Reverse Engineer to Business Requirements

A critical activity for any ERP implementation is gathering business requirements.  The purpose of business requirements is to define the needs that will enable business activities to generate business results.   The traditional school of thought is that if we capture all the requirements then we assume that we will develop a solution that will produce the desirable results.  I believe that experience has taught us that the above assumption is not correct. 

Business modeling associating business activities with business results

Results-Oriented View of Business Activities

 

Let’s use the above illustration to elaborate on a few observations based upon my experience: 

  • Customer’s existing business models will have both value-add and non-value-add business activities.
  • Customer’s existing business models may produce undesirable business results.

 A concern with traditional requirements gathering techniques is that non-value-add requirements are carried throughout the requirements management process.   This results in wasted effort, loss of focus on the critical requirements, and informally creates the expectation that the new ERP system will replicate existing functionality.   A majority of non-value-add requirements are a result of current technology or organization limitation.  This is not a criticism but rather a reality we all (Customers, IT, Implementation Partner) must address as part of an ERP implementation.

START WITH THE END IN MIND

Let’s consider something unconventional and trace desirable business results back to business activities and the individual needs (requirements) for each business activity.

Business requirements support business activities which support business results

Results-Oriented View of Business Requirements

 

Starting with the desired business results ensures that we drive to only those requirements that directly support true business value.  First, it is an exercise that really puts into perspective the purpose of a business model (results).  This exercise is not only useful to the project team but also the business stakeholders.  Second, it is an approach that can help you justify why certain existing business activities are not being carried forward in the new business solution.  Third, taking a business results oriented approach enables your project team to be more successful at focusing on the right business requirements and not wasting time on capturing requirements for non-value-add activities. 

SUMMARY

Often we spend too much time and effort focusing on gathering requirements that do not support key business results and then gloss over the key business activities because of implementation time constraints.  Prioritizing business results is an activity that we need to initiate before gather requirements, not during fit/gap when expectations are harder to manage and negotiate.

Five key areas to consider when selecting ERP software

There are five key areas to consider when selecting ERP software:

(1) Functional Fit

How well does the ERP software fit with (a) current business requirements and (b) future business requirements?  Too often I see vendor responses and demonstrations spend too much time on “core” functionality and not enough time on the unique and strategic requirements of customers.  These are the requirements that generate a competitive advantage to customers.

(2) Technical Fit

Two key activities need to be performed: (1) internal technical assessment and (2) external technical assessment with each vendor.  The internal technical assessment consists of identifying the current state of the customer’s IT environment: in terms of hardware, software, FTEs, and skills.  The external technical assessment consists of identifying the technology requirements of the vendor’s ERP software in terms of hardware, software, FTEs, and skills.  You then perform a comparison (fit/gap) to identify the technical requirements for the customers to move to the vendor’s ERP solution.   Quantifying the technical gap is very important in calculating the financial fit.

(3) Organizational Fit

This area is typically overlooked and underestimated.  It is important to understand how the customer’s organization must change to effective support the new ERP solution.  Many customers know that they must change, however few understand how and the amount of change that is required. 

(4) Implementation Partner

This is by far the area that will have the greatest impact on your success with any ERP software.  You can select the ERP software with the best fit but if you cannot implement the ERP software then what is the point!  This area is so important you should have a separate selection process for the implementation partner (separate RFIs, RFP, Evaluation).   Following are the key questions you should address with potential implementation partners:

  • Strengths
  • Weaknesses
  • Revenue, # of consultants dedicated to ERP software vendor
  • Locations
  • Industry Focus
  • Target Customer Focus (Up-market, SMB)
  • Software Product Knowledge
  • Certifications (Software, Industry)
  • Type of Consulting Services (implementation, upgrade, training, process improvement, installation, technical services) – how well can they support the entire ERP lifecycle
  • Implementation References similar to you
  • Recent News
  • Thought Leadership (publications, presentations)
  • Partnership status with Vendor (# of years, level)
  • Vendor recommendation

  (5) Financial Fit

 What is the total cost of ownership across the expected lifecycle of the ERP solution – including installation, training, implementation, maintenance, upgrades, hardware, ERP software, 3rd part software, process improvements?  It’s important to set the expectation that the proposed gains will not be realized in the initial implementation but over the expected life of the ERP solution.   The end result of the financial fit is the business case.  As with any business case there will be assumptions, constraints, and estimation accuracy (ex. Order of Magnitude) so please ensure that you clearly specify this information along with the value proposition. 

ERP software selection is an important step in your goal of implementation a new business solution.  I hope that the information will assist you in being successful.

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