adds value even if you follow a waterfall model for migration.
2. Analyze “on-the-ground” challenges. Broad objectives like “we want to introduce the product in Q2” are easy to understand but often fail to account for the day-to-day business realities of assembly lines, warehousing, distribution and preventive maintenance. Make commitments based on ERP data that analyzes the unique on-the-ground challenges of your various business functions and the improvements they want to achieve.
3. Communicate. Communicate. Communicate. While business and operations teams may know the improvements they want to achieve, have they clearly communicated their needs to the IT team deploying the new version? A successful outcome requires business, operations and IT to have a clear understanding of business objectives before the project starts. This builds trust between departments and prevents disappointment and rework.
4. Mandate a formal impact assessment. This is one of the most critical steps in the migration transformation journey, requiring key members from business, IT and management to form a team and conduct a functional and technical impact assessment. For example: Try to address critical custom functionality to be retained in the target version; new functionality to be configured; functionality that is getting obsolete; and new functionality requiring further customization to suit your unique business processes. A full assessment report gives you better control and reference as you engage a partner for actual migration.
5. Build a bulletproof QA process. A solid end-to-end QA testing plan ensures that upgraded functionality is flawlessly implemented. Too often organizations sacrifice system testing by succumbing to cost pressures and aggressive marketing timelines. Choose a QA partner who understands your motivation for migration, is ready with impact assessment templates and target version test assets, and has the expertise to drive the SI partner with respect to functional and technical scope of work.
6. Put the right people in the right roles. Your team should include business analysts, process owners, core business and IT teams, vendors for migration and independent QA teams given ample time for testing and user training. With the right people weighing in from the start, you minimize change requests and save on resources.
7. Have a process in place to measure performance. Having a process to gauge performance of critical business processes in the upgraded ERP system allows you to identify continuous improvement tasks and calculate the ROI of the migration. The measurement of how fast and often an MRP planning run or other critical process can occur directly influences agility and readiness to gain a leadership position.
Time to Upgrade?
There will come a time when your current ERP version is unable to meet the demands of expected fast response time, digital transformation, and product innovation. If your current ERP version has become merely a way to support a system of records, it may be time to convert it to a system of differentiation and engagement and begin the migration journey. However, in order to fully enjoy the many benefits of modernized ERP software, executives must plan early to stay ahead of common—but costly—pitfalls.