ERP Application Strategy Roadmap for Maximizing Long-Term ROI

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:

ERP Application Strategy Roadmap

ERP Application Strategy Roadmap

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.

ERP Application Strategy Process

ERP Application Strategy Process

For brevity sake, I would like to focus on two key activities that are typically overlooked during the development ERP application strategies:

  1. Step 2 – Inventory Current State Solution
  2. 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.

Mapping ERP Features to Business Objectives, Goals, and Strategies

Mapping ERP Features to Business Objectives, Goals, and Strategies

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:

Highlighting ERP System Gaps and Duplicate Functionality

Identifying ERP System Gaps and Duplications

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.

ERP Return On Investment Analysis

ERP Return On Investment Analysis

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.

Summary

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.

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About Brett Beaubouef
For the past twenty years Brett has helped customers select, implement, and manage ERP solutions across five industries (manufacturing, professional services, staffing, retail, and telecommunications). Business process knowledge and experience includes human resources, benefits, compensation, recruiting, time & attendance, finance, resource scheduling, contract administration, services procurement, sales, billings, project accounting, and project/portfolio management. Software selection experience includes evaluation of both ERP software and proposed implementation services. Brett has recently authored a book on leading ERP/COTS implementation strategies.

10 Responses to ERP Application Strategy Roadmap for Maximizing Long-Term ROI

  1. Hi Brett,

    Great job in positioning ERP’s role in delivering the business strategy. All too often business views ERP itself as the answer; forgetting that effective and efficient processes aligned to to key business objectives are what deliver results. ERP is just the tool. I encourage my clients to adopt a similar approach to what you’ve outlined, ednsuring that they maximinse benefits and avoid the “rip and replace” mentatlity that sometimes clouds management’s thinking.

  2. Brett: Great article. Thanks for cross-posting to linkedin. I would not have seen it otherwise!

    You’ve presented an excellent outline around which the roadmap needs to be built. Of course, as you correctly noted, each of the eight buckets encompasses a wide range of sub-discussions, checklists and decisions.

    As someone who has managed several ERP deployments/migrations, I would like to identify the most critical component: change management.

    Companies usually hire a tier 1 or 2 consulting company to manage their ERP implementation. These companies are expected to be armed with detailed checklists for each step. At the same time, it’s critical for the internal management to keep their eyes on the impact the new processes will cause internally, and should find ways to address them. It’s often said that an ineffective change management can be the difference between the success and failure of a project, and it’s especially true in case of an ERP rollout.

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  4. T K G Nair says:

    Very good article

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