The difference between a successful ERP project and one that struggles to realize significant business benefits isn’t usually the specific software deployed. In many cases, ERP failure is actually caused by a lack of effective project controls.
In other words, ERP project governance is critical to ensuring your effort stays on track, from the initial planning stages to well past your go-live date. This governance is maintained by a core group of influencers that direct the implementation.
Today, we’re sharing why this success factor is so important and how you can establish it from the beginning.
What is ERP Project Governance?
To stay competitive and meet customer expectations, more companies are looking to technologies, like ERP software, that automate and streamline operations. However, deciding which ERP vendor and system to select is only the first step.
You then must integrate the new technologies into your organization in ways that are effective, sustainable and well-received. This is a strategic effort that requires project governance.
What is ERP project governance? Usually positioned one level above project management, project governance focuses on the high-level aspects of your ERP implementation. It involves taking a close look at issues such as:
- System performance
- Project risks
- External factors that could influence success
While ERP project managers are focused on meeting day-to-day milestones, project governance is more concerned with monitoring the broader goals and objectives of the effort. It requires aligning your executive and project teams, and then ensuring that same cohesion among other stakeholders.
The 2021 ERP Report
This report summarizes our independent research into organizations' selection and implementation decisions and their project results.
Why is Project Governance Important?
It’s no secret that an ERP system is a major investment. Naturally, you want the implementation to meet your expectations. Project governance provides the framework for this kind of continued success.
It ensures that you aren’t pouring money, time or resources into anything that doesn’t support the overall project goals. For example, if you undergo business process reengineering, it’s important to ensure the changes you’re making support your long-term goals.
Without such guidance, it’s all too easy to focus on the wrong improvements and lose sight of the bigger picture. As a result, you may find your project costing more and taking longer than anticipated. In some cases, failing to govern your project from the top-down can even lead to ERP failure.
How to Develop ERP Project Governance
1. Obtain Strategic Executive Alignment
Everyone in charge of making key decisions concerning the ERP project should be aligned regarding organizational goals and project goals.
If there’s misalignment among the executive team, then it’s likely that your workforce is equally disjointed. To help bring everyone together, make sure your project vision is clear and is communicated to all stakeholders as part of your organizational change management plan.
2. Create an Overall Decision-making Framework
ERP success hinges on making smart, informed decisions at every touchpoint. However, any experienced business leader knows how quickly analysis paralysis can take hold. You want to make the best choices for the future of your company, but with so much riding on your decisions, it can be easy to stall. This is one way that project timelines get off track from the start.
We recommend spending the time upfront establishing how you will handle every decision, especially the big-ticket ones (ERP selection, business process management, etc.). There should be clearly-defined approval processes in place and everyone should understand their roles.
3. Form an Executive Steering Committee
Allowing too many entities to take individual control of different aspects of the project can lead to confusion and crossed wires. Instead, it’s important to create an executive steering committee that can make strategic decisions and guide the implementation from the top level.
Key members of this committee often include C-suite executives and members of your company’s board of directors.
4. Use Your Business Case as a Decision-making Tool
One way to empower your project team to stay on task throughout the ERP implementation is to continually keep the project business case top of mind. Hopefully, you developed this ERP business case before your project kickoff, and if done correctly, it should outline your project goals and quantify specific benefits the system is expected to achieve.
A business case is essential for many reasons, but one of the top reasons is that every time a decision needs to be made, you can refer to the business case to help you respond swiftly and strategically.
For instance, you may receive an ERP customization request from employees that doesn’t support your business case, so you reject it. In this way, you can help eliminate non-viable options and clarify your focus.
ERP Project Success Starts at the Top
An ERP implementation can transform your company from the inside out. To get there, however, you need strategic alignment that starts at the top.
When your steering committee and ERP project team members work together to guide and direct each step, the probability of long-term success is magnified. That’s why we recommend establishing ERP project governance at the very beginning and prioritizing it throughout the project as well as after go-live.