In 2020, Happy Feet International underwent a complete ERP transformation — much to the company’s relief.
The flooring distributor had been stymied by an old system that made it almost impossible to know how much inventory was on hand at any given time.
At one point, the ERP started counting backwards. When receivables came in, the inventory system marked them as sold. When items sold, it added them to available stock. The inventory snafu surfaced during a global supply chain disruption, adding more chaos to the mix.
The company worked with NetSuite to get a new ERP system up and running in 90 days. Not everything ran perfectly, said Happy Feet International CIO Nick Schwartz, adding that it took another 90 days to smooth out all the wrinkles.
Not getting it right out of the gate is typical for ERP shifts, even when there’s no rush to modernize. “It’s the largest scope software implementation that most companies will ever embark on,” said Chris Perry, M&A ERP lead at West Monroe. “It’s impossible to consider that every task finishes on time.”
When companies modernize ERP systems, it's common to run into security, data and integration issues. But CIOs can proactively address those hurdles and push forward with necessary upgrades.
Digital transformations often falter
Business leaders report various levels of discontent related to digital transformation efforts, according to a Forrester Consulting report commissioned by EdgeVerve.
Just 20% of respondents say that they've achieved success. The report also found ineffective digital transformations cost firms about $18 million a year on average.
The most common stumbling blocks to transformation are data security issues, data quality and integration issues and the lack of a coexistence framework.
Beyond technology-related problems, change management is another puzzle to solve.
The systems that need to be transformed often “cut across many entities and enterprises,” said Sateesh Seetharamiah, CEO of EdgeVerve. Digital transformations can falter when the process is not done holistically, a complex endeavor as most businesses are already separated into their own silos.
“All of these things are leading to not having an integrated approach.”
ROI on technology isn't guaranteed, as 53% of respondents find less than half of their digital transformation investments translate into tangible business value.
“Obviously these are complex programs, which have different levels of expectations and various stakeholders,” he said.
Strategy and good governance
A smoother path to critical system upgrades requires strategy.
“If we choose the wrong strategy or the wrong software, then no matter how well we execute, we’re limited,” said Perry. “If we’re implementing something that doesn’t align with your business strategy, then we’re doing the wrong thing very efficiently — in the best case.”
That means choosing the right software, but also choosing the right approach. Trying to do everything at once in a “big bang” type way instead of phased implementation may mean disaster for an organization that is “not really the type of company that can deal with significant business disruption,” Perry said.
Good governance and a testing strategy with meaningful scripts and capable technicians is also key. “By having a solid approach to testing, I will catch all the other problems,” Perry said. “I might still have those problems, but this is your final check and balance. If you don’t have it, you can be blind going live.”
That also means having a strong go/no go process, so project managers aren’t bullied into saying they’re ready when they are not. “People have to be willing to accept the pain of a delay,” Perry said. “It’s far better than the alternative, which is going live when you’re not ready.”
Post-migration operations
One of Happy Feet International’s biggest challenges was deciding which parts of the old system and processes had to stay, and which had to go.
The company didn’t always have the appropriate processes documented, and they didn’t always have much “flexibility when determining whether or not those processes need to continue,” said Schwartz.
For example, the old customer service system had 10 fields of information per customer, by far more than was needed. “It was a struggle transferring from using separate fields to just one user note section,” he said.
They worked through these struggles by having conversations around the “whole concept of change and change management,” Schwartz said, which can be difficult for a company that started out as a small family business. It took some work to get people, especially long time employees, to understand that they needed to work with a more formal and standard process under a new ERP system.
Happy Feet International worked with employees to help them master the software. In one case, a customer service employee struggled to get the hang of the new system, so they transitioned him into a different role. “We still have his knowledge on staff and he doesn’t feel stressed during the transition,” he added.
Schwartz said that the company is faster, leaner and more scalable, and is now in a second round of conversations about how they can get templates to work better for automation work.
The company was also able to implement a new tax system for its Arizona location in an hour and a half, which might have taken weeks of work otherwise. The shift still required a week of planning, but making the change was a snap with the new ERP.
Happy Feet International can also do inventory just twice a year now, down from a monthly cadence. Schwartz estimates the company was able to save six figures a month solely on being able to adjust shipping because it knew what it had, and what it needed.
