ERP Projects - Are you Digitising the Dinosaur?
Michelle Harvey
Independent ERP Strategy | ERP Evaluation | IT Strategy | Business Systems Review | ERP Consulting | Digital Transformation I Project Management | Change Management
At a high level there are 4 macro phases of an ERP Project. These phases are:
1.????Vendor and Solution Evaluation
2.????Detailed Scoping and Design
3.????Build and Implementation
4.????Go-Live and Hypercare
Phase 1 is usually quite straight forward. After following a structured ERP Evaluation Process, our clients decide on their preferred ERP Solution and Vendor and move to Phase 2 – Detailed Scoping and Design.
As part of our ERP Evaluation process, we ask Vendors to provide the "Fixed Costs" for Phase 2 - and the "Estimated Costs" for Phase 3 – Build and Implementation.
However, at the end of Phase 2 - Detailed Scoping and Design many of our clients face a terrible shock when the ERP Vendor presents them with "Revised Costs" for the Build and Implementation that can sometimes be double or treble what was originally proposed budget.
What is the No. 1 Reason for this Design Phase “Blow Out”?
At the beginning of the project, the Business Sponsor confirms they want to take advantage of a standardised ERP solution that has been purpose built for their specific industry. The mandate throughout the ERP Evaluation Process is for minimal customisations. This information has been conveyed to the Vendor, the Evaluation Team and the BPOs.
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However, along the way, customisations start to creep into the design.
The foundation reason for this is that users are often resistant to change from heavily customised systems that have been specifically developed for their way of working. New standardised systems are thereby viewed as creating more work and being less efficient.
They insist on duplicating their current manual processes, maintaining 20+ years of heavy modifications from their old technology platforms, keeping integrations and custom developed apps and retaining convoluted work practices that may be no longer relevant with the adoption of a new ERP.
The result is that during the design workshops they end up forcing the ERP Vendor to replicate what they do now in the current system.
This is called Digitising the Dinosaur
If you are moving from multiple disparate systems and outdated technology, you do not want to be digitising the dinosaur. The only way to stop this, is for the Business Sponsor to enforce the mandate that the organisation will be adopting a standard approach and using the ERP template that is offered by the Vendor, even if it may initially seem like a backward step.
This requires strong leadership, a firm hand and constant communication that there will be minimal customisations allowed.?The failure in this area is where the problem often starts.
If any customisations are requested by the users, then they need to be supported by a strong business case that shows a clear benefit and return on investment.
Have you ever experienced a significant “Design Stage” Blow Out? How did you manage this?
Leveraging the power of 4th industrial age to empower small and medium business and organisations to grow and succeed
2 年Michelle Harvey Great article once again. You always keep us thinking and thinking. A recent experience reminds me of the diligent work that we used to do back in the 80's and 90's with process re-engineering with best industry practises. The business landscape is an ever ending fast moving target. Some changes in scope along the way may be required, but need to be tightly controlled and seen as 'must haves' for the implementation to be seen as a success. There is nothing negative about creating a Phase II backlog for the Project if it is that important. The 'great resignation wave' can create a vacuum in the business on what and why business decisions were made during the early phases of the Project. We are all human ( well I don't think we have AI yet), change is hard in our personal and business lives and it is too easy to build another Dinosaur out of new pieces and call it a success. Thanks again.
Helping to end the ERP conspiracy
2 年The reason ERP projects come unstuck during Phase 2 is simply because they have not properly undertaken a Phase 0 which needs to be an exhaustive exercise preparing for Phase 1 and Phase 2. Until ELTs/SLTs understand this, ERP projects will continue to struggle. The problem is further compounded because most partners, vendors, SIs, and consultants when faced with the commercial realities of explaining this risk losing that client's business.
Taking a break from Linkedin; but I'm an ERP observer, blogger and author. Please contact me if you think that I might have knowledge that is useful to you.
2 年A senior guy at a leading Tier 2 author told me that, after 3 years, only 30% of the bespoke that they do for clients is still in use. I like to ask clients, "If what you are going to do is not going to save you money or make you money; why are you doing it?".