How your ERP PMO can help you avoid... ERP Technology Issues

This article is #2 in a series addressing the top 5 root causes of ERP cost and time overruns. You can find the overview of all 5 and links to the whole series here .

Let’s talk about getting better at managing ERP Technology Issues!

Commercial off-the-shelf (COTS) ERP systems themselves are generally not plagued with technology issues in the sense of defects or failure to do what they say they do. So it might come as a surprise that Technology Issues are the second biggest root cause factor in ERP cost & time overruns, after Inadequate Business Cases . But add the risk of choosing a poorly matched ERP to the need to integrate any ERP with other systems, and the potential for technology issues is clear.

Here are five things we can do to mitigate the risk of ERP Technology Issues:

1. Use Phase Zero Discovery to inform a procurement longlist

This breaks down into three parts, two "obvious and the third a bit more controversial

• Check the ERP landscape: Get hold of an up-to-date analysis of available ERP solutions and see how they are categorised. For example: some are aimed at smaller companies, while others support the largest corporations; different ERPs might have been designed primarily for manufacturing goods or for delivering services; ERPs can be cloud-native or server-client or some hybrid. Focus on a set of ERPs that seem the best fit for your organisation's size and sector.
• Verify the ERPs of potential interest: Use elements of “Phase Zero” Discovery to understand & document the “as is” system and integration landscape. Include a “Gemba walk” to understand how processes really work on the ground, and how systems and interfaces truly support them (or don't support them). Note potential “to be” integration points where your new ERP needs to talk to other systems.
• Use preliminary qualification to screen vendors: Use the learning from Discovery to drive the first step of procurement. Maybe 3 or 5 ERP solutions remain as interesting candidates? You can use a Preliminary Qualifying Questionnaire (PQQ) to invite those ERP suppliers to provide initial pre-tender information. Why is this step controversial? Firstly, because you need to be cautious: if you use a partner linked to ERP Vendor A for this work, they might be tempted to "deduce" that ERP Vendor A is best for your needs. Secondly, because the JFDI advocates in your organisation might be grumpy about an extra step in the process before ITT.

Watch Out: our technology issues don’t all disappear with this action! Rather, we reduce the risk of choosing an inappropriate core ERP solution. We still need to build and integrate it.

2. Engage your Enterprise Architect

Your Enterprise Architect can be your best friend in aligning ERP implementation with both business and system architecture. What you’re looking for is a path to the new system that demonstrably supports the organization’s strategic goals and integrates well with existing infrastructure. The architect’s expertise helps you create an architecture roadmap to accommodate future growth and technological advances. Let them do their job so the ERP system is robust, scalable, and aligned with your long-term vision for capabilities and strategic outcomes.

If you don't have an in-house EA, consider hiring independent architect help, but be aware that if you haven't figured out your own Business Architecture and don't have a Target Operating Model your risk mitigation might be less than complete.

Watch out: these are actually organisational capability issues, but when our ERP technology ends up mismatched with poorly articulated business needs, the technology will be blamed.

3. Use Only Intended ERP “User Exits” for Customisations

Take ERP provider warnings against customisations seriously. That said, they often cannot be avoided entirely. What to do? ERP systems often provide “user exits” or predefined points where custom code can be inserted to extend functionality in an approved manner. Using these for integrations ensures that customizations are supported and maintainable. Use approved Middleware and APIs to facilitate data exchange between the ERP system and other applications.

Watch out: Use a decision tree like that shown further down to nudge people away from customisations and put verified "must have" customisations through rigorous governance.

4. Vendor Product Roadmaps

In ERP Programmes WE HATE TECHNOLOGY SURPRISES! Check your ERP and other key systems' product roadmaps to understand the future direction and to identify upcoming features to exploit. However, adopting latest versions can sometimes lead to “bleeding edge” issues, where new features are not quite reliable. To mitigate this risk, you might adopt a policy of using “version n-1”. Regularly reviewing vendor roadmaps also helps to plan upgrades and ensure ongoing compatibility with future releases. Make sure it is someone's job to scan the horizon, especially on public cloud ERPs where your ability to delay an upgrade is constrained.

Watch out: a vendor product roadmap is not a cast-iron promise. Let's identify a fallback Plan B solution if our ERP Plan A is built around an assumption of using future roadmap feature XYZ.

5. Conference Room Pilots and Process Walk-Throughs

Despite the above steps, there is still the risk of technology issues lurking in the detail. Experience tells us that some of them might not be found even in a well-run ERP system test or UAT. Here are 2 further techniques to catch such technology issues before Go Live.

• Conference Room Pilot: Before you cut over to Production, run a simulation of your new integrated solution, as exact as you can make it, in your Test environment. This is non-trivial to prepare & run, and people will yell about it. But there is just nothing like running "real" transactions to surface issues with data, roles, training, or interfaces. Duplicate in ERP Test EXACTLY the customer orders, work orders or purchases folks are doing in your live systems that week or the next week. Gather a small but sufficient team of SMEs in a conference room - I have used 1 desk per business team - and trace the customer order through to the warehouse fulfilment and customer invoice; the purchase order through to goods receipt and vendor payment; the work order through to finished goods inventory valuation. Expect to find issues with Master Data, Roles, and gaps in training on the new technologies
• Process Walk-Through: one unavoidable drawback of the Conference Room Pilot is that it necessarily comes late in the day. There's a lot of ERP configuration, data migration and user training needed before you have all the resources at hand to run it. But how do we surface technology issues before we have the technology? One possibility is to use the "to be" process diagrams to run a paper-based simulation. You will benefit from process models that are mapped to underlying technologies and user roles, and from simulating data transfers and document outputs. Try to use real world work that people are doing this week or next week rather than abstracted test cases, and get real user representatives to help, not managers. Expect to find issues with process sequence, hand-offs and approvals, and off-system steps that were not captured in the design.

Watch out: These are non-trivial exercises that need preparation and participant education, as well as a day or a half day to run. You will get resistance. But I would be astonished if you don't learn something new in simulation that would be very much worse to learn as a Production issue.

Example decision tree for mitigation #3 above

Sources & Resources

ERP Landscape: Follow Sam Gupta who is running a series on the topic and has a handy reference document. Gartner ($) is a useful source of annually updated information.

Preliminary Qualifying Questionnaire: there is a VERY high level description here , enough to kick off a discussion with your own Procurement folks.

Enterprise Architecture: You can get an overview via the TOGAF standard and there are some useful Business Architecture resources from the Business Architecture Guild ($). I enjoyed working with Zak Juma and Mike Wyatt as Business and Enterprise Architects, respectively. For a contractor Enterprise Architect, consider Liz Wray .

Vendor Product Roadmaps: you can usually get to see these at public events like SAP TechEd or NetSuite SuiteWorld. ERP resellers and consultancies may be able to discuss them for individual providers. If there's a "one-stop shop" where you can easily find a comparison of future roadmaps across multiple ERP vendors, I don't know it.

Conference Room Pilots: Useful online resources include a short summary from Datix and a longer piece from ERP Information .

#ERPPMO #UsefulPMO