09 March 2010

Changing the game for ERP/COTS implementations

I think we've all learned that implementing ERP/COTS using a traditional approach of (1) focusing on custom software and (2) having a purely requirements-driven approach results in greater Total Cost of Ownership (TCO). ERP/COTS can make for an expensive custom solution. What is required to change this trend is to evolve our implementation approach. Following are my top strategies for changing the game for ERP/COTS implementations:

(1) Focus on Business Results. Too often we focus on software scope and not the entire business solution (People, Business Processes, Technology). A challenge I make to my project team is to focus on all three components that drive business results. Also, spend time/effort on gathering requirements that drive value-add business results. Not all of the customer's existing business results drive real business value.

(2) Ask customers to formalize knowledge transfer on their existing business model. Every customer's implementation is unique and it is important that every member on the project team has a common understanding of the customer's existing business model. This knowledge transfer will enable implementation partners (consultants, IT) to better align with the explicit and implicit expectations of their customer. Implementation partners need to speak the language of their customers. Being in the same meeting or having the latest chat technology does not guarantee alignment nor collaboration.

(3) Implementation partners need to enable customers to lead during the implementation. This requires us to have a formal knowledge transfer plan and a progressive leadership style: Directing, Coaching, Facilitating, and Supporting. A new measure for success: the implementation partner leavers before the go-live because the customer is self-sufficient.

(4) Perform business solution modeling. Use prototyping for defining requirements and modeling to validate requirements/configurations. Use multiple validation techniques (peer reviews, modeling, testing) to identify potential problems.

(5) Implement to the current business process maturity level. Technology alone does not mature a business process. Meeting the customer where they are at will (a) reduce the challenge of emerging requirements, (b) reduce implementation risk, and (c) put you in a better position for a quick win.

(6) Minimize customizations and maximize enhancements. Every customer will have unique requirements that must be addressed via software. Some of these requirements add no material value to desired business results (customizations) while other requirements have a material impact to desired business results (enhancements). This is not meant to be a negative commentary but it deals with the reality that a customer's existing business process is not 100% efficient nor 100% effective (Lean Six Sigma). A key strategy for the project team is to focus on the requirements that drive enhancements and eliminate non value add customizations as quickly as possible (before Fit/Gap).

(7) Negotiate for success. This requires changing the customer's expectation of business software. If the custom expects a custom software solution then the results will be additional gaps, costs, and disappointments. Implementation partners need to understand the potential areas in the ERP/COTS software where software changes can be cost-effective. Negotiation will be required to foster adoption and yet not eliminate the inherent advantages of ERP/COTS.

(8) Accelerate decisions by generating more knowledge and less information. At the end of the day, decisions (not documents) move implementations forward. Sometimes we get caught up in generating too many detailed documents without ensuring they generate value-add results (decisions).

In summary, the key to effective ERP/COTS implementations is to have an implementation approach that maximizes the advantages and minimizes the challenges associated with ERP/COTS software.

Adapted from the book "Maximize Your Investment: 10 Key Strategies for Effective Packaged Software Implementations" by Brett Beaubouef.

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