It sounds simple: Invest in the correct software, then make sure you capitalize on all it has to offer. But the statistics show most companies seldom do this. Most companies are making huge investments into a tool that is less than 50% utilized. The Standish Group evaluated and ranked the adoption factor of features across the average enterprise software system. Their findings showed that on average only:
7% of an application’s features are "always" used
13% of features are "often" used
16% of features are used "occasionally"
So how do you go beyond 36% utilization? A company that implements software correctly will have developed a clear plan of the product selection and project kick-off that ensures adoption and utilization of software. This plan will need to address implementation “buy-in” by all team members and go-live adoption. But the biggest gains in adoption and usage (and therefore in ROI) will be garnered during post-go-live initiatives.
During implementation and the first six months or so after go-live, the firm is focused on getting the software launched, ensuring all critical processes are working, and resolving minor go-live issues. Then, quite frankly, the team is exhausted and ready to move on to a new project. But wait! We still have 64% of the product to leverage and the balance of our ROI to garner.
To measure success, the goal must first be established. Step one is to clearly define the major issues and problems that are to be resolved with the new software purchase. Define your objectives before starting your software search. What issues will it solve? Are you after faster inventory tracking, perhaps, to minimize labor and time to check your warehouses? Or maybe a human resource system to profile your key employees from the regular set? With a clear objective, you’re likely to buy the right software for your needs. This is not a list of features and/or functions.
Each problem/issued identified in Step 1 should have a clearly defined, measurable ROI. This could be stated in terms of hourly savings for repetitive or duplicate tasks. It may also be measured indirect cost savings, such as reduction in expedited shipping fees or growth without having to add headcounts. Attaching a firm dollar amount will help
Software alone is NEVER the total answer. Software WITH improved business processes will yield the greatest success. But people resist change, making this the most difficult part of any implementation and full adoption of software. All changes to business processes need to be documented and communicated to team members. One of the biggest challenges that come with implementing any new software is managing the change it brings in the way people work. It’s challenging to shift people’s habits and processes in a new direction but is necessary for growth and evolution. When adopting your new software, this can provide the perfect window to rethink some of your methodologies and processes. Utilizing a consultant at this stage can help transform your implementation to a new level, and help to communicate the value of these changes to your entire team.
Investment in operational business software is enormous. The total outlay will include software fees, consulting services (for training, data conversion, customizations) and the hours invested by your team to bring the new product to life. Statistics indicate that the cost of ERP software project (excluding HR and Payroll) is between is 3% to 5% of annual revenues. A full HCM/Payroll purchase is usually 1.5% and 3.5% percent of your firms’ annual revenue. These investments are made with an anticipated useful life of the software to be seven years.
Do not become distracted with the ‘sizzle’ of the software features. Rather, focus features of the software that will specifically address the ROI items that you have identified. Confirm that each ROI objective can be met. With a ‘conference room pilot’ or ‘proof of concept’ demo, changes to business processes can be tested, refined and confirmed.
Now your company has made the leap and invested in software that promises to radically improve your business. Prior to your project kick off, two key team members need to be identified. First is your Product Champion who will serve as the point person for the entire project. The Product Champion will serve as the person to consider the impact across all functional areas as decisions are made regarding security, set-up, configuration and change orders. They will ensure that appropriate team members participate in directional meetings, training sessions, and business process adjustment decisions. All systems work best when all people using them are fully on board and making the most out of the features and services offered. Your Product Champion will be charged with information dissemination.
The second key team member in any successful project is your Data Champion. Your Data Champion will get to know your software data and all tools available for data extraction, delivery, and reporting. Most software products on the market today offer 3 or 4 embedded tools for reporting. Additionally, they allow access to data via Microsoft SQL, Excel and a myriad of business intelligence tools. With so many options, the question becomes “What tool(s) do I use?” Your Data Champion will need to understand which tool to leverage for each data request and will be able to empower team members with appropriate tools to access their data themselves.
Pause and measure what was achieved at this critical point. At go-live it is important to ask the team the following questions based on each of the ROI items that were originally identified:
If not, there a few more questions to ask:
Realistically, at go-live, none of the questions will be answered with a “we have reached maximum utilization.” As mentioned earlier, there is most likely a 64% probability that your software is still waiting to be fully leveraged. It is critical to understand exactly where you are with complete adoption and documenting what remains to be done.
There is a tendency to install the initial phase or the most critical components of the solution and then lag while implementing follow-on features and functions. If the software isn't driving revenue opportunities, lowering costs, creating operational efficiencies, reducing risks, or making other tangible contributions to your overall operations, it's time to step back and assess the reasons why. What use are the robust features of your software if your staff can only use the basic tools? Don’t scrimp on additional training or consulting services from your product expert. The training will allow them to maximize all the extended features of the system, which are what you really paid for. The consulting services can be leveraged to identify tweaks to business processes that will save time and money.
Research shows that most software systems remain in place for an average of 7 years. Like most capital expenditures, ongoing costs will be required. The asset will need to be maintained, staff will need ongoing training, new staff will require training. Refinements and additions to the assets can enhance efficiency. Your team will be able to take advantage of a solution only to the extent that they are well trained and comfortable with it. Additionally, as your business grows and your market changes and offerings expand, so will your business processes. Business process improvement is not a ‘one and done’. Continual process improvement is a ‘won and next-up’.
Sheri Blaho is the Director of Marketing for CS3 Technology. Her education as an accountant combined with her years of system design and programming gives her a unique perspective that is a great advantage for all customers. While primarily focused on HR, Payroll and Time Collection systems, she can answer questions regarding ERP solutions too.
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