As you are preparing for your ERP rollout and following project practices, you’ll come across the topic of forming a steering committee (sometimes called ‘steering board’).
The steering committee can have an important impact on your project. So it’s great that you take some time for this decision with the goal of identifying the right players.
As a former IT project manager, I have a few tips to share with you about establishing a steering committee and engaging it effectively during an ERP project.
The role of the steering committee in ERP projects
In general, a steering committee has a dual role: It should monitor progress from a high level and thereby ensure a successful project. On the other hand, the steering committee also is supposed to assist the project team in case of major issues. This can involve decision-making on matters with wide-ranging consequences or invoking management power in case of escalations with vendors.
This dual role of the steering committee is also to be practiced in ERP implementations.
Based on my experience, the steering committee in an ERP project will mostly be concerned with two key topics: resource issues and organizational decisions.
I don’t have to say much about resource issues, I guess. Like in any project, it’s always about having the right resources available when needed, but in real life, resource availability is an ever-present issue.
That leaves us with the other major chunk of work an ERP steering committee should expect to get involved in: making organizational decisions.
Here are examples of organizational topics to be addressed with the steering committee:
- How do we manage ERP user support post go-live? Do we establish a dedicated support team? Or do we outsource support?
- How do we manage master data maintenance across the organization? With a central MDM team or with individual staff in each department and location?
- How should we organize change management in the project?
- What should the budget approval process look like using in the new system?
- Should the purchasing function be centralized?
- How do we organize data governance in the future?
As you can see, it’s mostly cross functional questions that the steering committee has to deal with, as the area-specific questions are addressed within the functional teams like purchasing, finance or supply chain.
Now that you have an understanding of the committee’s role, let’s look at identifying the right people for your project’s steering board.
Identifying the right committee members for your project
The following questions are supposed to help you identify the right players:
1) Who is funding the project?
ERP implementations usually cost a fortune. Therefore tight management of the project’s budget and careful cost tracking are essential. The project sponsor who has provided funding for the implementation should definitely be onboard and be given regular updates on the budget status.
2) Who is performing the technical work?
These two parties must be represented in the steering committee:
- Your in-house IT team: Add the Head of IT or Head of Applications to the steering committee
- Your implementation partner: If you are relying on an implementation service company to handle the technical side of the implementation, they should definitely be onboard.
3) What areas are adopting the new ERP processes? What areas are impacted the most?
ERP systems are delivered in so-called “modules”, which are software packages bundling the ERP’s functionality for a particular area like sales order management, purchasing or finance.
Some companies choose to implement all available modules at once while others may only want to use the ERP in specific areas like finance. It all depends on your company’s strategy and the project scope.
For your project, you should not just look at all the areas that are going to move to the new ERP system. These may be a dozen or more departments, and for practical reasons, it does not make sense to have them all represented in the steering committee. Thus, you should identify the areas that are going to be impacted the most by the system transition. Those key areas should be represented in the steering committee.
“Impacted the most” can be measured in different ways …
Generally it’s measured by the number of users. Suppose your sales and customer service team accounts for 50% of the ERP user base, they should definitely be represented in the committee. But your 3-person mailroom team which rarely uses the system doesn’t have to be involved.
Consider also that there may be also areas with few employees but which contribute over-proportionally to the company’s success. Their voices should also be heard in the ERP project.
4) Where is your company headed strategically? Ask the CEO!
Companies that embark on an ERP implementation or system upgrade are usually pursuing long-term strategic changes which the new system is supposed to facilitate.
For example, a company may want to drive the regionalization of its operations for reasons of cost saving. Another strategy could be global expansion, with the goal of integrating overseas processes into the company’s main ERP system. In both cases, the ERP becomes the backbone facilitating those strategic moves, and it must be ensured that the new system supports these objectives.
Given what I wrote, it may be a good idea to spend an hour with the CEO and get his vision for the company. He may want to involve his own people in the ERP project as they can play a key role in ensuring that the new system aligns with the company’s strategic goals.
General guidelines for forming an ERP steering committee
Below I have listed a few more rules for picking suitable committee candidates:
- Decision-makers only: A steering committee should be comprised of management representatives capable of making fundamental strategic decisions. While it may be helpful to invite subject matter experts to specific steering committee meetings, the core steering team should be made up of decision-makers.
- Include Finance and HR: These two functions should always be represented on the steering board. Finance is required for budget decisions. HR is the main driver behind organizational change management and training in the ERP project.
- Choose respected leaders: Choose leaders who enjoy great popularity among the workforce and who possess the necessary influence to promote important decisions inside the organization. Remember also that you as the project manager frequently have to deal with the committee members, so you want to select people you enjoy working with.
- Keep the committee small: What is the ideal size for a steering committee? I would say between 5 and 7 people. In my projects we never had more than five people on the committe. The more people you involve, the harder it will be to make decisions. And finding meeting slots that work for everybody will be a nightmare! If you have multiple areas that want to be on the committee, see if one area can act as the speaker representing the other areas. Of course this requires a good relationship between the respective section leaders.
Let me know your ERP questions
I hope you found my tips on establishing a steering committee helpful. Do you have more questions on planning or managing an ERP rollout? Just connect with me and let me know your questions.