Five keys for implementing enterprise systems at SMEs

Implementing an integrated business system is necessary to enable an organization to continue to grow. CMAs are likely to play a major role in the implementation process.

By Brent Snider MBA, CMA

With their original target market maturing (most large organizations have already implemented an enterprise system), software vendors are focusing on the SME market (500 employees or less), by providing appropriate functionality at a reasonable price. At the same time, SMEs are looking to enterprise systems for two primary reasons — to address current system issues (excessive administration, lack of integration, untrustworthy data, etc.) and to have a scalable solution to handle continued business growth. This mutual interest just happens to be occurring in a massive marketplace — SMEs provide 64 per cent of all Canadian private-sector employment (Industry Canada, 2006), and 51 per cent of all employment in the United States (U.S. Census Bureau, 2004). The result is an explosion of SME enterprise system implementations in recent years.  With Information Technology (IT) responsibilities often assigned to the accounting department at SMEs, it should be no surprise that accounting professionals are playing a significant role in these implementations.

Implementation environment

Anyone who has worked at both a large organization and a SME will agree that the environments are different. SMEs are typically faced with limited human and financial resources, which significantly impact how they can accomplish a successful enterprise system implementation.  Unlike large organizations where individuals are often entirely or extensively freed up to focus on the implementation, SME members are expected to perform the vast majority of their regular tasks while working on the project. The limited availability for project work inherently creates a high reliance on the implementation consultant (often a single individual for SME implementations); however extensive consulting fees can create pressure due to the limited financial resources. The limited human and financial resources are often combined with antiquated legacy systems that may be nearing the brink of collapse due to ever increasing volume and variety of business activity. Significant urgency and a lack of resources do not appear to be a recipe for successfully implementing a new integrated enterprise system.  On the other hand, SMEs typically have informal cultures aiding communication, small and involved management teams directly influencing employees, and that urgency due to legacy system frustrations could actually help with user acceptance of the new system (see Table 1).

Given that the environment for an enterprise system implementation at an SME is significantly different than at large organizations, it should be no surprise that the factors influencing success for enterprise system implementations are also significantly different (see Table 2).

Five keys for implementation success

1. Wait for legacy system frustration

Let the end-users personally experience frustrations with the legacy systems, such as data re-entry, data corruption, and system instability. This may seem surprising but there is no better way to motivate employees for change than when they personally cannot stand things the way they currently are. Legacy system shutdowns are not necessary for frustration — often the increased administration and slow processing speed attributable to increased business volume and variety can be sufficient. If, on the other hand, the very busy end-users are content with their current systems, motivating them towards a new enterprise system for the purpose of improved management and accounting information will be difficult. SMEs that initiate implementation projects under these conditions can expect to find significant change management issues with those end-users, and even the possibility of project sabotage. Employers will want their employees to be personally frustrated with the current system so they will be personally motivated for a new one, however, make sure the move is made before things get so bad that the legacy systems become inoperable for an extended period of time. Finding the balance where the legacy system “bends, but not breaks” is key.

2. “Family meeting” for software selection

The relatively small working environment of SMEs typically creates close relationships, and unlike large organizations, SME employees have an expectation of providing input into decisions that directly impact them. Correspondingly, seeking user input into the software selection decision creates a sense of “project ownership” in the users’ eyes, while exclusion contributes to resentment towards the project. In addition to creating a positive starting point for the implementation project, actively seeking input from all impacted employees provides varied feedback that aids in selecting the most appropriate software package for the entire organization. Finally, try to minimize the influence of accounting in the selection process. Accounting functionality is relatively standard in enterprise systems — it is much more critical for the users in sales and operations to heavily influence the eventual decision.  The “getting the system we wanted” mentality will result in those sales and operations users being more likely to accurately and efficiently enter their transactional data — critical for accounting analysis and month-end closings.

3. Ensure the consultant is a “friend of the family”

In the family-like work environment of an SME, the interpersonal skills of the consultant are often more influential than their business and software knowledge. Poor interpersonal skills can override the consultant’s business and software skills resulting in the internal project team becoming less and less eager to collaborate with the external consultant. Internal teams have been known to avoid “condescending” consultants, even on critical issues that require the consultant’s expertise, resulting in poor decisions and wasted efforts. Conversely, when a strong interpersonal relationship is established between the consultant and the internal project team, implementations are much more likely to be successful. How can a company select a consultant? During the sales/selection process, employees are likely to interact with a few of the service provider’s consultants. With feedback from them, select a preferred primary consultant and have this specified in the services contract. This will prevent the service provider from switching consultants assigned to a project after the deal is signed.

4. Internal team — smaller is better

Conventional wisdom on the internal implementation team is to select the top employee from each department and dedicate that person to the implementation team. For SMEs, full-time project dedication is not feasible. The second fault of the recommendation is that teams based on “representation from each department” can be less successful than very small implementation teams (two or three members) at SMEs, for a number of reasons:

Group think: the mentality of having “all the answers here in the room” results in the large team rarely seeking external input. Small teams inherently interact with all staff to identify processes and solutions.

Decision making: small teams are able to quickly make team decisions and be more open to “a little give and take, here and there” to keep things moving. 

Communication: small teams are easier to manage for both the external consultant and the internal leader, reducing non-value added activities such as schedule coordination and progress updates that are required for larger teams.

Commitment: larger teams typically include at least one “weak-link” member who is often behind schedule. This rarely occurs with small internal teams.

Very small implementation teams have been successful at SMEs with over 250 employees and 40 end-users. Ideally, select individuals that have worked in multiple roles at the organization as it provides an integrated understanding of the organization’s business processes.

5. Outsource project management and end-user training

Considering the reality that the internal team members are concurrently performing the majority of their regular responsibilities for a growing business, it should be no surprise that preparing documentation relating to the project can quickly slip down the priority list for these employees.  Dedicating time to typing meeting minutes or preparing detailed training manuals for the project is simply tough to do in the middle of month-end. SMEs that assign project management and end-user training responsibilities to their internal teams often find out later that the level of detail in those documents are insufficient and result in a poorly managed project and frequent end-user confusion. The external consultant, on the other hand, often has more project management and training experience than the internal team. Perhaps, more importantly, the consultant is willing to dedicate sufficient time to effectively complete this documentation and end-user training sessions as it counts towards their “billable time” targets. Paying $150 per hour for a consultant to prepare documentation may seem a little steep, but outsourcing project management and end-user training is the only way to ensure they are effectively addressed in the often chaotic work environment of SMEs. 

Non-critical factors

In addition to aiding implementation success, effectively addressing the above listed five keys will also help by enabling a lesser effort in other areas. Change management, setting project goals and evaluating performance, and communicating project progress may be critical for enterprise system implementations at large organizations; however their influence is minimal, and may even be negative at SMEs.

Enterprise system implementations at large organizations historically resulted in significant job “realignments” and even layoffs, creating an environment where proactively addressing employee “change management” concerns was imperative.  At SMEs, where a key driver for the enterprise system implementations in the first place is business growth, these concerns are relatively minimal.  SME employees at these companies feel secure in their jobs, recognizing that even if the new system brings some operational/administrative efficiency, the continued business growth will ensure their employment.  Furthermore, employees that have worked at the SME for a while have likely experienced regular job realignments as the business matured, making them much more accepting of change.  Finally, as mentioned earlier, employees will have less anxiety regarding the impending changes if they had personally experienced frustration with the legacy systems, and their input was considered in the software and consultant selection.

Establishing specific project goals, such as inventory reduction and month-end closing targets, and later evaluating performance improvements after going live are not as necessary for the success of SMEs.  The reason — “stretched to the max” legacy systems. The legacy systems are often so limiting and frustrating that improvement is a guarantee, and the systems are often unable to provide good metrics to serve as an improvement baseline. Post-live performance evaluations may be unnecessary as improvements are readily observable, such as reduced administrative overtime.

Hard-working culture

SME employees often have a high-level of commitment to their organization.  The combination of a hard-working culture with an implementation approach that is tailored to the realities of the resource constrained SME environment, changes a recipe for disaster into a recipe for success.

Brent Snider MBA, CMA is an instructor at the University of Calgary’s Haskayne School of Business, teaching in the areas of operations management and management information systems.  He studied enterprise system implementations of SMEs across Canada for his thesis.

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