Viable – Manageable ERP

Several ERP implementations suffer from what I call a “fast-food” mentality of delivering value.  Customers feel that they need to get functionality that addresses both existing needs but also future needs given long implementation cycles.  Business needs and business wants get blurred together during requirements gathering which make it harder to differentiate and validate.  Finally, more analysis and effort is spent trying to fit one more feature or capability into the ERP implementation versus understanding the support requirements after the implementation.  Typically, the result is a solution that causes more problems than it solves because the ERP solution is not sustainable.  In the next sections, we will discuss some principles to prevent your ERP project from delivering an unmanageable solution.

Set REAL Expectations for Executives (i.e. There is no such thing as a “push button” solution)

How many time(s) have you heard an executive say “All I want is a button to push so I can produce what I need!”  That statement is enough to indicate that there is a huge “expectation gap” and no matter what you do it will be a losing battle.  To establish expectations for success I use the following strategy:

Setting Realistic Expecations

Setting Realistic Expectations

The first and most important step is to establish realistic expectations.  This effort will require educating your executives on the organizational effort, potential business value, and possible risks involved in meeting an executive mandate.  Be prepared to articulate in layman’s terms what is you can do and what should not do with technology.  Second, use the language that every executive knows and understands: money!  Quantifying business value, costs, and risks in an executive business case can quickly align executive wishes with business reality.  Third, come to an agreement on expectations.  This agreement should be formalized via a signed project charter.  Finally, there should be boundaries (limits) on the agreed upon expectations.  These limits should be defined within a scope statement with constraints and assumptions.  Next, we need to further define and refine expectations for key business personnel that will enable you to meet executive expectations. 

Set REAL Expectations for Business Users (i.e. theoretically correct vs. practically accurate)

Today’s ERP software has increased the amount of data that business users can capture.  In addition, naturally business users see this as an opportunity to drive more business value.  However, capturing additional data does not automatically equate to additional business value.  Consider the following illustration:

theoretically correct vs. practically accurate

theoretically correct vs. practically accurate

It is important to challenge the assumption that more data creates greater value and better decisions.  In the illustration above what is the level of precision required to get to the right answer?  In the pursuit of driving better decisions we can easily start down the path of creating a data-gathering monster that cannot realistically be maintained.  The result is bad or missing data and the goal of driving better decisions is unattainable. 

Set REAL Expectations for IT (i.e. developing software is not the most valuable thing IT performs)

I’m sure if you ask a majority of IT personnel how they generate business value that software development is right there at the top. However, this value generator is in conflict with a core ERP value proposition.  Organizations purchase packaged software like ERP to minimize internal software development.    Internal IT organizations that support ERP solutions must change their definition of value generation for their customers.  Consider the following illustration: 

ERP Service Categories for ERP

ERP Service Value Chain

As you can see above the highest level of services that IT organizations can provide are advisory services that assist internal customers in how to best leverage technology.  Another key concept that is a huge mind shift for IT organizations is to utilize ERP as the fundamental driver for generating additional value versus utilizing a traditional requirements-driven approach.  Let’s look at the implications of IT organizations do not adapt to take full advantage of their largest software investment (ERP).

Impacts of an Unmanageable Solution (i.e. we are not getting value from ERP)

I don’t know about you but I’m guessing that you are being asked to do more with less.  I have a very small IT staff that is responsible for both ERP support and ERP-driven enhancements/transformations.  The IT staff spends the majority of their time (up to 70%) on ERP support.  Even though ERP support is at the lower end of the ERP value chain the activty is a very high priority.   However, this leaves us with a small level of capacity to support higher services.  A high maintenance ERP solution limits your ability to generate greater perceived value to business users.  Business users usually do not perceive value from ERP support services unless something goes wrong. 

Summary

As the ERP industry continues to mature we are observing the rise of more functionality and capabilities to capture even more data.  However, nothing is free. Additional functionality and data capture requires additional discipline and support requirements from both IT and Business users.   Please do not take an extreme approach and stifle innovation.  Business is all about take risks.  My point is – take calculated risks.

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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.

8 Responses to Viable – Manageable ERP

  1. Brilliant article and well written

  2. Pingback: Cloud Can Bring Out the Best of ERP « ERP the Right Way!

  3. Brian says:

    I agree Subodh. Really appreciated the info-graphics. All sound advice!
    my co-workers and I publish discussions/news about Enterprise BPM, ERP’s, cloud computing, etc. that might be of interest as well: http://blog.apptricity.com/

  4. Pingback: Viable – Manageable ERP | Pardaan.com

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  6. Pingback: The Next Evolution of ERP: Adaptive ERP « ERP the Right Way!

  7. Pingback: Building a Business-Aware Cloud Solution « ERP the Right Way!

  8. Pingback: ERP SaaS 101 – Services Trump Software | ERP the Right Way!

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