The Third Stage of ERP

Software and Digital

Transformation:

20 LESSONS
FROM 1,000+
DIGITAL TRANSFORMATIONS
OVER 20 YEARS
By Eric Kimberling
Over the last 20 years, I’ve had the The findings in this report will help your
privilege of working with well over 1,000 organization reach the third stage of
companies on their ERP software and transformation. Most companies fail to
digital transformation initiatives. Some get past the first two stages, where they
of these were clients that I helped get bogged down by change resistance,
through their entire transformation broken business processes, budgetary
– from selection all the way through overruns, and other challenges. The
and after implementation. Some were most successful organizations are
organizations that I worked with to help able to reach that third stage of digital
get their implementations back on track. transformation success.
Others were cases that I analyzed as an I’ve combed through my mental
ERP expert witness, while I was involved database to identify the 20 things that
with others as an executive steering I would prescribe to just about any
committee member. organization to ensure success. These
This broad experience based has best practices apply to any sort of
fine-tuned my instincts to recognize digital transformation, whether it be a
and prescribe the “secret sauce” of deployment of SAP S4/HANA, Oracle
ERP implementations and digital Cloud; Microsoft Dynamics365, or
transformations. It’s helped me another ERP system; implementation
understand that success isn’t based of a best-of-breed solution; CRM or
on luck – instead, it’s based on a very HCM software such as Salesforce or
consistent pattern of behavior and best Workday; or any other type of digital
practices that virtually guarantee success. transformation.
1 IMPLEMENTATION SUCCESS VERSUS FAILURE IS NOT A COINCIDENCE

Implementation success doesn’t happen because of luck. On the flip side, failure is not a
case of bad luck. Rather, successful implementations deploy a set of proven and effective
best practices, while less successful organizations leave their projects up to chance.
Failure can be avoided, and success can be achieved. It’s up to you and your team which
path you will take. The lessons and findings outlined throughout this report provide a
foundation for the best practices you will need to leverage on your digital transformation
efforts.

2 DEFINE A CLEAR ENTERPRISE AND DIGITAL STRATEGY BEFORE YOUR

PROJECT EVER STARTS

Digital and ERP projects tend to go awry that you are choosing software that best
without a clear digital and technology fits your long-term needs and strategic
strategy and roadmap. Too often, direction. It also helps save time and
organizations want to jump right money – especially in the long-term.
into an ERP software selection and
implementation without having a clear
vision and strategy for the project. As a
result, they end up missing out on big
opportunities to leverage technology to
generate massive improvements to their
businesses.
A well-defined digital strategy, on the
other hand, will help ensure that you
have clear direction, widely understood
goals and objectives, and prioritization
of limited resources. It helps ensure

3 DON’T SPEND TOO MUCH TIME AND MONEY ON YOUR SOFTWARE

SELECTION

With the number of options in the Either 1) your consultants and team
market, it’s easy to get caught in analysis members are spinning their wheels
paralysis. The leading ERP vendors, their because they don’t know enough about
smaller competitors, and even upstart the ERP software space, and/or 2) you
software firms provide a range of viable are spending too much time on money
options to companies of all industries, that could be better spent elsewhere.
geographies, and size. If you’re about to start an ERP selection,
If your ERP selection process or think about how you can strip down the
consultants are leading you down a path process to the bare essentials, leverage
of an exhaustive long list, requests for outside experts to get you there
information (RFIs), or overly detailed and quickly, and focus more of your time
unprioritized business requirements, on implementation. This will help you
then one of two things is happening. achieve success where so many fail.
4 DON’T BACK YOURSELF INTO A CORNER WITH TECHNOLOGY

Business should drive your digital and costs, or other suboptimal results
technology initiatives – not the other way that you may not realize at the
around. Too often, organizations choose and time.
implement new technology without a clear There are plenty of options in the
vision of the desired end-state, which boxes market. CRM, HCM, planning and
them in and makes it difficult to achieve forecasting, business intelligence,
long-term growth and efficiency. predictive analytics, and other
For example, let’s say you are only looking systems are all examples that can
at a small scope for the first phase of your give you the competitive advantage
digital transformation. You may just be you’re looking for. Be sure you’re
looking at CRM software or a new HCM not backing yourself into a corner
system. If you select and implement that and that the early phases of your
technology in a vacuum, you may later be imitative are part of a longer-term,
limited by integration issues, escalating overarching strategy and plan.

5 A STRONG IMPLEMENTATION IS MUCH MORE IMPORTANT THAN A

TIME-CONSUMING SOFTWARE SELECTION

Every company has limited time, money, and Momentum is a tricky thing. It’s great
resources, so management teams need to once you have it, but it’s easy to lose
be careful where they invest those limited and very difficult to overcome its
resources. Companies that get distracted by loss. Software selections that take
a laborious and expensive software selection too long tend to create skepticism,
process have less time and resources to uncertainty, and burnout among
invest in a successful implementation. A your project team members,
perfect software selection with an imperfect employees, and executives. Fast-
implementation is much less effective than tracking the process helps ensure
a very strong implementation after an that you start your implementation
accelerated selection process. with plenty of gas in the tank.

6 WHEN IT COMES TO DIGITAL TRANSFORMATION, THERE ARE NO

SILVER BULLETS

Everyone likes an easy button. We all want the easiest and lowest cost solution with the
least amount of risk. Buzzwords like “pre-configured industry solutions,” “simple cloud
software,” and “canned training materials” point to this state of utopia that we all long for.
But there are no silver bullets or easy answers when it comes to your digital
transformation. Every choice you make is full of pros, cons, risks, and tradeoffs. The key
is to objectively define the solution that makes the most sense for your organization and
your priorities.
At the end of the day, it’s important to recognize that no matter what technology
solutions you choose, you still have to put in the hard work, time, and resources to make
the transformation successful. Organizational change, business process improvement,
project management, and other critical success factors still require hard (and effective)
work in order to be successful.
7 SUCCESSFUL DIGITAL TRANSFORMATIONS ARE BUSINESS
TRANSFORMATIONS, NOT IT PROJECTS

The most successful projects are those that are treated like broader business
transformations rather than IT projects. In other words, these projects focus more
on improving and transforming business processes, operating models, roles and
responsibilities, and overall business results, and less about implementing new
technology.
This philosophy should permeate your entire project, from the way you define your
long-term digital strategy, to the way you evaluate and select software, to the way you
implement and ultimately use technology. A laser focus on things like organizational
change management, business process improvement, and benefits realization are more
likely to deliver transformational results than the actual implementation of technology
solutions.

8 ENSURE THAT YOU HAVE REALISTIC EXPECTATIONS TO START

Unrealistic expectations are one of the root It is nearly impossible for a project to
causes of transformation failure. Too many succeed with unrealistic expectations,
organizations are doomed from the start so make sure you have a solid
simply because they underestimated the and realistic project plan to begin
time, money, and resources required to with. Begin by taking vendor sales
make the project successful. proposals with a grain of salt and
Project teams tend to make poor decisions ensuring that you augment their
out of necessity when a project plan is recommended plan with critical
built on unrealistic expectations. Because activities that you are responsible for.
they never had enough time, money, For example, organizational change
or resources to begin with, they begin management, data migration, and
making faulty decisions. For example, quality assurance are three areas that
organizational change management is often are typically omitted from vendor,
the first workstream to be eliminated when reseller, and system integrator
resource constraints impact the project. project plans.
9 CONTROL THE TEMPO OF YOUR TRANSFORMATION INITIATIVE

It is important to view your digital future-state vision, be sure to spend time

transformation as a marathon, not a carefully designing your business processes
sprint. With this in mind, it is important and technical configurations before
to pace yourself and control the jumping straight into implementation.
tempo of the overall initiative. Slowing the tempo of your project may
This tenet should begin in the early seem like it is costing you more time and
stages of your project. Begin with money, but your savings will be exponential
clearly defining your long-term vision in the long-term. In addition, the actual
and strategy, followed by defining implementation will be smoother and
your new and improved business less disruptive than if you rush into
processes. Once you have selected implementation without having your house
the technology that best fits this in order first.

10 MAKE SURE YOUR HOUSE IS IN ORDER BEFORE IMPLEMENTATION

ERP software vendors are notorious for convincing buyers to sign on the dotted line and
prematurely jump into implementation before they are truly ready. It’s important to have
a strong foundation with your house in order before rushing into your project.
For example, you will want to make sure you have clearly defined your business
requirements, a first-cut of your desired business processes, and a clear strategy before
beginning your selection and implementation projects in earnest. This will help save time
and money, while also ensuring that you choose and implement the technology that
best fits your future needs – rather than solutions that simply automate your already
inefficient business processes.

11 DEDICATE THE BEST RESOURCES TO YOUR PROJECT

Most organizations don’t have a bench

of resources awaiting a big assignment
like an ERP implementation or digital
transformation project. Despite this
constraint, successful technology
deployments have plenty of internal
and external firepower assigned to their
projects.
This begins with your executive sponsors
and cascades all the way through to your
superusers, change agents, and subject
matter experts. You don’t just want the
people that have the time to dedicate, but
you also want to assign people that are
your A-players, know the business the best,
and are open to outside best practices that
can help transform your business.
12 ENSURE THAT YOU HAVE STRONG EXECUTIVE SUPPORT, BUY-IN, AND
INVOLVEMENT IN YOUR PROJECT

Establishing the right resource assignments starts at the top with the executive sponsors
and the executive steering committee. This team needs to be fully engaged in keeping a
pulse on the project, making important (and often times, difficult) decisions, and helping
solve problems along the way.
Decision-making is one of the things that many executive teams are the least prepared
for. They will not only need to make decisions regarding the project, but they will also
need to make important operational decisions regarding how the business will operate in
the future and the magnitude of change they are willing to absorb. Make sure that your
executive team is actively involved this team rather than delegating to the project team.
This is an important prerequisite for success.

13 ESTABLISH STRONG PROJECT GOVERNANCE AND CONTROLS

Think of project governance and controls as the guard rails that will keep your project
from getting off track. A strong project management team, key decision frameworks,
and the right outside consulting support are all keys to a successful project governance
structure.
A business case is another key input to a successful project governance approach. Your
business case should guide decision-making to ensure that your implementation stays
true to the company’s longer-term vision for the project. For example, customization
requests are a lot easier to rationalize or reject if you have a solid business case that links
to your corporate strategy.

14 ESTABLISH CLEAR PROJECT GOALS AND A STRONG BENEFITS

REALIZATION PLAN

Speaking of a business case, your project ownership and align with future reporting
needs more than the typical business and analytics requirements. Most
case designed to sell the project to importantly, it should be the foundation
executives. In other words, a good for post-implementation audits designed
business case isn’t something that sits to identify areas of underperformance
on the shelf collecting dust after the and implement continuous improvements
project is approved. It should be a living to optimize business benefits.
document that helps drive decisions Most companies spend significant time
during the project, business benefits and money on their transformations,
after implementation, and longer-term but they underinvest in this important
innovation. activity. When compared to the overall
A business case becomes more of cost of a project, benefits realization is
a benefits realization tool once it is arguably the area that delivers the most
actionable. It should link specific business business value and return on investment.
benefits, functionality in the software, The incremental and relatively immaterial
and business process changes that will investments required will increase your
enable the benefits. It should also assign chances of success.
15 DON’T MAKE SHORT-SIGHTED DECISIONS

When managing their transformations, For example, it may appear that

companies too often make short-sighted compressing your business process
decisions. To use the old adage, they management or organizational change
step over dollars to pick up pennies. management schedule will accelerate
When assessing potential cost-benefit your overall timeline – or at least it may
scenarios, it is important to assess short- look that way on paper. However, this
term project costs along with longer- hypothesis doesn’t conform to reality.
term costs and business value. What may Short-sighted decisions like these will
be good for the short-term project could inevitably lead to longer-term time, cost,
be disastrous for longer-term value, and risk, so be sure to look at the big
innovation, and benefits realization. picture first before making such decisions.

16 INTEGRATE STRONG QUALITY ASSURANCE AND RISK MITIGATION

PROCESSES INTO YOUR PROJECT

An effective quality assurance and risk mitigation process helps address many of the risks
identified throughout this report. Like a “canary in a coal mine,” a good QA process will
identify warning signs even before they are apparent to your team. It will also ensure that
you minimize operational disruption when you go live with new technologies.
For example, skipping a round or two of user acceptance testing or conference room
pilots may not seem like a huge deal at first. It may not even “feel” like it’s having any
sort of negative impact on your project – until it’s too late. A QA process based on
implementation best practices is one of the best ways to identify these risks and mistakes
while there is still time to remediate and keep your project on the path to success.
17 IT’S NEVER TOO EARLY TO BEGIN PLANNING FOR DATA MIGRATION,
BUSINESS INTELLIGENCE, ANALYTICS, FORMS, AND REPORTS

Anything involving data may seem like an afterthought to a successful implementation,

but it can severely disrupt your project. Just as importantly, it takes time to define your
data and reporting architecture.
This risk has become even more pronounced as software vendors have invested more
heavily in artificial intelligence, business intelligence, machine learning, predictive
analytics, and other ways of leveraging big data. This technology loses its advantage when
the implementing organization hasn’t adequately mapped and cleansed its data or clearly
defined its business intelligence and analytics needs.

18 INVEST PLENTY OF TIME IN BUSINESS PROCESS MANAGEMENT – YOUR

FUTURE-STATE BUSINESS BLUEPRINT

Despite big investments in new enterprise areas that need improvement. They also
technologies, companies leave far too understand that technology is simply an
much money on the table because of enabler of change – not the end all be all.
inefficient post go-live business processes. A deliberate business process
Too many organizations simply automate management work stream also helps
their subpar processes. Some refer to this clearly define a more appropriate system
as “paving the cow paths.” design, a more effective organizational
The most successful implementations change strategy, and clear opportunities
invest the time and money defining to reengineer business processes. It
current state and future state business also speeds up later phases of the
processes, with an emphasis on the latter. transformation by providing a clear
They understand their strong areas, their business blueprint for everyone to work
areas of competitive advantage, and from.
19 SUCCESSFUL DIGITAL TRANSFORMATIONS REQUIRE MORE ATTENTION
AND FOCUS ON PEOPLE

Organizational change management impact assessments, business readiness

is probably the most important thing assessments, redesigned roles and
for you do well during your digital responsibilities, training, communication,
transformation. If the software works well and a host of other important activities.
without your people working well with Although it may appear as though
the software, then your project will be an investing less in organizational change
unmitigated failure. management will save time and money,
The problem with organizational change it actually costs more time and money to
is that so few know what it means, and neglect this critical success factor. A robust
it is a concept that is hard to touch and and complete organizational change
feel. To summarize, it includes any and management strategy will cost much less
all activities that help ensure your people time and money, cause less operational
are aligned with the new processes and disruption, and result in a higher return on
systems. This includes things like change investment.

20 ASK FOR HELP

Even if you’ve been through an implementation or two in your past, chances are that
this project is going to be nearly as difficult as the last. Don’t be afraid to leverage third-
party resources and support to guide you through the process. At the very least, outside
consultants can help act as a sounding board for challenges you experience along the
way.
Independent consulting firms such as Third Stage Consulting can help define a clear
digital strategy aligned with your corporate goals, develop a realistic roadmap based
on your situation, keep your implementation on track, and help manage organizational
changes throughout.
CONCLUSION

Transformation success is not due to chance. It is a result of common patterns that

have proven themselves over time.
To summarize, here are a few of the most common root causes of success that are
most likely to mitigate risk on your project:
• A clearly defined digital strategy, aligned with your corporate strategies
• Strong project governance
• An effective organizational change management strategy and plan
• Clear business process management
• Executive and project resource commitment
• The right third-party consulting support
The above recommendations don’t involve rocket science. They don’t require an
advanced degree, certification, or even a ton of implementation experience. These
technology-agnostic best practices will ensure that you have a better chance of
succeeding and that your organization comes out ahead at the end of the day.

About Eric Kimberling

Eric Kimberling is the most recognized and respected independent ERP
systems expert in the world, giving 100% unbiased advice to clients for over
20 years. Eric has dedicated himself to giving keynote speeches at industry
conferences and universities worldwide, and has been quoted in thousands
of articles in newspapers, magazines, and books, including the Wall Street
Journal, CIO Magazine, and Fortune. He has served as the expert witness in
the industry’s highest-profile legal cases, representing both government and
private companies across the globe. He is also the author of the acclaimed
book, “An Expert’s Guide to ERP Success.”
Eric is an expert in organizational change management, project management,
implementation, and evaluations of ERP systems. His extensive experience
includes ERP software selection, organizational change management,
implementation project management, and benefits realization. In addition to
his extensive ERP experience, Eric has also helped clients with merger and
acquisition business integration, via strategic planning, business process
reengineering, and Six Sigma. He further demonstrates his innovative and
unparalleled industry experience as the lead facilitator of a weekly webinar
series.
Throughout his career, Eric has helped hundreds of high-profile enterprises
worldwide with their ERP initiatives, including Nucor Steel, Fisher and Paykel
Healthcare, Kodak, Samsonite, Coors, Boeing, Duke Energy, Filson, and Lucent
Technologies, to name a few. He has helped manage ERP implementations
and reengineer global supply chains in countries as diverse as China, India,
Singapore, Hong Kong, New Zealand, South Africa, and the United States. He
has won numerous industry awards for his experience and contributions,
including Supply Chain Pro to Know and Best Independent ERP Blog award
from ERP Focus.
 About Third Stage Consulting
Founded by industry thought leader Eric Kimberling and
supported by the industry’s leading consultants who
have also spun off from his previous venture, Third Stage
brings our clients an unparalleled wealth of experience.
Comprised of senior business and technology advisors, project managers, process engineers
and change innovators, our team has led some of the most complex and well-known
technology initiatives over the past 20+ years.
Our consulting approach and methodologies stem from the core objective of improving
businesses operational efficiencies and profitability through optimizing the use of technology.
Technology, in one way or another, influences every single aspect of business today. With the
immense amount of technologies available, it is rarely easy to determine the best technology
strategy. Expertise is needed to help determine when, where and how to implement new
systems, to make use of emerging technologies and to map technology investment to a positive
ROI. This is where Third Stage Consulting thrives.

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