Achieving the best results from an ERP consolidation or upgrade requires a strategic vision and a well-planned approach that combine business and IT perspectives and sponsorship. That calls for business executives across the company to join with the CIO and be actively involved in the communications, planning, and strategy process to fully understand the intent, size, scope, costs, and timing of these initiatives.
It also creates a synergy that amplifies the ability to identify potential opportunities and challenges that may be involved in a system consolidation or upgrade.
Careful planning and development of a road map with business and IT involvement can help ease cost constraints by taking inventory of existing technology and business application portfolios. This can also help to gauge their business value and make any necessary adjustments, as well as help drive future applications investments.
By analyzing core business processes—their performance, complexity, cost, utilization, and contribution to the business—an organization can be in a better position to eliminate ineffective areas and optimize the most valuable ones. This can also help to reduce costs and control strategies to drive systems augmentation.
Creating value in addition to preserving it should be the strategic focus of an ERP consolidation or upgrade. This requires looking at the ERP landscape from a performance point of view rather than just a risk, compliance, and controls point of view. To do so involves determining how this performance-based mindset impacts the organization in terms of IT landscape, current processes, governance, and the company’s business and IT strategy.
It is also important to recognize that creating value from ERP extends far beyond the actual IT implementation phase and requires a commitment to the long-term business strategy. Organizational alignment, improvement of business processes, and driving performance are critical components following the initial IT implementation phase, and they need to be reassessed over time.
The new long-term strategy should focus on whether the ERP implementation growth curve is completed and how rapid gains are used to prime IT and business to execute the strategy on a tactical and operational level. A common risk is that the organization will remain at the level of rapid gains, will be satisfied with the result, and will forget that there is also a long-term strategy. Commitment to that strategy by key stakeholders is essential for completing the growth curve and creating competitive value. In an effort to create value and stay true to the long-term business strategy, organizations should ask themselves the following three questions:
- Which market developments should be taken into account in terms of the long-term strategy?
- How do these developments translate into requirements within the three layers of business model, process, and IT?
- Having defined the requirements, how do these requirements impact the business model, processes, and IT?
Since ERP implementations can often disruptively impact business functions, and because businesses seek the benefits of a consolidation or upgrade as soon as possible, timing is always of the essence. The duration and success of implementations, however, will depend on a variety of factors, some of which include:
- The degree of commitment and collaboration of executive and business management with IT;
- The quality of planning and alignment with strategic objectives;
- The level of customization versus out-of-the-box implementation;
- The maturity of an organization and their experience with ERP;
- The technical or functional purpose of an upgrade;
- Organizational change management and training;
- Whether expectations are realistic, and the extent to which there is a true focus on business processes;
- The effectiveness of governance and milestone tracking.
While the technology matters, the key to a successful ERP strategy is built around the business needs and the goals to be accomplished. By understanding business objectives and what is to be accomplished with an ERP strategy, companies are more likely to realize the business benefits of ERP and will likely be in a better position to establish key performance measures, set baselines and targets for those measures, and track performance after the system is up and running.