How to get the best value from your ERP System?

Why Is Value from ERP Critical?

Implementing an ERP is an elaborate and expensive exercise that demands money, time, and effort.

Usually, the ERP implementation stretches over a long period, and fatigue sets in by the end of the project. In the intervening period between project kick-off and ERP go-live, you may confront doubts, frustrations, and impatience amongst stakeholders. In such situations, the incremental value from the implementation, from the sponsors to the CxOs, to managers to transaction-level users, becomes the topmost motivating factor for driving the project. 

Why Do ERP Implementations Fail?

According to a study done by Gartner, 55-75% of ERP projects either fail or don’t meet their intended objectives. Studies also inform that approximately 20% of ERP implementation projects fail to achieve value for the users.

Therefore, it is essential that you consistently review all factors that contribute to making an ERP implementation project successful during the entire project lifecycle. Further, you may also have to monitor all the factors that can disrupt the project.

Apart from the factors that influence an ERP implementation, you may want to ensure the start of the realization of value as early as possible in the project life cycle to keep the project on track.

What Value Can You Expect From ERP?

The first and foremost aspect of the assessment of value to be delivered by your ERP is to ask yourself whether you are steadily progressing towards achieving your objective of implementing it or not? Whether you can realize milestone/stage-wise evidence of the project objective?

In general, one of the following may be your primary objective for implementing the ERP:

• Support framework for growth: When your organization is on an ambitious growth path.
• Streamlining of operations: When you want to improve the productivity and efficiency of the organization by automating and getting better control to manage business processes.
• Uniform System in Organization: When your organization has grown into a group of business units resulting from mergers and acquisitions. A uniform system would enable better management and faster decision-making.
• Obsolete Technology: When your organization’s current system has become technologically outdated, no further upgrades are possible that enable the utilization of contemporary features and functionalities or integrate it with other universally accepted technology solutions.
• Vehicle for the achievement of Strategic Goals: When the organization has clearly defined business goals and objectives, a well-defined IT strategy can facilitate you in achieving those goals and objectives.

What Does The Value From ERP Look Like?

Enterprises implementing a new ERP will see value in three core categories: productivity, information, and efficient resource management.

1. Productivity – An effective ERP solution should enable enhancement in productivity resulting from optimized and improved processes. Streamlined processes eliminate rework or duplicate effort, thus, improving efficiency and resulting in better margins and greater profitability.
2. Information – Getting real-time information faster with greater accuracy means improved decision-making, better planning, reduction in duplicate efforts, and more realistic delivery commitments. A single source of truth enables better cross-functional communication. For example, the sales department can make better delivery commitments to customers with information on production planning and control. 
3. Resource Management – Streamlined processes enable optimal utilization of resources. For instance, automation of processes allows personnel to devote time to negotiating better terms in procurement instead of spending time collating information for making a purchase. Improved ways to manage resources will facilitate better revenue and control over operational costs.

What Is Your Reason To Implement ERP?

The objective of the ERP project forms the basis for defining system requirements specifications, and the sum of requirements and expectations is the value or the future state of how the organization will operate post-go-live.

Realization of future state will depend upon evidence at each stage, right from System Requirement Specification, Gap-Analysis, Development & Testing, Deployment & Training, System Go-live, to Post-Go-Live support.

How Does Value Affect The Buy-In Of Stakeholders?

Moreover, the realization of value is a compelling buy-in for all stakeholders in the project. Incremental value realization continuously reaffirms progress towards the achievement of project objectives and assures return on investment. It is one of the most potent ingredients for achieving organizational transformation and effective change management. It answers each stakeholder’s question – ‘What is in it for me?’

Conclusion

Delays in value realization as per the project plan are a recipe for project failure at the worst and unsatisfactory implementation at best. It is desirable to have a projection of incremental value that can be realized from implementation at each stage of the project and not wait for the big-bang realization of the future state. Thus, small successes add up to the overall success of the project.

It may be wise to single out value realization as one of the most critical aspects of ERP implementation project management.

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References & Sources:

Advantages and Benefits of ERP by Leah Costello

How can you measure the value of ERP

How to ensure successful ERP Implementation