Embrace Changing Requirements for ERP Implementations

Business is Changing!  Don’t Fight it – Embrace It!

A key challenge with any ERP implementation is changing business requirements.  Yet many project teams are surprised when business requirements change.  Think about it, the scope of an ERP implementation is based upon a “point in time” solution.  Competitive business models are constantly evolving to meet customer demands.  Today, the majority of ERP implementation approaches discourage changing requirements by having laborious scope change control procedures that tends to be more of a roadblock than an enabler.   What is required is a more proactive approach to identify differentiated requirements that can provide a competitive advantage to ERP customers.

What Are Differentiated Requirements?

Differentiated requirements are business requirements that will support a business solution that is uniquely different from another business solution.  They allude to a significant, comparative difference.  Differentiated business requirements are very useful in ERP software selections because they focus on the unique differences between the ERP software packages.   In the context of an ERP implementation differentiated business requirements refer to unique business requirements that are different from company’s peers or competitors.  Consider the following illustration:

How ERPs address business requirements

How ERPs address Business Requirements

Allow me expand on a couple of thoughts:

  • Differentiated requirements are not best practices.  Best practices are common and generally accepted business practices across a specific industry and/or country.  Best practices are generally available in the market and therefore are not competitive (or no longer competitive).
  • Differentiated requirements should focus on competitive business requirements that uniquely position a customer’s offerings in the market.  Practically speaking, a customer should be more concerned about being competitive in revenue-generating business processes (i.e. Order to Cash) rather than revenue-supporting business processes (i.e. Expense Reporting).
  • Competent ERP software is designed to address generally accepted best practices.  ERP software will not address the unique competitive business requirements of an individual customer.

 

Handling Differentiated Business Requirements Late in the Game

Now comes the challenge of handling differentiated business requirements late in the implementation.   If you notice I did not say we should address all requirements.  There are risks associated with addressing business requirements at the end of an implementation cycle.  The question you need to ask is whether the business requirement will create more business value than the implementation risk generated.  There are four steps you can take to address differentiated business requirements:

  • Reduce the possibility for late competitive business requirements by proactively searching for these requirements during earlier stages of the implementation.  This will require a competent understanding of business processes, their key results, and how they can be competitive.
  • Maintain a business solution modeling environment to quickly determine how the differentiated requirement can be addressed.  Business solution modeling will enable simulations on how the three components of a business solution could support the competitive requirement.  The simulation may take several iterations.
Modeling ERP against business scenarios

Business Solution Modeling

  • Plan for this scenario to happen.  Let me restate that the scope for an ERP implementation is based upon a point in time solution.  This scenario should be formally listed as a risk and managed as such.  This scenario is almost a certainty for a revenue-generating business process (ex. Order to Cash) given the external competitive forces at work.
  • Develop a roadmap during the implementation to articulate how new or advanced business requirements will be handled in the future.  Too often a customer may believe that they have only a single opportunity to get both their needs and wants addressed in the ERP software. 

Summary

Just as we expect a customer’s organization to adopt change with an ERP implementation, project teams need to expect and embrace change for differentiated requirements.  The key challenge is identifying which requirements are competitive and strategic.   Too often we narrowly focus on functional areas and not the entire business process.

  

Project team focus during ERP implementations

Silo Functional Focus vs. Business Process Focus

 

This is a challenge that all three key players of an ERP implementation (software providers, implementation partners, customers) must address.   Please do not underestimate this under-appreciated challenge.  It can be a huge mindset change for business owners that focus more on functional optimization rather than strategic customer advantage.  The best strategy for addressing late requirements is to plan for this scenario and have the appropriate iterative processes in place to quickly define, assess, and implement requirements that have competitive value to the customer.

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.

%d bloggers like this: