Five things management must consider for ERP implementation

By ERP Focus. So, you’re ready to start your ERP implementation or upgrade your existing solution. But have you planned for how you’ll manage solution requirements to ensure a successful project? Without a strategic approach to requirements management, most organizations will struggle with meeting the needs of its stakeholders; resulting in organizational disruption, delays, and potentially project failure.

The implementation of enterprise software represents change. How well you prepare for, and manage that change, is a significant predictor of success.

According to a 2017 report from the Project Management Institute (PMI), organisations waste on average $97,000 for every $1,000,000 invested due to poor project performance.¹ There are other startling statistics; a 2012 study by McKinsey and Company in collaboration with the University of Oxford found on average large IT projects run 45 percent over budget and 7 percent over time while delivering 56 percent less value than predicted.² They also found 17 percent of projects perform so poorly, they threaten the existence of the sponsoring organization.

The change associated with ERP projects can take several forms, most commonly the “Big T” (large-scale enterprise transformations), the “little t” (minor transformations in one or more business functions), and “lift and shifts” (essentially technology upgrades). In all cases, success requires a strong collaboration amongst the affected stakeholders.

ERP vendors have spent billions of dollars optimising their software, providing vertical-specific workflows and recommendations, to improve business processes efficiency. For you to realise the value and benefits from your significant investment in enterprise software, it is important to consider your company’s culture, business processes, resources (people, financial, equipment, and technology), and the implementation methodology.

The most successful ERP implementation projects are guided by a project management framework, which serves as the wrapper for the activities and tasks associated with requirements management, which in turn guides the ERP’s configuration. With the appropriate level of management, oversight, and rigor, you can overcome the hurdles and the dramatic letdown commonly associated with ERP implementations.

Below are five aspects of requirements management to consider when starting an ERP implementation project.

Focus on requirements management

ERP projects are strategic investments in an organisations future; designed to improve business processes and drive efficiencies, they should not be viewed as IT projects, although IT has a key project role. A focus on requirements management can help you overcome the doldrums of missed expectations and poor execution. A holistic focus on all requirements will result in higher levels of user adoption, and an increased ROI, resulting in tangible benefits.

Stakeholders

Thorough and proper stakeholder analysis is essential to ensuring the final implemented ERP solution meets or exceeds the sponsor’s expectations. During the stakeholder identification processes, remember to consider the following categories for inclusion in your analysis. Missing anyone could be the difference between success and failure.

The value proposition

The ideal starting point for any ERP implementation is a needs assessment, where the organisation clearly defines the problem and opportunity they are attempting to address.

The next step is to conduct a cost benefit analysis and develop a business case for the initiative.

During this process, the goals and objectives of the project are strategically aligned to those of the business.

A properly defined ERP business case will be referred to and updated throughout the lifecycle of the initiative, and potentially referenced for several years afterwards. The business case will help to ensure a common understanding of the initiative, and defines the value the ERP program will deliver to the business.

With careful planning and consideration, a well-crafted business case can significantly increase the likelihood of a successful ERP implementation.  With the approval of the business case, the organization should commence work on the project charter, the document that formally authorizes the project.

Failure to establish clarity on what the team is trying to achieve is a leading cause of project failure. To increase the likelihood of positive results, take the time to create the business case and project charter at the onset.

Approach and plans for successful ERP implementation

Supporting the implementation framework are many plans designed to align stakeholders based on the approved business case and charter.  A few key deliverables that are often overlooked include:

• Strategy for traceability, and the traceability matrix.
• Requirements management plan, and business analysis plan.
• Test strategy, acceptance criteria plan, and integrated change management plan.

The best tool for collecting requirements is a MoSCoW traceability matrix.  With the proper use of this tool, project teams can capture, prioritize, trace, and track the requirements over the duration of the initiative. The test strategy and the acceptance criteria plan provide the guidance to ensure the items documented in the MoSCoW traceability matrix have the necessary approval for migration to an operational state.

Requirements analysis

Thoroughly analysing requirements is perhaps the single most important activity within a project.  These activities and tasks focus on the following:

• identification,
• prioritisation,
• specification creation,
• approval, and
• validation of solution requirements.

The specifics are documented in the strategy for traceability, requirements management plan and business analysis plans.

The first iteration of the MoSCoW traceability matrix provides a baseline measurement for future comparison and effective decision-making. This baseline represents the known universe of work to complete the ERP implementation.

Once baselined, any changes must follow the integrated change management plan.  The purpose of an integrated change management plan is not to eliminate change, but rather to define a process allowing the proposed changes to be properly identified, evaluated, and escalated to governance as appropriate.

Beyond RICE

Many ERP projects focus on functional requirements, typically referred to as RICE (Reports, Interfaces, Conversions, and Extensions). The most successful ERP projects look beyond RICE and consider the business, stakeholder, non-functional, and transition requirements. This holistic approach to requirements analysis and management helps to ensure all aspects of the project are considered, and the organization is prepared for the transition to an operational state following go-live.

¹ Project Management Institute, 2017 Pulse of the Profession Success Rates Rise, Transforming the high cost of low performance

² McKinsey and Company, 2012, Delivering large-scale IT projects on time, on budget, and on value

ABOUT THE AUTHOR…

Brian Williamson (PfMP, PgMP, PMP, PMI-RMP, PMI-PBA, PMI-SP, PMI-ACP, ITIL Expert, and Certified Fraud Examiner) is an Executive Director of PMO with Avaap. Brian is the author of “PMI-PBA® Exam Practice Test and Study Guide”; the co-author of “Making Choices: Aligning Strategic Business Execution with Strategy through Project Portfolio Management”; and has contributed to many publications on portfolio, program, and project management.