ILLUMITI INNOVATION BLOG

Make sure your ERP implementation is a business-led project with a solid business case

By: Dror Orbach
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Every company has heard of at least one ERP horror story and of many struggles with ERP implementations. Gartner’s recent report, entitled "Working Smarter, Not Harder Is the Key to Business Success With ERP” identifies the principal reasons why some organizations achieve successful implementations, while others continue to experience challenges and disappointment.

One of the key takeaways from Gartner’s paper is the fact that while many companies implement ERP, too few invest adequate time and thought into the business needs they are trying to satisfy and the way ERP fits within their long term strategic vision.  In the mid 1990’s, companies looked to ERP as a key solution for their Y2K challenges.  Later on, companies sought out ERP implementations as a means of replacing Excel spreadsheets for their business activities, or as a tool to help them consolidate legacy or disparate systems into a single system. These both remain key drivers today.

Too often, an ERP implementation is seen as an IT-led project, and that can lead to potential challenges when it comes time for the business to start adopting and using the product.  At Illumiti, we coach our clients from the outset that the business must own the implementation, actively take part in the steering committee and select key project members based on their depth of experience and knowledge of the business.  Ideally the project team members become part of a company-wide competency centre at the completion of the project and continue to guide future changes to the ERP system.

We encourage our clients to follow our Illumiti Value Engineering approach to ensure alignment  between IT and the business. We start by looking at the key performance indicators (KPIs) they currently  measure and provide guidance on top KPIs to incorporate for their industry.  We then record a baseline of their current performance as a means to measure the incremental value of any future change the company implements.

As a next step, we encourage our clients to leverage SAP’s complimentary Benchmarking tool. This is a free service that enables our clients to benchmark their current performance relative to their peers.  The peer group is selected based on industry, region and revenue size. By seeing how they fare against their competitors, our clients can set realistic goals. They are able to see their strengths, where they are competitive and where they may be falling behind. This analysis is used as input for blueprinting to provide focus and efficiency for the ERP implementation.  It helps define which processes are core competencies and deserve greater attention and which are context processes where best practices should suffice.

Baselining and setting clear goals from the start also ensures that companies will be able to measure the value of what they achieved, once the implementation is complete and their operational tools and processes are stable. By reviewing KPIs at regular intervals, companies are able to verify that their decisions and tools are in fact moving them closer to achieving their targets. If that is not the case, these reviews serve as a trigger to take corrective action. We strive to be our clients’ partner in continuous improvement and check-in with them at scheduled times to discuss pain points, wish lists and develop a roadmap of recommendations to maximize their return on investment and continue to move KPIs in the desired direction.

Larger organizations may have already been thinking in these terms, but for smaller firms, it’s often the first time they have ever looked at their business in this context. It allows them to develop a strong business case for implementing ERP, measure the value achieved and provides a path forward that is aligned with the company’s long term goals.