you have implemented erp - now, how do you extract the promised value

1/13/12 You Have Implemented ERP - Now, How Do You Extract the Promised Valu…

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You Have Implemented ERP - Now, How Do YouExtract the Promised Value?E \�-RQDW K D Q�*URVV | Ja n 4 2 01 2

Happy New Year! We hope you’re kicking off 2012 with a commitment to continued ERP success.

In 2011, we largely focused our written content on ERP selection and ERP implementation best-practices. In the context of

an ERP system’s lifecycle, these phases represent an organization’s platform and preparation for enhanced business

value. The delivery of actual business value – and return on ERP investment - happens later on in an ERP system’s

lifecycle, during the post-implementation optimization phase.

It’s during post-implementation optimization where organizations should be looking to leverage ERP-driven benefits of

integration, transparency and automation. The following graph shows a fairly typical scenario for a high performing

organization that’s committed to post-implementation optimization.

The benefits first start to accrue once the organization successfully integrates the system into its business processes. This

happens when the users finally accept, adopt and become comfortable with the new, ERP-supported business processes.

From that point onward, these best-in-class organizations accelerate benefits realization as they continuously review,

revise and improve their business processes (leveraging, of course, their ERP system capabilities).

Although most companies never experience the steep part of the value realization curve, almost all are capable of doing

so – provided that they’ve successfully implemented ERP.

Of course, the obvious questions are: how does an organization do so? And, where should it start? To answer the first

question, a business has to focus on continuous improvement. That means constantly benchmarking performance, setting

new goals, driving improvements and evaluating performance. The second question is answered below.

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Benchmarking Performance – What You Need to Get Started

To plot a path to a better state of being, you need two pieces of information: a starting point and an ending point. The

starting point is an understanding of current performance. How much do you lose on obsolete inventory? What percentage

of your orders are shipped on time? What is your current defect rate? How long does it take you to close your books?

Values like these will act as baseline benchmarks. When choosing benchmark indicators, you should pick those that drive

strategic and operational goals.

How should you go about measuring the values? Start with a set of business process maps that accurately reflect

business functions. If you’ve recently completed an ERP implementation, you should have a set of fairly accurate process

maps. If you don’t have an accurate set of process maps, make them. These documents are indispensable to this type of

continuous improvement project.

With the maps in-hand, quantify the key baseline metrics on a process-by-process basis. In all likelihood you’ll need to

analyze key financial data and interview key users to get the data you require.

Goal Setting – Modeling Improved Business Processes

With the starting point set, your next task is to figure out what the future value looks like. To get started, you’ll need the

following:

Strategic and operational targets

Business process maps

Baseline metrics

If management hasn’t formally articulated and quantified strategic and operating targets, it will need to do so. Once

completed, the project falls back on your plate. You’ll need to figure out how business processes can be reshaped to drive

the identified goals. How? By studying the process maps, learning the ERP system’s capabilities and interviewing key

users, all with a view to making operations more efficient and effective. Can you reduce the number of procedures in a

given process? Can certain manual tasks be automated? As you model the improved business, you should project the

value of the improvements.

Planning and Execution

Your next task is to find the easiest, cheapest, fastest and least disruptive way to implement the changes. You’ll need to

create a project plan that accounts for cost, schedule and resource requirements. As with any project that involves

change, we strongly suggest that you first secure buy-in from key stakeholders and senior management.

Thereafter, it’s up to you and your team to execute the proposed plan. As the plan is implemented, it’s important that the

process maps be revised to reflected ongoing changes.

Performance Evaluation – A Measure of ERP-Enabled Value

At the conclusion of the project, your task is to quantify the processes and measure them against the benchmarks. The

difference yields the incremental business value resulting from post-implementation optimization efforts.

At this point, the project has come full-circle. The revised process maps and resulting performance indicators become the

benchmark against which the next set of improvement projects are measured.

At Pemeco Consulting, we help organizations extract significant value from their ERP implementations, through any

combination of benchmarking, planning, execution and measurement. Contact us to learn how we might be able to help

your business optimize its post-implementation performance.

Analysis Business Process Mapping ERP Optimization and Training ROI Value



Submitted by Ashok Vaishnav (not verified) on Fri, 2012-01-06 03:45.

The first and formost challenge that post-implementation ERP Project manager has to is to ensure retenation of the core

members of the implementation phase. Th e attrition can be in the form of people leaving the oraganiztion as well as

people reverting back to thier pre-ERP roles.

The first one is simply because the people trained during implementaion ground are most obvious source of trained men

power for the organizations for whom ERP is core business.

The second one normally happens because the line managers still consider ERP as one of add-on system, neccessiated

beacuse of the organization changes, but not an aid for better information source and more useful tool to aid in decision

making. Thus, ERP implementation memeber may find it better to join his/her original role for better career.

At the core is the fact that many organizations do implement ERP have yet to impart equal value to information - creation,

sharing and utlization. These organization would have made very cosmetic changes in their thier processes during

implementation of ERP.

Submitted by admin on Fri, 2012-01-06 11:31.

Hi Ashok,

Thanks for another valuable comment.

Super user attrition is certainly a challenge. Here are a couple of ways to mitigate those risks:

1) As you mention, create appropriate incentives and rewards to retain the right people in the right positions; and

2) Establish appropriate succession planning to mitigate attrition-related risks.

Happy new year,

Jonathan

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