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In this blog I will outline an effective strategy to prepare for the implementation of Enterprise Resource Planning (ERP) within an organization. ERP is implemented in order to support business processes in an integral, cost-efficient way. The most important advantage of ERP is that it enables an organization to efficiently manage its resources (such as customer orders, production hours and materials).
It supports the availability of organizational data and exchange of data between all business functions, independent from the department that has entered the data into the system. The implementation of ERP is already widely described in scientific and management literature. So why am I writing this blog? Because the integral, business-wide advantages promised by an ERP-system are also the reason why the implementation of ERP is often a painful, expensive and labor intensive process (and even then it could still be questionable whether ERP delivers all its promised advantages). I would like to share a method for overcoming problems as experienced in practice.
A short, certainly not conclusive, list of problems regarding ERP implementation:
Costs: Costs are often exceeded by a factor x budgeted. During the implementation phase unexpected issues arise that need to be covered by expensive ERP-consultants.
Time: ERP-implementation projects are rarely finalized within the planned timeframe; often because of the previously mentioned unidentified issues which arise during implementation.
People: The employees – the most important resources of an organization – are not involved in the implementation and for that reason are not willing to adapt to the new way of working prescribed by the ERP-system.
So how do we get a grip on these costs, time and people aspects? My opinion is that several of the above mentioned problems can – at least to a large extent – be prevented by a proper preparation of an organization before bringing in ERP-consultants. I think that lots of organizations trust too much on the promise that an ERP implementation can be without any hassle when bringing the ERP-experts in. Without questioning the expertise of ERP-consultants, organizations should strive to keep control before and during ERP implementation and not give away the initiative to an ERP-implementer too early in the process. Furthermore, a good preparation also enables an organization to make a good substantiated, well thought-out decision on ERP-selection. Based on my experience in a project aimed at preparing an ERP implementation within an international manufacturer of technical systems, consisting of multiple business units within several countries, I propose the following method:
Determine scope ERP-systems can support the whole world, but what kind of support do we need? In other words: for what reason and which domains are we implementing ERP? This scoping enables the organization to provide direction and scope for subsequent preparation phases.
Describe process architecture By which processes do we deliver customer value? How are these processes interrelated? By using reference architectures, industry best practices are incorporated and can be used as a basis for describing the process architecture. This prevents the organization from putting a lot of time and effort in activities from which the results are already available. From these standards, further customization is required to make it organization-specific, just as a standard ERP system requires customization for each specific organization.
Identify strategic, generic and other processes In the ideal world all processes are elaborated to the bone before implementation starts. In practice, project constraints such as time and money enforce organizations to focus on those processes that are most vital for delivering customer value. For this reason a distinction should be made in strategic, generic and other processes which provides guidance to what extent processes should be elaborated.
Elaborate strategic and generic processes and describe other processes on a high-level The strategic and generic processes are further elaborated in process models. A visual model language facilitates the communication with business stakeholders for reviewing purposes. Furthermore, it brings you the advantage that international modeling languages (such as BPMN 2.0) are often known by system-implementers. In the end, the selection for an ERP is based on the fit to these elaborated strategic and generic processes since these are the processes that provide competitive advantage. For means of completeness one should also make a high-level description of the other processes so that no processes are overlooked during implementation.
Identify basic requirements to the ERP system During and after elaborating the strategic, generic and other processes one should think about the requirements that should be met by the ERP-system. As will be described later one can make a distinction into business requirements, functional requirements and non-functional requirements. For the preparation of the implementation the whole process of above mentioned steps provides a good opportunity to collect these requirements from business stakeholders.
This is the outline of the proposed approach for preparing ERP implementation. In the following blogs I will elaborate on the presented steps in more detail. Furthermore , I will present the human oriented part of the approach (the process-driven part may be already quite obvious). So stay tuned for upcoming posts and if you have any questions, please leave a comment.
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