ERP Application Strategy Roadmap for Maximizing Long-Term ROI
July 2, 2011 10 Comments
You have just implemented your ERP solution – congratulations! Now what? Will your ERP experience become an endless cycle of applying maintenance patches and upgrades? Many customers only realize a fraction of the business value that ERP can provide. Too often customers rely on their ERP vendor to provide the long-term vision and strategy for increasing ERP ROI – which is general as best. In the next sections, I would like to speak to you about internally creating the vision and strategy for maximizing your ERP investment over the long-term. It all starts with having an ERP application strategy roadmap.
What is an ERP Application Strategy Roadmap
The ERP application strategy roadmap documents the application strategy that enables the stated business goals, strategies, and processes to be achieved given the IT goals, governance, and capacity. Generating and maintaining ERP application strategy roadmaps will ensure alignment between business goals, strategies, and performance targets to the required ERP functionality. In addition, the application strategy roadmap provides the framework for a shared prioritization mechanism for conflicting business and IT priorities. Consider the following illustration:
Practically speaking, there will always be two different perspectives for ERP strategy and prioritization. What is important is that your organization has an ongoing process to align business priorities and IT priorities for your business solution. Having an ERP application strategy roadmap is a deliverable that will support the alignment process. In the next section, we will address the activities for creating an ERP application strategy roadmap.
Creating an ERP Application Strategy Roadmap
The following illustration outlines the key activities to perform in creating an ERP application strategy roadmap.
For brevity sake, I would like to focus on two key activities that are typically overlooked during the development ERP application strategies:
- Step 2 – Inventory Current State Solution
- Step 3 – Define Gaps, Duplication, & Inefficiencies
Once your organization defines the business goals and strategies (Step 1), the next analysis is to determine what components are in place to support the business needs.
In the illustration above you see that the business objectives are supported by a series of business strategies that provides the first level of support for meeting the agreed upon objectives. Business strategies are further elaborated into the individual business processe(s), people, and ERP capabilities that will support the implementation. Performing this experience is important in order to identify the required interdependencies between the components of a business solution.
Once the above analysis is performed, the next step is to conduct an ERP assessment. The ERP assessment will provide you with the insight needed to understand how your organization utilizes your ERP system. This analysis will enable you identify opportunities to better align with business objectives and goals. In additional to finding opportunities your organization should identify gaps and duplicate functionality that should be addressed. Consider the following:
An important exercise that needs to be performed is to map business requirements to the existing ERP solution(s). The above illustration is an example of mapping business objectives to the individual systems that would said objectives. This exercise is very useful for identifying gaps and functionality overlap (Step 3).
The Price of Not Having an ERP Application Strategy Roadmap
Performing a current assessment (Step 2) and identifying opportunities and gaps within the current ERP environment (Step 3) is no small feat of effort. Many times these activities are perceived as “looking back” and generate no real value of moving forward. I humbly disagree and say that these activities are vital to enabling customers to move forward with a realistic and achievable strategy. Without an ERP application strategy customers are “blindly following” the ERP vendor’s application strategy – which may not be in the best interest of a single individual customer.
It is important to realize that your ERP solution will have incremental costs (red arrows) throughout the ERP life-cycle. Without an ERP application strategy in place, your organization is taking a gamble that business benefits from ERP will continue to outpace the corresponding operational costs.
Maximizing your ERP investment is a process – not a milestone. Not only do you need to understand the ERP functionality implemented but also how that functionality supports business results. To achieve long-lasting value from ERP you need to have a long-term strategy to incrementally generate additional value because you will generate additional incremental cost over the ERP life-cycle.