By: Larry Perlov
ERP implementation projects aren’t as easy as they look, and they don’t look very easy. Every year, organizations spend millions of dollars to implement different ERP solutions with the hopes that the new solutions will allow companies to scale, reduce operating expenses, or become more effective at serving customers. However, many of these projects fail to achieve the benefits companies envision when they set out on their transformation journey.
In this blog series, I am going to share the 3 most important questions to ask before starting an implementation project, so when your organization starts the project, it will be well positioned for success.
Some implementations are technical replacements, others are grounded in desired business outcomes. Regardless of the type of implementation, if it doesn’t come with clear objectives, it will likely fail to improve a company’s business performance. That’s why any significant project should be grounded in a strong “Why?” – a strong business case – especially when the decision involves an ERP solution that could take significant time and resources to implement.
A good and clear “Why” becomes the “true north” for the implementation and provides an ongoing focus for any important decisions or dilemmas throughout the implementation.
To define your “Why,” you need to identify the most important outcomes that your business stakeholders want to achieve as a consequence of the ERP initiative. Every organization’s “Why” may be different. At the highest level, the “Why” for many organizations is usually associated with increasing throughput, reducing operating expenses, improving working capital or improving compliance.
There are many activities that can help you define your “why” with respect to an ERP implementation.
“SO WHAT?”, “WHO CARES?”, AND “HOW MUCH?”
The answer to “Why” must be strong enough to serve as your project’s “true north”. You can more effectively establish this by asking “so what?” or more diplomatically, “what are the (positive or negative) ramifications of this?”. For instance if the answer to “why change” is “…to improve our visibility…”, asking “so what?” could expose a higher level outcome such as “improve profitability of customers by identifying which products our most profitable customers buy repeatedly and enable us to promote those product to customers who don’t currently buy them”. This feels better and more aligned to the broad category of increasing throughput. We can further test this by checking “who cares?” – the answer we are looking for is someone at a senior enough level whose personal business plan for the next 3-5 years is dependent on improving this outcome. If the answer to “who cares” is not an executive level stakeholder, you are too low, and need to ask “so what” again.
It is also important to quantify these as much as possible, i.e. “by how much would revenues increase if we get this right?” If quantification is not possible, at lease a qualified order of magnitude is very important.
As a starting point, look ahead to six to twelve months following the change(go live) and outline any related clear, measurable outcomes you expect to accomplish as a result of the project. These outcomes should align fully with your overarching business strategy and your senior leadership team’s view of what is most important. Next, ask yourself what the risks and benefits are associated with both making the change and with not making the change. By understanding the potential impacts associated with both making the change and not making change, you will be able to really understand why – or why not – you should implement an ERP solution.
For more about the keys to a successful ERP implementation, please check out our new thought leadership paper: Creating a Recipe for Success: Questions to guide the development of a first class ERP solution