by Mubbisher Ahmed

Back to basics: Enterprise Resource Planning

Feb 02, 2010
IT LeadershipIT StrategyMobile Apps

Enterprise resource planning (ERP) software attempts to link all internal business processes into a common set of applications that share a common database. It is the common database that allows an ERP system to serve as a source for a robust data warehouse that can support sophisticated decision support and analysis. Top suppliers include SAP, Oracle and Microsoft Dynamics. Data warehouse design can also involve a process of extract, transform and load (ETL) that allows business intelligence software to perform its queries and predictive analysis of your organisation’s data. Business intelligence (BI) systems have the ability to sit on top of a data warehouse and perform intelligent querying of data through data mining, online analytical processing (OLAP) and business performance management (BPM). In particular, it is the BPM aspect that MDs/CEOs utilise the most as it becomes a decision support system, providing dashboards for all sorts of performance indicators allowing management quick synopsis of any given situation, allowing quicker decision making. Market trends: Current Consolidation, who owns who and how it will affect the future of ERP The IT market is undergoing significant reshuffle and consolidation. This has led to a great deal of confusion on who owns who, especially if your CEO does not actively follow the IT industry. ERP system supplier consolidation has meant that Microsoft has bought Navision and Great Plains. SAP now owns BI vendor Business Objects . Oracle is the supplier that is the most influential as far as acquisitions are concerned as it has bought, Sun Microsystems, PeopleSoft, which already owned JD Edwards, Siebel, Primavera and Hyperion. Also IBM bought Cognos as it is software for BI.

Lessons learnt that allow future successful implementations Project leadership can mitigate ERP implementation risks with a strong plan that remains focused on the organisation’s goals and objectives. A spirit of cooperation between the vendor and buyer for mutual benefit is often quoted as the single most important factor for success. It is interesting that on average an ERP implementation takes approx 20 months and that only seven per cent of projects finish on time while 68 per cent took “much longer” than expected. A new ERP implementation is best done by splitting the project into three discrete areas: Planning, Change and Review. The areas below will on occasion be conducted in parallel. Planning: The business needs to appoint a steering committee to conduct a thorough SWOT and STEP (PEST) analysis with a view to setting up an ERP capability. It can then be used to identify gaps that need to be addressed. For example, if the STEP analysis highlights that politically, many departments aren’t interested or do not know about the new ERP implementation, it needs to be addressed. It also needs to be recorded in the SWOT analysis as a threat. This will highlight how prepared the business is for the required change and the next step can take these findings and ensure: 1. A senior Executive is appointed to ensure the project is top driven (Senior exec – CEO etc) and not bottom up (IT driven) 2.Business strategy is clearly defined. 3. ERP system fits within that strategy. 4. Definition of goals/objectives of introducing the ERP system Ensure questions such as what do we hope to achieve at the end? How will we know that we have arrived? – are answered, i.e. clearly define business requirements in detail and set realistic business benefits to manage expectations better. 5. Processes in 6, 7 and 8 need to be aligned to the overall business/IT strategy by involvement from both senior managers of functions and experienced users who understand the processes. 6. Processes are analysed for alignment to business vision and business/IT strategy and fixed accordingly. 7. Processes that are not captured by existing systems are captured. 8. Processed are improved. 9. Resources both human and technical – ensure miscalculation of time/effort is minimised, manage delivery timeframe expectations. 10. The above steps have been completed and a realistic budget is assigned. 11. ERP package selection is according to business requirements/process mapping. 12. ERP software is aligned to user procedures (May require new procedures) Change: 1. Ensure that all interested parties are engaged and feel involved (business buy in) and that resistance to change is reduced and addressed accordingly. (This can be accomplished by creating a steering committee that has reps from both senior management from every function involved; and a super user who understands current processes. The super user needs to have taken the time to create his/her steering committee to analyse current processes and suggest improvements (See item 5 under planning). 2. How do we communicate that this change is required? – On going communications with all stakeholders. 3. How will training elements be addressed? What is the current process (Manual/IT based system and if it is an IT system, are there any problems in the way that the system is used? 4. Reviews, for example, Gateway Reviews should be conducted to deliver a “peer review” where independent practitioners from outside the programme/project use their experience and expertise to examine the progress and likelihood of successful delivery of the programme or project. Review: Once the project has been delivered successfully, a yearly review should be conducted to enhance or improve the system allowing for continuous improvement. Minor modifications, tweaks and fixes can be performed as business as usual.

About the author: Mubbisher Ahmed is a management consultant with experience Senior Project Manager for the Environment Agency.