ERP - Life after go live

 

You implemented ERP to deliver your business strategy. After go-live is where you start feeling the benefits.

 

But that doesn't mean the hard work is over. After go-live you need to maintain internal knowledge on the system and drive continuous improvement to keep delivering benefits for years to come.

Getting value from ERP after go live

HOW DO YOU SUPPORT AN ERP SYSTEM?

Once an ERP system has been implemented it will be necessary to provide ongoing support to the organisation so that your system remains fit for purpose and keeps pace with the ongoing business change. Ongoing support of an ERP system spans multiple functions such as networks, infrastructure, and provision of servers as well as application support and managing the support desk.

To support your ERP solution you will need to understand how your support organisation is set up. Organisations normally have an Operating Model that describes the business vision or strategy, a description of the core business processes, the structure of the organisation, the technology and those internal and external factors that influence it.

How you are going to support your ERP system needs to be considered early in your project as it takes time to build and establish your support function.

Supporting an ERP system includes managing user access, ensuring that the system is available for use when it’s required and that processing remains efficient. 

The system also needs to cater for new business requirements - at go-live it’s likely the known business requirements have been built, but as time progresses and the business evolves and changes there will be system changes required and enhancements needed to satisfy new requirements that may arise. 

Go-live is really only the start of your ERP journey not the end. You will need a wealth of experience and knowledge to support your ERP system. The team that supports the ERP system will likely span the IT and the business functions and is often referred to as a Centre of Excellence (or something similar).

A centre of excellence is where all the IT and business functions come together to deliver the business activities critical to the organisation.

Depending on the size and structure of the organisation, the COE could be a team that works daily together as one team or it could be members from different teams that sit on a council or board on a periodical basis to make decisions that affect the use of the ERP system.

WHAT IS AN ERP CENTRE OF EXCELLENCE?

A Centre of Excellence is more than just a support function. It’s a framework that brings together the business and IT and can be divided into four quadrants:

  • The Business

  • IT 

  • Running what you have

  • Improving what you have

Centre of excellence COE framework

The IT support function falls into the bottom left quadrant of the CoE. Often, companies mistakenly make this the focus of the CoE post go-live.

But a  CoE does much more than just support IT.

It’s an enabler for making things better for your staff, your customers and your shareholders. That’s why your ERP Centre of Excellence needs to occupy all 4 quadrants of the ERP Success Universe.

Let’s discuss each of the four quadrants in turn.

Your ERP IT function: the run it quadrant

The Run IT Quadrant focuses on the operation which is the epicentre of running IT, in effect, keeping the lights on. Its primary reason for existing is to enable the business to deliver.

Common functions that make up the IT Quadrant are:

  • Service Desk

  • IT Service Management

  • Application Monitoring

  • Technical Monitoring and Management

  • Service Transition

  • Functional Delivery

  • Platform Hosting

  • Vendor Support

Some of the common models for IT Support that fall into this area include ITIL or VeriSM.

 

 

Centre of excellence COE framework run technology

ERP Enablement: The Run the business quadrant

 

Centre of excellence COE framework run buisness

We need to ensure the business runs effectively and efficiently and to do this we need to have the following in place;

  • User community

  • Super users

  • Security and provisioning

  • Training, education and communications

  • Data management

  • Business process support

Lots of the functions of this quadrant are about enabling the business the ERP system properly, and to help them get the business benefits they expected from ERP. 

At the point of go-live, this will include things like training and setting up super users - but in the long term it includes things like having business processes owners and process support that will make sure the ERP system continues to deliver what the business needs. Having the business process team engage with IT is one of the key success factors that make up a COE.

Those organisations that choose to keep business process owners and system process owners or product owners close operate in a more effective way than those that don't.

Develop IT: Improve the business with ERP technology

In order to continually develop your IT support function you need to improve it by building a platform that delivers the business strategy. This means your CoE should continually be evaluating and reevaluating what the business needs from it’s IT systems - and what new software is available to deliver the business strategy.

Implementing the latest cutting edge technology, the IT department can enable the business to grow its competitive advantage. however it needs to have functions in place that enable it to change and grow quickly and effectively.  

The functions that need to be in place to do this are:

  • Application and solution architecture

  • Environment management

  • Development and Configuration

  • Build and Release management

  • Delivery Management

  • Testing

Centre of excellence COE framework improve technology

These functions are key to ensuring that changes are delivered in a way that enables the business to deliver what it is that’s required to improve the features and up to date technology that supports the vision or strategy.

Strategy: Improve the business with ERP

Improving the business requires thought about how to increase competitive advantage and maximise value.

Centre of excellence COE framework  improve business

 

Competitive advantage is where your business will make the biggest gain. By ensuring that the whole business is aware of direction and strategy this will lead to further gains in the marketplace.

Business Process Owners and Product Owners working together will lead in this area. 

It’s important to note that it requires all functions  to work together to form the Centre of Excellence which then forms the heart of the operation.

 

Continuous improvement in ERP

Continuous improvement is the methodology that describes the incremental improvement of a product or a service. It isn’t specific to IT or ERP, the same principles apply across all the business functions. Your business and your system need to evolve and improve to keep you moving forward.

Continuous Service Improvement (CSI) involves identifying and improving IT processes and services and measures the success of those improvements. Streamlining your processes to reduce wasted time and effort, and reducing costs. 

Many IT Support frameworks such as ITIL place a large emphasis on continuous service improvement. We assess whether something needs to be improved by asking; 

  • Where do we want to be?

  • Where are we now?

  • How do we get there?

  • Take action to get there

  • How did we get there?

  • Is there anything we can improve on?

  • Start the cycle again

The plan-do-check-act cycle is the basis for the continual improvement of a product, process or service (also known as the Deming cycle) 

Plan - You identify and plan what it is that you are going to improve

Do - You improve it

Check - You check that the improvement has had a positive effect

Act - You act by improving further in the next cycle

Continuous improvement is core to any IT service provided.

history of continuous improvement in ERP

It is often cited that Henry Ford inaugurated the concept of CSI as part of his drive to improve his manufacturing process in the early 1900s. He developed his 8 Disciplines method (known as 8D) to improve the process of manufacturing, resolving problems by identifying them, correcting them and eliminating them. The mantra is to devise a short-term fix and implement a long-term solution to prevent recurring problems. This method of continuous improvements led to a reduction in the time taken to build a Model T.

At the same time continuous improvement models were being created in the Eastern Hemisphere.

Kaizen means “change for the better” or “continuous improvement” in Japanese. It’s a business philosophy focused on making gradual improvements to make the work environment more efficient and involving everyone in the challenge. Everyone’s ideas are welcome, implement small changes to maximise quality and eliminate waste, recognising they can make a big impact long-term. The belief is that everything can be changed and everything can be more efficient. 

Kaizen has been adopted widely as a business concept. Toyota actively employs Kaizen as a core principle of their Toyota Production System encouraging and empowering employees to identify improvements and deploy solutions.

Lean Manufacturing was a further evolution of Kaizen as a global production system improvement.

Lean focuses on the removal of waste where waste is anything that doesn’t add value to the customer. Identify wasteful activities and eliminate them - simple.

Lean manufacturing was the brainchild of Toyota. It is still at the heart of the Toyota Way and is still actively promoted on the Toyota website to this day.

Later on in the 20th century Six Sigma was established.

Six Sigma was a process improvement model introduced in 1985 by Motorola.  This was later implemented by Jack Welch at the General Electric in 1995 and has since then become very popular. Six Sigma strives for perfection providing a methodology that aims to eliminate defects in any process.

This was developed further in the 2000s to create Lean Six Sigma, a model that  combines the best features of Lean Manufacturing and Six Sigma, sometimes referred to as the 8 wastes. This seeks to improve performance by eliminating waste and defects, the basic philosophy is if it doesn’t create value for the customer then it should be eliminated.

The method or combination of methods an organisation uses to implement Continuous Improvement within the business varies depending on the type of organisation they are and what works best for them.

There are some key themes that run through all the approaches:

  • Involve and empower everyone

  • value everyone’s ideas

  • Start small and implement incremental change

  • Customer is key

  • All activities should drive value

  • Leadership buy in

  • Decisions should be fact based and measurable

Whatever approach the organisation chooses the chances are they will need to establish a team to manage CSI within the business.

ERP System Governance

Governance is a framework that brings accountability within an organisation, and explains how that organisation is managed, controlled, makes decisions and communicates.

Governance within the Support Organisation works in the same way as it does within a project environment. The same key control points are required, including service catalogue or support scope, cost, quality, resourcing, measuring and reporting, managing stakeholders, risk management and change control.

Overview of ERP Governance Framework

Governance frameworks base decision making on the following;

  • Policies and Standards

  • Governance processes

  • Processes and procedures

  • Risk management

  • Communication and reporting

  • Technology enablement

  • Performance management and benefits tracking

The decision making is supported by the cornerstones of

  • Organisational Structure

  • Roles and Responsibilities

 

 

Looking at the governance that needs to be in place in more detail.

Policies and Standards are defined to which the support organisation adheres. Policies are the drivers that refer to guiding principles for the support organisation.

In the same way that the business has sales processes or procurement processes, the support organisation must also have operating processes that define their ways of working. Supporting the operating processes, procedures are put in place that outline the individual steps that are required to execute the tasks necessary.

The following types of processes and procedures are defined as part of standard IT Organisation Governance:

  • Standard working processes and procedures

  • Escalation process

  • Work instructions and guidance on ways of working

  • Risk Management

  • Communication and reporting

  • Technology Enablement (this could be in the form or a service catalogue or service scope document)

  • Performance management and benefits tracking.

An organisation structure needs to be defined that outlines how our support team is organised and what our support organisation looks like in terms of teams and team members. This helps us to understand how we interact, reporting lines and areas of responsibility.

Roles and responsibilities also need to be clarified and agreed. There is usually a RACI matrix included in the governance framework that shows who is accountable, responsible, consulted or informed for each process within the support organisation.

Delivering Benefits from ERP

Business benefits are the positive outcomes, quantified or unquantified, that the project has delivered and demonstrate that the investment and hard work was worth it.

Once a project has gone live, all too often the benefits of the ERP implementation are forgotten. The project team disbands and the focus shifts, the ERP system transitions to ‘business as usual’.

Benefits realisation is the practice of ensuring that the outcome of the project produces the projected benefits that were agreed in the original business case.

When the business case is being written it’s important to determine what the benefits will be both short and long term and how they will support the strategic goals of the business in the short and long term.

Writing down and capturing the perceived business benefits is a great starting point but if you don’t measure whether those benefits have been achieved then it was a pointless exercise. We don’t know whether our ERP project achieved what we set out to do. “It has been shown that the more mature an organisation is in realising benefits, the more likely it is an organisation in which projects are completed on time and within budget, and an organisation that meets its original goals and business intent.”

Levin, G. (2015). Benefits – a necessity to deliver business value and a culture change but how do we achieve them?

Paper presented at PMI® Global Congress 2015—North America, Orlando, FL. Newtown Square, PA: Project Management Institute.

In order to realise the benefit first you have to be able to identify them. Benefits can  be considered as tangible or intangible, financial or non-financial (based on the work carried out by Williams & Parr, 2006).

Once we’ve captured and prioritised our business benefits then we can track them and make sure they are realised. 

All too often benefits realisation focuses on the benefits realised purely from the initial implementation of the ERP system but as we’ve said the implementation is just the very start of the journey. What about the post implementation benefits realisation? How do we ensure the system continues to improve our organisation and deliver benefits? 

If our ERP solution doesn’t continue to evolve alongside our business then the benefits it delivers starts to diminish. The system becomes outdated and unfit for purpose. Users become frustrated with ways of working resulting in unused solutions. Business processes are outdated and the business introduces off system workarounds to get the job done and to ‘paper over the cracks’.

Benefits realisation needs to continue post go live to ensure that your long-term business benefits are realised.

Resulting published a comprehensive research piece on the success of ERP after go-live.

The first major benefit is the ability to understand and track the KPIs that characterise the business benefits that were originally quantified in your original ERP business case.

But ERP applications experts who know the organisation’s business processes (and how your ERP modules have been configured and adapted over time to enable these vital processes) can track these KPI’s.

They will need to be equipped with the right software tools (and which ones to use is another story).

Ultimately, if you’re not tracking the KPIs that underpin your business case via your Centre of Excellence, then you’ll never achieve ‘excellence’.

When things go wrong with ERP

The reality is that no ERP project will ever be perfect. There’s a very good chance that there will be small disasters and issues along the way. Go live might quite be as smooth as you had hoped, the first few weeks after go live are hectic and there’s things that have been missed and defects that need to be fixed.

That’s certainly not uncommon and it doesn’t by default mean that you’ve failed. These are just teething problems you need to overcome.

Ramp that up and you may find your ERP project has failed to fully deliver on its business case, or your business might not have realised all the benefits they expected or your organisation might not have been fully ready for the business change and be resistant to get on board. Worse still you might have blown the budget or massively overrun in terms of time and effort. 

These may all be reasons that your ERP project is deemed a failure. ERP projects fail for a number of reasons and the magnitude to which they fail can vary massively. The focus might have been too much on the technology rather than does it fit the business need. If you’ve not done the right level of due diligence then you might even have selected the wrong ERP package entirely. 

It’s easy to get wrapped up in the hype of the technology and all its promises, and to get swept away by the sales pitch. It’s the cutting edge package that everyone is using, the market leader, it’ll solve all your problems. Not keeping an open mind and applying rigour to your selection process can often mean you choose the wrong package. 

If your IT director is hell bent on selecting SAP regardless then that’s an issue. You need to really consider what the business needs. Think about people and processes rather than technology.

Alternatively you might have the right package but you’ve over committed in terms of delivery. Promised too much for the budget and timeframe, been unrealistic about what you can actually deliver within the budget and the timeframe.
If you’ve not controlled and managed your project scope, if you’ve accommodated ‘urgent’ requests without considering the impact that will have, increasing the scope and workload. You could well have over committed in terms of delivery, worse still your budget might also be out of control accommodating these new requests and scope changes.

Sometimes it’s easy to get carried away with all the ‘nice to have’ functionality the product offers for which there really is no business drive. The project team can disappear down a rabbit hole delivering something they think the business wants.

If you’ve not been clear and structured in controlling this then your project could well have spiralled out of control.

To really succeed your ERP project needs strong leadership to steer it on the journey, to make critical decisions and give the project the right level of focus from the business.

Without this your project can loose direction and sense of purpose. Someone needs to hold the project accountable to delivering the business benefits. 

They also need to hold the business accountable to ensuring the right level of effort and engagement goes into the project. An ERP project can’t just be done in your spare time. The business needs to be fully immersed to make it work. Without strong executive sponsorship it is often difficult to get the required level of business engagement to make your project succeed. 

Over complicating things, allowing too much customisation and not enforcing standardisation. 

There’s no doubt there will be some level of customisation required, but this should be targeted. Commodity processes should be kept standard. Processes that differentiate you and add business value should only be considered for customisation. 

If as a project you haven’t applied the correct level of rigour to approving customisations then the chances are things will have gotten out of control and you’ll have a highly customised almost bespoke solution. This is especially common if your business users aren’t prepared to challenge their ways of working but also if your SI is on a time and materials contract where customisations earn them extra revenue.

Over and over we see customisations that have been put in place and are never used by the business … that’s a waste of time and money.

Hiring the wrong implementation partner, you haven’t done enough due diligence or you simply made the wrong choice and the partner you’ve selected isn’t the right one to deliver what you need. 

Maybe you’ve struggled to build a good relationship with them and work as a single team. It could be that their delivery approach or engagement model hasn’t fitted your organisation. Or that quite simply you haven’t gotten along.

Maybe their resources haven’t quite lived up to expectations, they promised highly skilled and experienced resources and then flooded the project with junior resources who were inexperienced.

It’s easy to get wowed by the sales pitch.

Sometimes companies can get it very wrong and the result can be a monumental ERP failure of epic proportions. Over the years there have been some pretty fundamental well documented disaster stories that have come to the surface involving big brands who’ve got their ERP implementation very wrong. 

If you google ERP disasters you’ll find story after story of big household names across all the industries who simply got it wrong. The outcome can sometimes be catastrophic - screw ups that cost millions of pounds, enraged investors, huge losses on the stock market and in share price, lawsuits and litigation, reputational damage and in some cases bankruptcy.

Getting your ERP project right really is critical but the project is only the start of the journey.

Are you working with ERP?

 

Are you planning to work with an ERP system?

You may have been asked by your employer to help on your ERP system implementation.  Or you might be involved in selecting a new ERP system for your business.

Maybe you're considering working in ERP as an IT career - as a consultant or developer?

Hopefully, this ERP Fundamentals information has been useful and informative for you.

If you'd like to understand more about ERP, or you'd like to talk through your challenges, feel free to contact Resulting IT for non-technical, practical ERP advice.

Resulting_RGB

 

Next: Uncover the factors that underpin successful ERP programmes.

Check out our ERP success research report.