Is your enterprise ready for an ERP?
This article is a continuation of our ERP Pyramid series where we explore the building blocks critical to a successful implementation of an Enterprise Resource Planning (ERP) system. In Chapter 3 we look at aligning the ERP implementation with both the project & long-term needs of the enterprise organization.
Once a strong ERP business case and executive sponsorship are established, comes the time to start gaining commitment from the entire organization to move forward with the initiative. Too many times ERP projects miss the integrated value from all functions or lines of business. Furthermore, there is often a lack of reasonable effort into understanding the impact of the change. Now is the time to prepare, engage and measure the organization readiness for the ERP before resources are committed.
Gaining value from an integrated system
The third building block of the ERP Pyramid, Enterprise Alignment, requires a cross-organizational effort to define the scope of change and its impact and to ultimately “sell” the initiative to the entire organization. There will be changes that will affect everyone in some way for the greater good, but these changes will not come free or easy. Setting visionary, yet honest and realistic, expectations will truly define the opportunity once the majority of leaders are aligned.
So much more than the sum of the parts
The ERP initiative will result in standardized work procedures across the organization. It there provides the opportunity for some critical thinking from leaders:
- Who are the business process owners?
- Are the measures or KPIs we use actually reflective or what we care about?
- Why do we have gaps or conflicts in system data?
- Let’s identify those bottlenecks in our processes
- Are our organization-wide policies or standards effective?
More importantly it’s the right time to share the future vision of improving enterprise-wide “value chains” for the organization. Those “big” processes that cross multiple functions are the candidates for standardization and drivers for the ERP.
Examples include Procure–to-Pay (P2P)
The vision needs to espouse the benefits from higher revenues, reduced costs, conflict reductions, better efficiencies, and controlled growth. Harmony and synchronization are terms sometimes used to describe the end-state of the ERP implementation. Executive sponsors must tie this ERP back to the strategic goals of the organization for all to see and believe. Leaders at all levels in the organization need to be aligned with this vision by also seeing benefits for their teams. Measurement of this leadership alignment is critical to ensure that no one will be left behind and thus become an outlier during the implementation, or worse.
Corporate Priorities
Most leaders have a long list of goals at the enterprise and functional level. Typically they are tied to their personal bonuses or other compensation vehicles. Some goals may be operational in nature (think customer satisfaction metrics) or project-based (such as “roll out new benefits plan”). An ERP implementation will consume more time and effort than executives would like to believe. Unless they have been involved personally in an ERP, executives will be quick to drop yet another strategic goal onto the ever-growing list of leadership goals. But how many priority 1 goals can a leader have and actually accomplish? Successful ERP implementations result when there is organization-wide clarity that it is truly a priority. Corporate governance functions such as Enterprise Project Management Offices, Change Approval Boards and Change Management Offices can be effective vehicles to manage initiatives and their priorities.
Leaders now have an expectation of what benefits are possible from the ERP and the importance of this effort. In Chapter 4, we next look at resourcing for the ERP.
Allen Miko is a Senior Partner at Chrysylys