Background – Validation of New ERP Recommendation
ITDirections was engaged by one of the largest owners, operators, and franchisers of hairstyling and hair care salons in the world with over 5,000 salons, revenue in excess of $1B, and 30,000 employees. A recommendation was provided to the Client by one of the largest Consulting organizations that the Client should implement a new integrated ERP system to replace their custom silos of applications. Although the Client was compelled to proceed with an ERP implementation, they wanted an objective second opinion before embarking on the costly massive project.
The Challenge – Differing Advice
ITDirections reviewed the Client’s situation and recommendation for a new ERP system and performed our proprietary and comprehensive implementation readiness assessment. ITDirections agreed with the need for a new ERP system but said the Client was not ready for the change management involved in successfully implementing such a system. The business processes were complex, customized, and departments had a poor track record on previous attempts at establishing global standards and implementing process improvements. Such a massive effort had a high risk of failure or simply recreating the old system.
The Solution – Education and Proof-of-Concept
This risk and recommended mitigation steps were discussed with management. ITDirections recommended beginning with ERP education for the executives and team leaders. This would provide the team with common terms definition, standard best practices, advanced ERP capabilities, and the dynamics of an integrated solution. The training would establish the basics to help the Client understand how their business processes would need to change and become better versed in the approach to ERP selection.
The second recommendation was to take one or two disparate processes and complete the future state definition based on industry best practices as a proof-of-concept of their ability to successfully implement change. The first process recommended for improvement was the Payroll process simplification. In addition to proving the team could do process improvement, it would document detailed requirements and gaps that would be used in the ERP selection phase.
After completion of some process improvement, the third recommendation was to do a formal ERP business case with the costs and benefits accurately forecasted. Only then, should the software and implementation partner be selected and implementation begin.
The Results – Knowledge is Power
After completion of the ERP education sessions, both the team and management made the decision they were not ready to successfully tackle an ERP implementation. They understood the depth of change that would be required. The first teams struggled to implement simple process improvements and they recognized their culture required some transformation prior to implementing massive software changes. The ERP education gave them the knowledge and experiential perspective. The stories and case studies embedded in the ERP education helped them to understand the impact of a new ERP system and draw the right conclusion for themselves. The bottom line is that the ERP education saved them from a costly ERP failure by considering the cultural issues and how they factor into implementation readiness.
