According to a 2012 report by Panorama Consulting on the state of Enterprise Resource Planning systems – the lifeblood of any growing business today – a whopping 57% of ERP projects go over budget, and nearly that many take longer than expected to implement. Moreover, according to their research, nearly half of all projects “realize less than half of expected benefits” and nearly 30% “have not recouped any costs.”
It doesn’t have to be that way.
Companies who start with a focus on “benefits realization” have the best shot of measuring, then attaining, a suitable, and even enormous, return on investment (ROI). Simply put, benefits realization is a comprehensive project approach that focuses on identifying, measuring and ensuring the business benefits achievable through technology.
You break down high-level business benefits into “manageable, actionable chunks” as Panorama best puts it. You measure the benefits after implementation and utilize tools to ensure that the benefits are maintained, then sustained. In short, you’re merging the technical aspects of the implementation with the business aspects of the implementation to ensure that benefits are realized.
In a recent White Paper, Panorama described their take on Ten “Key ERP Benefits Realization Activities” that focus on business value, ones companies implement as part of an overall ERP project plan. [Find the original white paper here. You may need to register first.]
We’re reprising them here because we believe strongly in the wisdom these profess. Fully half the action points below relate to how well a company assesses its internal needs, maps its workflow and processes, prepares itself for ERP, and measures its progress – all critical components that being with a functional needs analysis (or what our firm refers to as the Business Process Analysis).
We’ll review Panorama Consulting’s first 3 Benefits Realization Activities in the rest of this post, and list the other seven in our next post. The first three, with excerpts from their comments…
- High-level Business Case, Corporate Metrics and Benchmarks: It is important to identify and quantify the potential benefits of the project and then compare those benefits to the projected costs associated with the proposed information technology.
- Organizational Readiness Assessment: Assess the company’s culture and identify employee resistance to change early in the project in order to pinpoint activities necessary to overcome this resistance.
- High-level, Enterprise-wide Business Processes: Business processes need to be modeled and improved to improve efficiency and to make certain that technology is not merely used to “pave the cow paths.” Even more importantly, these defined business processes should ultimately drive overall ERP design, configuration and implementation.
This is a critical topic when a company evaluates ERP. We’ll close out with Panorama’s remaining seven action items in our next post, so stay tuned…