We have all heard the phrase “time is money.” In ERP projects, you not only have to work hard, but you have to work smart in order to get the project done both in time and in budget. The largest issues plaguing ERP projects are that they take longer than originally expected and cost more than originally expected. According to our 2015 ERP Report, these problems largely stem from project managers, executives and ERP consultants failing to properly scope the complexities and risks unique to any given organization.
Much of the time, scopes are based on simple assumptions, such as number of modules or number of users. However, these assumptions don’t take into consideration operational complexities, resistance to change, diversity of product lines and level of standardization among various locations. All of which are all variables that materially impact the cost and duration of your project.
Here are five strategies to keep in mind when scoping for your ERP project to rise above the norm:
- Account for the complexities of your business. Is your business relatively simple? OR Is your business a complex set of business processes supporting a diverse line of products? The mix of operational complexity versus simplicity, business process standardization versus decentralization, and employees’ willingness to change are all examples of variables that will ultimately determine the cost and duration of your scope. Be sure to get an independent view of these variables when planning your project (in other words, not from the same person trying to sell you the software).
- Include business transformational activities that will make or break your project. Technical-related activities are rarely the cause of project scoping issues – or the cause of success or failure, for that matter. Instead, business transformational activities such as business process reengineering and organizational change management are exponentially more likely to drive you cost, duration and ultimate success. When scoping for your project, be careful not to myopically focus too much on the technical aspects of the project.
- Be realistic about your project assumptions. It is vital to recognize whether or not your assumptions are realistic because they have the power to make or break your project. Many organizations enter their implementations with the assumption that there will be no customization on their projects. However, according to our experience and research, over 90% of organizations end up customizing their ERP software to some degree. This can materially affect your implementation duration and cost. Take the time at the beginning of your project to ensure that the assumptions you and your ERP consultants are working from are accurate.
- Benchmark against other organizations and data points. We have all heard the anecdotal stories about what to expect from ERP implementations. However, these isolated examples are rarely indicative of what the average project looks like. With this in mind, make sure to look at broad data sets of other organizations similar to yours to grasp a good understanding of what your implementation cost and duration may be. One helpful resource is Panorama’s 2015 ERP Report. This annual report outlines actual average costs and durations for hundreds of companies across the globe. The data in each report is typically much more reliable than single examples cited by ERP vendors and sales reps.
- Watch for the “it looks good on paper” trap. On paper and in theory, I could save just about any organization millions of dollars simply be removing all organizational change management However, this wouldn’t reflect the financial impact of employee resistance, project delays, lost sales and other common risks of failing to address organizational change. Just because something looks like it may save you time and money on paper doesn’t mean that it will. Make certain that your scoping assumptions account for the real “hidden” long-term costs of potentially saving time and money in the short-term.
In today’s world, time is most certainly money. However, the trick is being smart on the front end of your project to ensure a smart end to your implementation. An ERP project is not something that will come together with little thought. It requires a lot of TLC.
To learn more, register for tomorrow’s webinar, Business Process Reengineering: A Key Component of ERP ROI.