The ERP software marked in the GCC is expected to grow to $300m by the end of 2009 according to Madar research.
The reason for this extensive growth is because business costs are rising and there are high demands for efficiency but also increased improvements in customer service. Companies will be seeking business benefits from implementing ERP systems to get a competitive advantage. Many companies will be facing a first time implementation with no prior experience of large scale projects where achieving the anticipated business benefits will not happen unless a long list of factors are carefully evaluated and addressed.
The combination of business growth, disparate systems and a lack of visibility in business performance forces a company to conduct a complete reassessment of their entire system landscape and needs within the business.
The selection and implementation of an ERP system can be arduous and long if one is not prepared to make the right decisions before, during and after the implementation.
Why implementations fail…
The insight that PA has gained from working with many global organisations highlights the key reasons why previous attempts have either failed or not delivered all of the expected business benefit:
How can companies ensure that the ERP implementation is best fit to their strategy and processes?
In today's rapidly changing and challenging environment, it is important to always keep a close eye on the business performance, and more importantly, recognise when it is time to change. A large scale transformation of this nature will bring about a lot of change, but the result should be a positive drive forward for the organisation.
Organisations have to structure the delivery of their ERP implementation around their business needs and benefits – it is not "just another IT project", but should be viewed as a positive change for the organisation; a change to how day-to-day transactions are conducted; a change to the way the business is managed and more importantly a change to the organisation's working environment. Managing these changes collectively, focused on achieving the desired efficiencies and improvements requires active change management. This needs to be pivoted on a top-down approach from the senior executives of the organisation who need to be ready to take responsibility to deliver the associated business benefits.
It is crucial to complete a thorough business case, identifying the business needs and highlighting the expected benefits before beginning the implementation. Bear in mind that the strategy for business performance management (Business Intelligence Solutions) and Customer Relationship management (CRM) must be included in the early ERP business case. The business case has to be a living document, constantly reviewed to help target the change management processes needed to make the implementation a success.
The focus should be on the business benefits and not on the technical implementation. The business sponsor – a member of the Executive Steering Group (ESG) – needs to manage and own the overall benefits case and will drive the direction of this organisation-wide implementation and change, being responsible for ensuring these benefits are realised and aligned to target performance measures. Sponsorship from the executives will be critical for a successful implementation as these members maintain the organisation's strategic direction and need to ensure alignment with the business needs.
The ESG has to embed a governance structure that will reach the right stakeholders. Active engagement and change management with members at all levels within this structure will provide an easier transition to the new solution. Early engagement will unearth hidden and unidentified blockers, allowing adequate time to mitigate against identified risks.
It is clear that one cannot implement ERP without business resources – the subject matter experts who understand the business processes and are ultimately also the users of the new solution.
Intensive ERP – Implementation without (waste of) business resources
PA has over the past years used a number of techniques to improve the traditional way of implementing ERP systems. They are known as the 7 intensifiers. These do not replace the key phases of an ERP implementation nor do they remove the need to focus hard on realising business benefits and effective change management. Intensifiers should be used in different phases of the implementation to make it more effective in terms of using the limited resources in the implementations.
Each of the 7 intensifiers provide the business with an unique set of methods to ensure benefits are met and the implementation are run as efficient as possible, without overload of the key business resources. The traditional triangle that governs ERP implementations does not apply to the use of these intensifiers:
Intensive ERP implementation makes better use of resources – both internal and external:
The Intensifiers and their usage
The 7 intensifiers are used differently through out the ERP lifecycle.
Intensifier 1: Collaboration Lab
Collaboration Lab is a workspace where large groups come together for multi-day events to accelerate decision making, resolve complex business issues and create innovative solutions. The approach is based on an intensive group process that combines a rigorous, creative problem solving process with dynamic facilitation techniques in a unique environment which easily handles 40-160 participants.
Using Collaboration Labs in ERP implementations will help achieve numerous objectives in a short period of time by combining a unique collaborative environment and proven facilitation processes. It creates a rapid decision-making environment while delivering high performance and develops a results-oriented collaborative culture.
Intensifier 2: Independent Advisor
PA acts as an independent advisor from the early stages, even before the project starts, by adding experience all the way through the complex and challenging implementation to realisation of business value. In various roles PA will support the business at the critical path and phase ourselves out when client staff are ready to operate the roles by themselves.
The value to the client of an independent advisor not involved in selling the ERP software is a focused, business-driven implementation from the right starting point, built on the right scope. Only the processes where business benefits are positive will be implemented. Organisations will experience faster and more cost efficient implementation while keeping steam up and the pressure down with higher quality project deliverables that demonstrate real value to the organisation.
Intensifier 3: Business Impact Map (BIM)
A Business Impact Map (BIM) is a structured and flexible way of pinpointing how a complex set of changes will impact an organisation. It is derived from the business case containing the identified business benefits and ensures that the implementation is continuously focused around achieving the desired benefits by linking these to the change management activities.
The BIM is used to establish a change-driven communication strategy and a fact-based stakeholder analysis. It will also identify and link business risk to change and help create scenarios that help management evaluate how various change scenarios will impact the organisation
Intensifier 4: Prototyping – “Seeing is believing”
Prototyping is used to avoid the many iterations and possible communication errors in typical implementation setups where interpretations of business specifications often lead to rework, confusion and delays. You can get a living and fully documented prototype with minimum effort or make fast identifications of FIT and GAP areas for processes in the ERP system.
Intensifier 5: Role Play
In role play, selected business resources are confronted with different business situations and scenarios. The confrontation is performed by the business resources as a role play in front of an audience of key stakeholders. The play is carefully prepared from either As-Is or To-Be business processes – depending on the purpose of the role play.
Using role play enables you to discover bad process design and identifies improvement areas at the same time as creating awareness to the organisation by demonstrating how processes fail or succeed, which again boosts key stakeholder commitment.
Intensifier 6: Smart Testing
Testing an ERP solution is often a time consuming and expensive process; these are perceived as a non-value adding activity by the implementation teams. Failing to perform sufficient system tests have on several occasions led to delays due to errors in the production system. Smart testing is a different and intelligent approach to testing, focusing on agility and efficiency in the test phase. This is achieved by having a risk-focused effort to be delivered by dedicated resources in effective dialogue and carefully arranged physical environment.
Smart testing avoids drain of business resources and results in higher quality testing of complex parts of the system while providing quality assurance and end user documentation.
Intensifier 7: Outsourced business documentation
Creating business documentation can be a tiresome process and getting the right level of documentation stored can be difficult. Using specialised writers to create larger volumes of business documentation: End-user documentation, training material and test cases, can relive key business resources from this task and focus on more value adding activities.
Selecting and implementing your ERP system must be aligned with the strategic objectives, the technologic platform of the company and focus on delivering business benefits. The implementation of ERP systems should not be treated as “just another IT project” but the means of which companies achieve the business goals of tomorrow. ERP implementations cannot be performed without your key business resources, but by using the intensifiers you will be sure that you are using them in the most efficient manner.
ERP implementations should change and improve business processes and taking a hard look at the options and possible business benefits prior to selection of software and implementation partner is crucial. Intensifiers should be used to ensure the best possible implementation of your solution. There is no reason to repeat errors others have already made and waste millions of dollars and precious time when you can avoid many pitfalls by building on the experience gained during numerous ERP implementations in the last decade.
Having an independent advisor helps on all aspects of bridging between vendors and the business and often also within the organisation. A neutral advisor is free from existing organisational constraints and can assist in driving through hurdles with a clear benefit-driven focus for the business.
Finally, active sponsorship from senior executives is critical for a successful implementation as these members maintain the organisation's strategic direction and need to ensure alignment with the business needs.