Many have come to know that ERP projects never really end. An ERP implementation is only the beginning of a journey with many twists, turns and – unfortunately – missed opportunities. The majority of business value ERP can generate happens during the maintenance life-cycle. Many customers never realize the full potential of ERP due to the maintenance strategy employed. What can we do to stay the course and ensure that customers can realize the value articulated in the ERP sales cycle?
IT all starts with Governance
An area that gets little attention but has a significant impact on ERP business value generation is ERP governance. Let’s revisit the inherent advantages and challenges associated with ERP.
We must address the above points throughout the entire ERP life-cycle. Too often I have observed customers applying their existing IT governance policies predicated on developing custom software for ERP packaged software. This overlooked problem can lead to significant ERP pains and limitations. Periodically conducting an ERP assessment can help the customer stay on track to maximizing their ERP investment.
Performing an ERP Assessment
An ERP assessment is a set of activities to determine how the organization is utilizing their ERP solution and identify opportunities for generating additional value from the investment. It is also a chance for the customer’s IT organization to develop an ERP roadmap to align with business objectives. Following is a brief overview of how to perform an ERP assessment.
Step #1 – Conduct a ERP software assessment
Knowing how the business is using their ERP software provides insight into possible opportunities and risks that should be part of an overall ERP roadmap. The ERP software checklist should identify all Out-Of-The-Box (OOTB) functionality that is available for use. I recommend that we complete the checklist by completing the following interviews:
- Conduct interview(s) with key IT resources for business. This will give us the opportunity to pre-populate the checklist before meeting with the key business users.
- Conduct interview(s) with key business users (owners). Highlight differences between IT and the Business so we can realign the understanding.
I also suggest that you highlight opportunities and concerns like the following:
- What are the Functionality/Business activities performed outside the ERP software?
- Identify functionality that may be a future requirement.
- Identify functionality that the Business does not know exists in the ERP software.
Following is an example of an ERP software checklist for a specific module (Asset Management).
ERP software is only one component of a business solution. When we perform an ERP assessment an analysis should also look at the business processes and people who the ERP software supports.
Step #2 – Perform a Business Process assessment
Understanding business maturity provides insight into what ERP OOTB functionality that business should be utilizing. However, do not get caught up in the trap that technology alone matures a business model. The business process assessment should identify all business activities. We also need to define a scale or rating to determine the maturity level. I typically utilize the Capability Maturity Model Integrated (CMMI) to define the level of maturity.
I recommend that we should complete the assessment by completing the following interviews:
- Conduct interview(s) with key IT resources (pre-populate) for business.
- Conduct interview(s) with key business users (owners). Highlight differences between IT and the Business so we can realign the understanding.
I also suggest that you highlight opportunities and concerns like the following:
- Business maturity capability gaps greater than 1.0 level.
Following is an example of a business maturity assessment.
Now, we need to focus on the most important part of a business solution – people. The last step looks at identifying resource capacity supporting your ERP investment.
Step #3 – Conduct a People assessment
If your organization does not have the resources or knowledge to effectively leverage your ERP investment. The skills checklist should identify all relevant software and process knowledge required to support the business. We should also identify the required knowledge/skill level required across the business solution. Complete the assessment by completing the following interviews:
- Conduct interview(s) with dedicated Business and IT resources.
- Review results with appropriate Business and IT management. Highlight differences between resource and manager evaluations.
Following is an example of an ERP skills assessment template.
Another strategic area to investigate is demand management. Reviewing the wants and needs communicated by the business will provide you insight regarding their expectations of ERP software.
Step #4 – Conduct a Helpdesk request assessment
Managing user expectations are constantly challenging. Technology may not be the answer for every business requirement. In addition, we need to be practical and understand that users naturally would like to address both their needs and wants for ERP. Regardless of the tool you use for ERP helpdesk management you need to categorize and analyze ticket volume and underlying drivers. Consider the following analysis:
From this summary we can see that the IT organization spent time an inordinate amount of effort due to no formal training being performed. Regardless of the ERP software capabilities, if users do not have sufficient ERP knowledge then business value is not generated. If the ERP software is of poor quality then we will see a significant increase in issues. IT support analysis for ERP software is a key indicator of how well the business is experiencing value from their ERP investment.
Summary
What is the purpose of doing an ERP assessment? At the end of the day the purpose of conducting an ERP health check assessment is to understand how to generate additional Return On Investment (ROI) from ERP. It is the first step in generating a holistic ERP application strategy.
Conducting an ERP health check can provide us the insight and knowledge we need to made informed decisions regarding governance, opportunities, risks, and investments.
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