ERP Implementations and House Building - Phase 4: Decisions

ERP Implementations and House Building - Phase 4: Decisions

In this multi-part blog series, Alan Lyczkowski discusses the many surprising parallels that can be drawn between an ERP implementation and the process of building a house. NOTE: If you’re just joining us for the series, you can read the first four installments here: Introduction, Phase 1: Analysis, Phase 2: Shopping, and Phase 3: Choosing a Partner.

During the Analysis phase, you met with your users to understand their pain points, needs and wants. During this phase, you should also gain an understanding of what a new ERP System can do for you. You will also have chosen the ERP that is right for you. During the Choosing a Partner phase, you will have found the Partner that will work with you.

Now comes the daunting task of making a whole slew of decisions in a short period of time. In my home building experience, I needed to decide the color of the carpets and other flooring options, the cabinets, countertops, faucets, drains, roofing and siding materials, and so on. My builder had his “Builder Grade” choices, and then everything else was considered an “Upgrade.” My builder also made me aware that upgrades were easy to handle.

Knowing what I needed was great, and knowing what I wanted was also great. It is very (very) easy to want everything that a builder could deliver, but it was also important to know that everything that is considered an Upgrade comes with an Upgrade Charge.

Aside from making all of the color and material choices, I felt a risk: What if the carpets and the flooring end up looking bad together? I would have to pay to have one of them replaced. What if the colors on the countertops didn’t match my cabinets? How much rework would be needed to correct this?

This posed a dilemma: My wife and I needed to decide what Upgrades we wanted and what we could live without (I won’t go into how the decisions on what was to be upgraded and what was to be builder grade was made; you can imagine how our debates went). In our case, the upgrades to what was shown as the “base model” was about 20% of the total home cost, but I could see how this could easily run into thousands, even tens of thousands of dollars, when all is said and done.

Just like a builder will say it’s easy to make those upgrades, an ERP partner will say any enhancement is easy to make. However, a great ERP partner should understand your wants and needs well enough to challenge every one of the enhancements you request, because they want the best ERP system to fit your needs—without unnecessary cost or aggravation.

When looking at enhancements to your ERP system, keep in mind a few things:

  1. Most people are afraid of change, so they will want their NEW ERP to be identical to their existing ERP. I caution against making the new system identical to the old system. If the old system was perfect, why do you need to go through all of the effort of implementing a new system?
  2. Enhancements to an ERP system are needed, but keep in mind that they pose risks because they might not work with what you have in the base system and may require adjustments.
  3. Just like the value of the upgrades in home building have hidden costs (the value of my new home is 20 % more, so my insurance and my property taxes are higher), the value of ERP enhancements have hidden costs. When you add a large number of customizations to an ERP system, be aware that these customizations will typically have to be redeveloped each time you upgrade your ERP system.

This can be a very difficult phase in your ERP implementation. You want everyone to be happy, but that can cause extensive cost increases to your implementation and open up additional project risks. Refer back to the analysis, keep in mind your original requirements, and work to make good decisions for your organization as a whole.

Watch for Alan’s next installment, Phase 5: Project Planning and Preparation.

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