The ERP holy grail of seamless, integrated business functions achieving their full potential has been elusive, for sure. According to a Gartner report, a whopping 75% of ERP implementations fail to achieve their objectives, due in large part to how they start off and the outcomes stakeholders think they will achieve.
While I think those are generic reasons for why any project might not succeed, in my 25 years working with enterprise business applications, I’ve found that, in the case of ERP, organizations often repave (or pave over) the same process roads with new technology, which means that sooner or later they will end up where they started, and fail to get the right returns on their ERP investment. Put another way, there is too much focus on technology inputs and not enough attention towards the corollary business processes, and by extension the desired business outcomes [CLICK TO TWEET].
I’m not the first to say that technology on its own is not the point. Understanding business processes and business process integration to drive systems work is where the magic lies. Here are a few key points I’ve found helpful for making sure business applications reflect and drive your actual business processes.
Don’t treat your ERP implementation as a technology project
If the IT shop is leading your ERP program, you should not expect to get the maximum business impact. As talented as your IT folks might be, they are typically at least one layer removed from the actual operations of your business. Companies that identify a dedicated business sponsor to drive the direction, priorities, and approach to enterprise solutions invariably realize the greatest business impact.
Do create a “value compass” for your ERP program
“We don’t need a business case, everyone knows the system is bad and we need a change.” I’ve heard statements like this from many IT leaders over the years. While this may be completely valid, such a view can miss the big picture around managing value throughout the program. I’ve found that organizations benefit hugely from a “value compass” based on a business case through which to filter ongoing decision making and to keep themselves on point. Establishing a strategic improvement framework as part of a business case is the master key to delivering real business value in your ERP implementation (see Exhibit A).
Work through the complexity of business process management with the right tools
Many businesses lack the approach and tools to model and optimize their business processes. Such tools have traditionally been overly complex and expensive, and many organizations simply end up with manuals and PowerPoint. However, such static tools make it hard to see the business holistically and to understand the flows, responsibilities, and dependencies. The Microsoft ecosystem now puts the fundamentals of dynamic business process management within reach of most companies (see Exhibit B).
Make sure you actually connect the business process to your business applications
The last mile in a business-process driven approach to ERP is configuring your applications to support the business model. No matter what solution you use to manage technology-enabled processes (and you’ll be hard pressed to find any that aren’t these days), the processes and applications cannot operate separately. This is as much a matter of mindset as it is of technology execution. When starting to think about your ERP implementation and linking business processes and business applications, ask yourself questions like these:
“How can we …”
- design and configure the application to support a business process from the start?
- rationalize how the business process works with how the application works (Exhibit C)?
- link our business processes with “user help” inside the system…what happens when there’s an update?
At Avanade, we don’t think in silos, rather we think in terms of mega-processes, across functions. With Dynamics 365 for Operations, it’s all about identifying and integrating the right business processes to achieve your goals. For example, if your order-to-cash function requires data and workflow linkages across billing, customer (self)-service and fulfillment, you can configure your ERP solution to support that. The Dynamics 365 platform allows you to pick and choose your business processes and applications to meet your needs, and enterprises can approach those needs either incrementally or holistically.
As a result, you can increase both the speed of your ERP implementation – up to 50% faster than traditional implementations – and the speed with which you can operate your business processes. Better ERP technology can actually lead to better business processes and greater value, with less cost and risk.