Over the past decade or two, higher education technology leaders may have discovered a need for ERP bolt-ons, customizations, and workarounds, leading many to ask: "Should we replace our ERP?"
For many college and university leaders, implementing their first ERP was a clear choice: it united disparate systems, tools, and processes into a single central solution resulting in standardization and insights that were not previously available. That was the promise in the late 1990s through the mid-2000s. But over the past decade or two, leaders may have discovered a need for bolt-ons, customizations, and workarounds, leading many to ask: "Should we replace our ERP? If so, when and how?"
Identifying the Need for a New ERP
The decision to replace an ERP can be complicated and challenging. After all, ERP implementations even at mid-size institutions can rival the cost of a major new building. In addition, the implementation is likely to stop or significantly slow down many other strategic efforts for a period of years as significant portions of functional areas and IT organizations focus on the ERP effort.
If you are an institutional or technology leader facing this decision, you should ask yourself the following four questions:
- First, is your current solution fully meeting your needs? If not, how critical are the needs that it isn't meeting?
- Second, are there efficiencies to be gained, such as getting rid of current bolt-ons, changing business processes, or having broader access to data and analytics?
- Third, what does your mid- to long-term future with the current solution provider look like? Do the vendor's development plans include you and your evolving needs? Is the pricing going to change significantly, or is the vendor moving to a new model (e.g., an on-premises SaaS model) that will mean you'll need to make major investments to keep up?
- Fourth, what does the technology solutions market look like? Are there other solutions that would be a good fit, and are there enough experienced implementation partners and consultants to assist you through your implementation and go-lives?
Answers to these questions may vary depending on where your institution is in its ERP life cycle. We saw this in the late 1990s and the early-to-mid 2000s as institutions moved from no ERP or "green screen" ERPs to on-premises ERPs. At that time, institutions often discovered missing functionalities and had to build their own capabilities or wait for vendors to add in critical components. Now we're seeing this again as institutions consider next-generation, cloud-based, and SaaS systems. While early adopters often pay the price with missed dates and failed implementations, a growing number of institutions are successfully moving to fully cloud ERPs, and the cloud SaaS ERP market is slowly growing and maturing.
Driving Organizational Change with a New ERP
You may be tempted to lay responsibility for organizational change and business process improvement on your ERP effort. You may even be able to do so. But the successful ERP implementations we've seen also had underlying success factors such as executive sponsorship, a commitment to using modern practices instead of heavy customization and "this is how we do it here" mindsets, and appropriate resourcing.
If your institution thinks that buying a new ERP will fix its internal issues, you may be in for a rough ride! You need to consider the impact that a new system will have on current operations and processes. Culture and business process change may not magically happen just because your ERP changes. In fact, if your institution isn't ready at a cultural and leadership level for the strain that a new ERP can put on it, you may want to delay while you focus on that level for a while. Or you can build time into your implementation plan for business process improvement activities.
Building the Business Case
An ERP replacement is often one of the largest initiatives—if not the largest initiative—that IT and business organizations take on, in terms of both the effort and the cost that an IT organization will be involved in. Note: If your IT organization is the sole driver for the ERP change, rather than one of a group of key players, you're likely on a path to challenges. But if you're considering an ERP with partner organizations such as HR, finance, student affairs, and enrollment management, you're more likely to be successful. Those key sponsors are critical in most institutions, and they can help build a strong business case for why they need what a new ERP can bring. Having alignment around the core drivers and also support from institutional leadership is critical.
As we spoke to colleagues from across higher education about their ERP implementations, a handful of common drivers came up:
- The need for new functionality
- The desire for efficiency and optimization, including more accessible data and organizational reporting, often driven by the bolt-on tools and/or business processes that were designed into a customized ERP a decade or two ago
- A concern about the viability, in the mid or long term, of a current solution provider
We also sometimes heard about a desire to save money. But much like the cloud migrations that many of our organizations undertook over the past decade, a next-generation cloud ERP implementation is unlikely to generate significant direct cost savings. In fact, the majority of the people we spoke to said that they were paying more after an implementation. That doesn't mean you may not save money elsewhere. Reducing bolt-ons, changing staffing models, or simply allowing your business teams to be more efficient by using automations and improved workflows can all have positive financial and productivity results.
Once you've determined the drivers that align to your institutional needs, you'll still have to put in some heavy lifting to identify the funding as well as the organizational and board level support for the new ERP implementation. In many cases, engaging an experienced assessment partner to help you review the current market and your own assumptions about both the need and the readiness for the change. While costly, an assessment is far cheaper than a failed or delayed ERP implementation.
Buying a New ERP
The costs of a new ERP implementation can be broken up into three major buckets:
- The cost of the service itself. This is often the smallest of the three costs initially, but you should consider your multi-year cost model for the tool and whether you'll need additional licenses or services in order to take full advantage of the service. You should also consider what you need to buy when. In many cases, you won't be using all components fully for a while, and your agreement might benefit from taking that timeline into account.
- The cost of the implementation partners. This is often the largest up-front cost, particularly since many organizations don't have staff available to perform the full implementation. A major risk factor is under-investment in implementation assistance, with heavily DIY implementations being somewhat more likely to miss implementation dates.
- The cost of the implementation staff across the institution. Staff in multiple campus organizations will be part of your implementation team. On the IT side of things, you may be working through a series of implementations with HR, finance, student, and other administrative systems. That means your ERP planning and implementation team will need to account for the cost of multiple years of heavy workload.
You should also consider the costs needed for organizational change management and a reasonable contingency fund. In our talks with consultants and advisors who have seen many successful—and unsuccessful—efforts, we've heard that these costs can add up to around 20 percent of the total cost.
Bear in mind: an increasingly large number of organizations are available to consult with you about what worked and what didn't at other institutions. Miami University kept track of these success and failure issues collected through conversations with peers across higher education and consolidated the most common factors into lists that the core implementation team could use throughout the ERP selection and planning processes.
"Don't Worry, I've Got This"
Another common challenge occurs when IT leaders overestimate their ability to staff an ERP implementation on their own. If you're running with primarily internal resources, disruptions are more likely to make you miss dates. Staff departing with their new skills also remains an issue. In addition, if you're trying to hire in a market where you're competing with consulting organizations, most higher education institutions are going to come up short. We recommend carefully considering your internal-versus-consultant engagement balance and being very honest with yourself, your organization, and your institution about your real capacity to staff the ERP effort.
As cloud ERPs become more broadly adopted, procurement processes are increasingly able to take advantage of common practices, such as shared contracts representing multiple institutions. This means that at least in some circumstances, institutions are able to save time in the negotiation process by leveraging statewide contracts or using contracts that peers have already worked through. Contracts established through consortia-based programs might also be acceptable options.
Selecting the right implementation partner is also a critical success factor for most institutions. You should assess whether potential partners have the expertise, capability, cultural alignment, tools, and price model to get you through to a successful delivery. For example, one current potential challenge is that many implementation partners have limited experience with deploying Workday Student, a fairly new student information system. This problem will undoubtedly resolve over time as more institutions implement newly developed tools like this, but it highlights a consideration to keep in mind as you select your potential implementation partner for a next-generation ERP effort.
A Golden Ticket . . . er Tenant
Is your institution part of a larger system, or is it operating as a public institution in a state where state law and common requirements might be similar? If so, consider talking to your potential solution providers about the possibility of a "golden tenant," which involves setting up a core system and using pre-built configurations to help speed up implementation and reduce costs.
Implementing a New ERP
Once you know what you are going to implement, and why, it's time for implementation. But remember: what you see today isn't what you'll implement! SaaS ERPs are constantly changing and adding features, functionality, and capabilities. While you can't rely on predictions, you can expect things to be different by the time you implement them.
Upgrading and/or implementing new business systems can be an intense and complex process that requires careful planning and execution. It involves consideration of the amount of overall change that will occur, the number of people who will be involved, the required business process changes, the data prep and migration, the training requirements, the risk factors, and the need to resolve issues quickly. Each phase must be managed carefully to ensure that the new system is implemented correctly and according to the needs of the organization. The following seven steps encompass these considerations.
1. Define Clear Objectives
Before executing an ERP implementation, you must define clear objectives. These objectives should be specific, measurable, achievable, relevant, and time-bound (SMART). Defining clear objectives will help ensure that the implementation is focused on achieving specific goals and that progress can be measured throughout the process.
You should also include process improvement as a targeted objective. Those of us who have kept our systems around for many years have morphed our processes not only to complement the system but also to fill gaps and constraints. New systems will definitely impact old processes, so it's important to be explicit about including the time needed take for improvements.
2. Establish a Project Plan
Once the objectives have been defined, you can establish a project plan. The project plan should include a detailed timeline, milestones, and specific tasks that need to be completed. The plan should also identify the resources required for each task and assign responsibilities to team members.
Rutgers has a formal Project Management Office (PMO) focused solely on planning and implementation. This office comprises project managers, change management specialists, communications staff, budget management staff, and various other support staff. The PMO manages all the respective system implementation workstreams, project teams, implementation partners, and budgets.
3. Assemble a Skilled Team
An ERP implementation requires a skilled team with expertise in various areas, such as project management, business analysis, operational knowledge, technical implementation, and training. Assembling a skilled team is essential to ensuring that the implementation is successful.
Consider using an external implementation partner, especially if your environment is particularly challenging. Look for a partner who has experience with the software product as well as in a higher education setting. The role of this partner can involve gathering business requirements, defining and outlining operational processes, mapping data integration requirements, configuring the new system, co-leading the project, and more.
Rutgers has used a variety of external partners throughout all of its implementation projects, focused on different aspects of the process. These partners have participated in product selection, process improvement exercises, requirements gathering, data cleanup and migration, integration mapping, and training. The partner staff become part of the team to expand the organization's workforce capacity and help minimize unforeseen issues.
4. Communicate Effectively
Effective communication is also critical to the success of an ERP implementation. Communication should be clear, concise, and frequent. Regular meetings should be scheduled to review progress and address any issues that arise. Communication should also be tailored to different stakeholders, such as end-users, executives, and IT staff.
Do not underestimate the importance of constant communication, especially if you have a complicated environment due to size, level of impact, or considerable resistance.
5. Test Thoroughly
Thorough testing is essential to ensure that the ERP system is working correctly and that it meets the organizational needs. Testing should be conducted at each phase of the implementation process and should include functional testing, integration testing, and user acceptance testing. Make sure you have adequate time built into your project plan for lots of testing. This not only will help you mitigate issues before go-live but also will create opportunities for those staff in the operational areas to get more comfortable with their new tools.
6. Provide Comprehensive Training
Comprehensive training is required to enable end-users to use the ERP system effectively. Training should be tailored to the specific needs of each user group and should be provided in a variety of formats, such as classroom training, online training, and job aids. Consider digitizing training sessions for future reference so that if staff forget what to do in the first week of go–live, they can review the training modules again.
7. Understand and Manage the Risk Factors
Risks should be identified and tracked from the beginning of the planning process and as you progress through the implementation. Try to anticipate what might go wrong and develop mitigation strategies. Revisit the risks regularly. There will be issues and you will experience snags along the way. Recognizing and planning for this upfront will help your institution know what to be ready for. Don't hesitate to outline information about some of the bigger risks and share it with others, especially with institutional leaders and those who have not been through these initiatives before. Not accounting for the risks could negatively impact the go-live date.
What most frequently causes missed go-live dates?
- Small delays stack up.
- Too many changes/customizations are allowed.
- Integration points are underestimated.
- Not enough time is built in for testing.
- Staffing changes are not anticipated: people will leave, consultants will change.
- Sponsorship engagement and prioritization are lacking.
Executing an ERP implementation requires careful planning, management, and execution. By following best practices, IT organizations can successfully implement next-generation ERP systems that improve efficiency, potentially reduce costs, and enhance overall performance. Defining clear objectives, establishing a project plan, assembling a skilled team, communicating effectively, testing thoroughly, and providing comprehensive training are all essential components of a successful ERP implementation.
Managing the ERP after Go-Live
Once the ERP system has been implemented, it needs to be managed effectively. This includes monitoring system performance, quickly addressing any issues that arise, and providing ongoing support to users. Effective management of the ERP system is essential to ensuring that it continues to meet organizational needs over time.
Keep in mind also that you'll likely have multiple years of backed-up institutional demands that were paused until the resources could be refocused on day-to-day operations. You may have to rebuild relationships that have suffered because of the IT organization's need to focus on the ERP deployment, and you may have to reevaluate your entire backlog of work in the context of the new ERP.
Moving to cloud-based (SaaS) business systems adds an extra dimension. Even if your organization has a good handle on what SaaS means, you may not have implemented at the scale of an ERP before. This means you may have both financial and operational habits that need to change. Your cloud ERP is going to get updated regularly—whether or not you want it to and whether or not you are ready for it! As a result, other institutional organizations and departments can't ask you to delay rolling out features or changes for long periods of time, and testing and validation habits will have to be ready for an ongoing update cycle. The good part of this regular updating is that the systems will have a continual stream of new features for users to take advantage of.
Finally, a truly great thing about cloud ERPs is the new approaches to data visualization, access, and democratization. Requests for data and reports will increase after go-live, especially as the operational units get more comfortable with their new tools. It's important to understand what reports are included within the system and which ones should be offered through a data warehouse. Identify the critical reports that will be needed at go-live. You may need to build time into the implementation plan if reports need to be rebuilt within the new system and data framework. Plus, there may be limitations on how long you can retain data in the core tool. Think about what data you need to bring forward from your old ERP and where your data lives for the long term in a parallel and integrated reporting environment.
Cloud ERPs are here, and adoption is speeding up. Should your organization make the change, and if so, how? What are the challenges? One of the valuable aspects of the EDUCAUSE community is knowledge sharing. We have outlined our experiences and advice for selecting, implementing, and running next-generation ERPs. If you are also in this process, paying it forward and sharing both your successes and your failures can help others as they progress along this path.
David Seidl is Vice President for Information Technology and CIO at Miami University.
Michele Norin is Senior Vice President and Chief Information Officer at Rutgers, The State University of New Jersey.
© 2023 David Seidl and Michele Norin