Unfortunately, ERP implementations fail to deliver expected business benefits for most organizations. As outlined in our 2012 ERP Report, 50-percent of organizations fail to realize at least 50-percent of the tangible benefits from their ERP systems that they expected during the selection and planning stages of the project. To add insult to injury, this pattern is common across ERP vendors, so whether you’re implementing SAP, Oracle E-Business Suite, Microsoft Dynamics, or any of the various Tier II ERP systems in the marketplace, you are just as likely to experience these challenges.
While the problem is very measurable and consistent, the solution to the problem isn’t always as tangible. It’s one thing to establish a specific and measurable expected business benefit, but realizing the benefit requires a bit more effort. This is perhaps one of the key reasons why ERP implementations, system integrators and ERP vendors are notorious for failing to deliver measurable business value to the organizations that invest heavily in the solutions.
So what is a CIO or CFO to do? First of all, it is critical to understand the drivers of expected business benefits rather than simply quantifying them. As is the case with many ERP benefits, improved employee interaction and broken silos are the root enablers of business benefits, so it’s important to define how those drivers will create the business value and ROI.
Here are a few tips to help ensure that your organization creates the cross-functional interactions and breaks down the silos required to enable the business benefits of your ERP software:
1. Focus on business process management and ERP blueprinting. One of my pet peeves stemming from my 15 years in the industry is the loose and nebulous use of terms like “blueprinting,” “best practices” and “business processes.” Sure, every ERP consultant and system integrator is going to define business processes, but typically only in the context of what they need to configure the software. So when it comes to increasing operational efficiencies, creating cross-functional effectiveness, and minimizing non-value-add activities, the myopic checklists and vague process diagrams of most consultants and system integrators fall woefully short. Instead, organizations need to take a top-down, holistic approach to designing and improving business processes via a robust business process management and blueprinting process, such as the methodology we use at Panorama.
2. Let organizational change management methodologies make your business processes and business benefits become an organizational reality. ERP implementations and results are only as good as the reality of how your organization adopts new business processes and enables business benefits, which is why organizational change management is typically the deciding factor between implementation success and failure. In fact, our research and experience show that over 60-percent of an ERP implementation’s success or failure is directly or indirectly associated with organizational change management. And when we talk about organizational change management, we’re not simply referring to canned vendor training materials – we’re also referring to organizational design, communications, organizational impact and implementation, and a host of other organizational change activities required to enable cross-functional interaction. Panorama’s organizational change management methodology and toolset, for example, has been developed and refined over years of research and experience managing ERP implementations.
3. Alignment between your ERP system, business processes and organizational behaviors. It amazes me how often we see ERP implementations that are completely misaligned with an organization’s business processes and employee use of the system. Sure, ERP systems typically work brilliantly from a technical and functional perspective, but they are typically misaligned with the operational and organizational aspects of the business. Careful business process design (#1 above), organizational change management (#2 above), and a thorough and robust implementation methodology are just a few things required to address this challenge.
At the end of the day, ERP implementations are tough enough to handle without bringing a company to bankruptcy, so it’s hard for most inexperienced and unsophisticated project managers, ERP consultants and system integrators to also think about optimizing business benefits. However, that could be because they don’t know how to enable the root drivers of those business benefits, such as interaction and the elimination of cross-functional silos. The above three steps are just a few areas that Panorama leverages to make ERP implementations successful and create measurable business benefits. Contact us today to learn more.