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Establish a Concrete ERP Foundation

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1 Establish a Concrete ERP Foundation
Getting your ERP project off the ground starts with a stakeholder-aligned blueprint.

2 ANALYST PERSPECTIVE Don’t be afraid of ERP. There actually is a formula for success. An ERP project is a business transformation that involves the entire organization. Rather than fear it, consider it an opportunity to optimize processes, connect disparate systems, and provide meaningful workflow for end users and real-time information for management. Even though the ERP industry is being influenced by cloud, mobile, data, and analytics disrupters, its primary purpose as a control system to support business processes has not changed. ERP’s maturity means you can leverage best practices and lessons learned. To successfully select, implement, and fully realize ERP benefits, start with a stakeholder-aligned blueprint with clearly defined process boundaries and success metrics. Suanne McGrath-Kelly, CPA CMA CMC Senior Director, Enterprise Applications Info-Tech Research Group

3 Framing the project IT Application Director/ Manager VP of IT CIO CFO
Create a strategic foundation that sets the ERP up for success; set realistic expectations and identify critical success factors. Align the goals, objectives, and metrics of your ERP initiative with organizational objectives to maximize the potential for full benefits realization. Involve your stakeholders early and often by assigning clear roles and accountability. Directors/Managers of ERP-affected business functions, e.g. Finance and Operations Business analysts responsible for ERP functions and/or processes Architects working on IT infrastructures Obtain a conceptual understanding of the ERP future state Understand their roles and responsibilities Action plan

4 Executive summary Organizations often do not know where to start with an ERP project. They focus on tactically implementing the technology but ignore the strategic foundation that sets the ERP system up for success. The outcome of an ERP project is completely dependent on establishing and maintaining a stakeholder-aligned foundational blueprint. If you do not have top management support, do not proceed with an ERP project. At many points in an ERP project, you will be asked why you are doing it. You need to have a compelling case that is supported by the business and aligned with strategic business objectives. ERP should be a business-led / IT- supported initiative. Assign process ownership and ensure the project team has the resources and capabilities to execute and support the ERP system. ERP projects impact the entire organization – they are not limited to just financial and operating metrics. The disruption is felt during both implementation and in the production environment. Missteps early on can cost time, financial resources, and careers. Roughly 55% of ERP projects reported being over budget, and two-thirds of organizations implementing ERP realized less than half of their anticipated benefits. Obtain organizational buy-in for the ERP project and secure top management support. Set clear expectations for the ERP project and establish stakeholder-aligned guiding principles and critical success factors. Build an ERP operating model/business model that identifies process boundaries and scope, and prioritizes requirements. Ready the organization for the ERP project by assessing stakeholder involvement, change impact, risks, and opportunities. Develop SMART metrics to gauge the success of the ERP project.

5 Enterprise resource planning (ERP) overview
WHAT IS ERP? Record to Report Hire to Retire Quote to Cash Procure to Pay Issue to Resolution Acquire to Dispose Idea to Offering Market to Order Plan to Perform ERP Enterprise resource planning (ERP) systems facilitate the flow of information across business units. It allows for seamless integration of systems and creates a holistic view of the enterprise to support decision making. In many organizations, the ERP system is considered the lifeblood of the enterprise. Problems with this key operational system will have a dramatic impact on the ability of the enterprise to survive and grow. An ERP system: Automates processes, reducing the amount of manual, routine work. Integrates with core modules, eliminating the fragmentation of systems. Reporting centralizes information from multiple parts of the value chain to a single point. Forecast to Delivery

6 Snapshot of the ERP market
The ERP market grew to over $25 billion in 2014. #1 SAP leads the ERP market with 24% market share. There will be MORE extensive ERP integration with enterprise software systems. Cloud Trend SaaS software will equal approximately $106 billion in 2016. The SaaS market will grow 20% in 2016. 2018 30% of service-centric companies will move their ERP to the cloud. THE SPIKE IN MULTI-CLOUD STRATEGIES WILL CONTINUE… Source:

7 Management support is the biggest critical success factor for ERP implementations
Effective top management support comes from establishing a steering committee that is highly committed and dedicated to the ERP project. This team needs to have representation from across the organization to build the case for ERP and oversee the implementation. Effective Top Management Provides leadership Provides the necessary resources #1 Source: Critical Success Factors of ERP Implementations - An Analysis

8 Top 5 Benefits of Establishing an ERP Foundation
An ERP project will fail to deliver on the anticipated benefits without the proper ERP foundation PERCENTAGE OF BENEFITS REALIZED 40% of organizations realize less than 30% of their expected benefits. In many cases, ERP expectations are not realistic. Many organizations fail to identify appropriate ERP objectives and metrics. Top 5 Benefits of Establishing an ERP Foundation A clear direction for the ERP project Increased project buy-in and user adoption Alignment with organizational goals ERP metrics to measure success pre- and post- deployment Cost and time savings in vendor selection and ERP implementation TIME TO RECOUP COSTS Over 50% of organizations cannot quantify cost recovery on ERP projects. A, unclear payback period is related to poor planning. Organizations tend to overlook the importance of identifying success metrics, which causes significant difficulty quantifying the benefits. Source: Panorama Consulting

9 Many ERP challenges can be addressed with upfront planning and a structured approach
THE CHALLENGE STATISTICS ERP projects are long, complex, and costly initiatives for any organization. They drive massive changes to the way people work and the data that is used. ERP systems touch every aspect of the organization, which has an exponential impact in the event of failure. The real cost of an ERP failure can be your career! In the past four years, the average ERP implementation has cost $6.5 million and lasted roughly 16 months. 54% of ERP projects exceeded their budgets 72% of ERP projects did not meet their scheduled deadlines 66% of organizations received less that 50% of their anticipated benefits Source: Panorama Consulting THE SOLUTION In order to avoid extensive challenges and failures, organizations must take time upfront to assess their readiness and create a solid ERP foundation. Three Biggest Challenges 31% 31% 19% Business/IT Alignment Lack of Qualified Talent Less system functionality than originally defined Source: TekSystems

10 An ERP foundation will develop a common understanding between business and IT stakeholders
Organizations often buy a tool without understanding how they should use it. Before you invest in ERP, you need to understand where you are today and where you want to go. If the readiness isn’t there and you can’t execute the project properly, the software won’t help. – Boris Znebel, VP, Second Foundation Objectives of an ERP Foundation Blueprint: People Processes Technology Who should be engaged in the ERP project? What is the scope of the ERP project? What is the optimal ERP future state? Introduce ERP concepts and set expectations Define process boundaries and functional scope Understand current state, gaps, and opportunities Validate and prioritize high-level ERP requirements Identify desired target state and develop ERP operating model Determine project guiding principles and critical success factors Develop stakeholder maps and identify risk mitigation strategies Align the ERP roadmap with organizational needs and capabilities

11 Build a concrete ERP foundation using the deliverables created from this blueprint
Elements of an ERP Foundation: Defined Roles and Responsibilities Completed Operating Model Mapped Level 1 Processes Defined Success Metrics Finalized ERP Roadmap Strategy Benefits: A holistic view of the current IT environment, the future direction, and the initiatives required to achieve the desired future environment. A nimble, reliable, and efficient response to strategic objectives. The ERP foundation contains a technology roadmap, stemming from an analysis between current and desired states, while considering objectives and capacity. A demonstration of how to minimize risk, lower costs, and increase output as well as promote competitive advantage through people, processes, and technology. Overall the ERP implementation has gone wonderfully; there have been a few minor surprises but nothing that we couldn’t deal with. By establishing an ERP foundation alongside Info-Tech, we were definitely well prepared. – Josh Plamondon, General Manager, Aqua-Pak BLUEPRINT TOOLS AND TEMPLATES ERP Foundation Project Charter Template ERP Foundation Presentation Template Process Owner Assignment Guide *This blueprint contains additional resources that support the creation of interim deliverables and the execution of project steps.

12 An ERP project is most effective when you follow a structured approach to define, select, implement
Top-down approach Operating Model Define process strategy, objectives, and operational implications. ERP Foundation Level 1 Processes Define process boundaries, scope and organization level interactions. Level 2 Processes Define processes from a functional group perspective and establish communication channels for internal and external interactions. Level 3 Processes Define processes from a functional role perspective and establish communication channels for internal and external interactions. Functional Specifications; Blueprint and Technical Framework Refine how the system will support and enable the target process business operations. Org Structure and Change Management Re-align org structure and develop change mgmt. strategy to support the future business processes. Implementation and Transition to Operations Execute new methods, systems, processes, procedures, and organizational structure. ERP Optimization and Continuous Improvement Establish a program to monitor, govern, and improve ERP systems and processes. *A “stage gate” approach should be used: the next level begins after consensus is achieved for the previous level.

13 ERP Implementation Readiness
High-growth company establishes a unified ERP strategy and builds a strong ERP business case to present to the board CASE STUDY Industry Source Software and Electric Utility Info-Tech Research Group Situation A high-growth energy intelligence software provider had expanded through a series of acquisitions and needed to create a modern and consolidated technology profile. After a prior false start looking for a replacement for its legacy ERP system, EnerNOC worked with Info- Tech to establish an ERP foundation and select a vendor. Challenges Lack of organizational buy-in on the need for ERP Complex business processes across many functional areas Limited set of vendors that provided the breadth of functionality ERP project funding was contingent on business case approval Results The core team, comprised of Info-Tech and directors from every major department at EnerNOC, developed an operating model to frame the ERP project. The approach encouraged collective involvement at the outset to get alignment on scope and direction. The team built upon that initial framework to map Level 2 processes, and built an RFP with detailed use cases and scenarios to present to vendors. Info-Tech helped EnerNOC make the business case to select an ERP vendor aligned with the company’s strategy as a global SaaS provider. EnerNOC ultimately secured board approval to proceed with selecting an ERP vendor. ERP Implementation Readiness Project Phases ERP Foundation Workshop Level 2 Process Mapping/ Requirements Gathering RFP and Vendor Selection Business Case Approval Implementation Planning

14 Follow Info-Tech’s approach to develop your ERP foundation
Introduce ERP Structure the Project Conduct an Environmental Scan Create an Operating Model Build an Implementation Plan Identify goals and objectives for the ERP project. Determine the need for a concrete foundation. Scope the project. Identify relevant stakeholders. Build a RACI chart. Take baseline metrics. Outputs ERP Foundation Project Charter Identify drivers, objectives, enablers, and barriers. Align ERP objectives with the corporate strategy. Outputs ERP Current State Map Define ERP mega-processes. Establish business process owners. Determine guiding principles and key success metrics. Conduct stakeholder mapping. Outputs ERP Operating Model Create a high-level implementation plan. Obtain stakeholder sponsorship. Communicate ERP initiatives. Track metrics. Outputs Strategic Alignment Implementation Plan Determine current state of HR processes and systems. Outputs Finalize the Blueprint Map future state. Outputs Prepare ERP strategy presentation to gain stakeholder commitment. Outputs ERP Future State Stakeholder Presentation

15 Info-Tech’s enterprise application support framework can guide you through each stage of your ERP project * *ERP success begins with a solid foundation ERP is not an end state, it is an ongoing initiative. The disruption is felt before, during, and after implementation as everyone struggles to leverage functionality and maximize the benefits of the investment. Info-Tech’s blueprints and advisory services ensure you have the tools to support you through each stage in the ERP lifecycle. Use Info-Tech’s 4C Approach: Conceptual – start by framing the current state and thoroughly understanding the need Consensus – obtain buy-in for the strategy and take a structured approach to selection Concrete – build a business blueprint for implementation of systems and processes Continuous – monitor the performance of systems and processes Info-Tech Enterprise Applications Support

16 Leverage Info-Tech research and resources
Maximize the Benefits from Enterprise Applications with a Center of Excellence Formalize roles and responsibilities for all application initiatives Develop a standard process of governance and oversight of the application Determine the comprehensive support network Build a Business-Driven Application Roadmap Using an Agile Approach Assess application portfolio health, create application inventory Evaluate business value and end-user satisfaction Iterate toward highest priority and business value initiatives Optimize Requirements Gathering to Effectively Serve the Business Define requirements gathering target state Determine requirements elicitation process Analyze and validate requirements, governance, and action plan Optimize IT Procurement Vendor selection best practices and methodology Tools, templates, and documents Govern and Manage an Enterprise Software Implementation Prepare for project launch Identify enter and exit criteria for each critical phase Establish risk mitigation strategies and project success metrics Optimize the Change Management Process Define project goals, structure, and scope Analyze change impact and establish roles and engagement plan Develop and execute the transition plan Create Project Management Success Determine project management approach Create planning and execution process standards Implement the project management process Optimize ERP Processes to Limit Customization Assess business processes by cost, satisfaction, opportunity Manage stakeholders and understand the impact of process change Identify process optimization best practices, e.g. document, train, monitor

17 Info-Tech offers various levels of support to suit your needs
Core Membership Value-Added Services Guided Implementation “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.” DIY Toolkit “Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.” Workshop “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.” Consulting “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.” Diagnostics and consistent frameworks used throughout all four options

18 Establish a Concrete ERP Foundation – blueprint overview
1. Create ERP Vision 2. Model Future State 3. Implement and Finalize Deliverable Best-Practice Toolkit 1.1 Make the Case for ERP 1.2 Structure the Project 2.1 Conduct an Environmental Scan 2.2 Create an Operating Model 3.1 Build an Implementation Plan 3.2 Finalize the Blueprint Guided Implementations Understand the importance of an ERP foundation. Structure the project; select project team, identify risks, and finalize the project charter. Create an ERP business model by identifying goals, objectives, risks, and drivers. Identify mega-processes and complete the ERP operating model. Identify process KPIs and guiding principles. Create a high-level implementation plan and discuss key project components (risk and change management). Tips and tricks for presenting the final deliverable to stakeholders. Onsite Workshop Module 1: ERP Vision and Current State Module 2: ERP Operating Model and Future State Module 3: ERP Implementation Plan Phase 1 Outcome: Project Charter Phase 2 Outcome: Current and Future State Maps Completed ERP Business Model Completed ERP Operating Model Phase 3 Outcome: High-Level Implementation Plan Communication Plan Final Stakeholder Deliverable

19 ERP foundation workshop overview
Offsite Onsite Contact your account representative or for more information. Workshop Day 1 Workshop Day 2 Workshop Day 3 Workshop Day 4 Workshop Day 5 Activities Preparation Workshop Pre-Work Review ERP approach. Review supporting documentation and questionnaires. Introduce project charter. ERP Current State Morning Itinerary Set expectations. Introduce ERP. Evaluate business needs and priorities. Discuss challenges and pain points. Discover benefits and opportunities. Complete ERP model. Align ERP strategy with corporate strategy. Afternoon Itinerary Map ERP current state. Identify manual process, redundancy, workarounds. Discuss ERP requirements. ERP Operating Model Identify ERP mega-processes. Review requirements by mega process. Relative ranking of mega-processes Build ERP Operating Model. Map level 1 ERP mega-processes Identify (for each area): Stakeholders Guiding principles Critical success factors. ERP Future State Review Operating Model. Visualize ERP future state. Discuss process owners, roles, and responsibilities. Assess readiness, risks, and impacts. Create high-level implementation plan. Develop communication plan. Establish project metrics. Finalize Deliverable Workshop Debrief Finalize deliverable and stakeholder presentation. Next Steps Assign process owners. Present to stakeholders and obtain approval. Deliverables Workshop Agenda Questionnaires Project Charter Project Expectations ERP Business Model Stakeholder Maps Guiding Principles Critical Success Factors Future State Map Readiness/Risk Assessment Implementation and Communication Plan Prioritized Initiatives and Assignments Finalized Deliverable

20 ERP foundation workshop sample outputs
Business model, summarizing environmental factors and business goals Overview of current systems and gaps Group discussion on ERP value discipline High-level roadmap of ERP initiatives

21 Glossary Take a minute to review the terminology we use throughout this blueprint. Term Definition ERP Business Model The ERP business model helps depict the driving factors of the ERP technology decision. It incorporates business needs, environmental factors, organizational goals, and technical drivers. In addition, the business model will determine the barriers and enablers of an ERP strategy. ERP Operating Model The ERP operating model is a framework that drives operating decisions. It helps to set the parameters for the scope of ERP and the mega-processes that will be supported. Mega-Process Mega-processes are the highest level processes within an organization. They are end-to- end processes with no or few integration points to other mega-processes. For example, Hire to Retire, Record to Report. Level 1 Process Level 1 defines the process boundaries and interactions within the organization and externally. It builds on the mega-processes and depicts key interaction points.

22 Use these icons to help navigate this blueprint
Use these icons to help guide you through each step of the blueprint and direct you to content related to the recommended activities. This icon denotes a slide where a supporting Info-Tech tool or template will help you perform the activity or step associated with the slide. Refer to the supporting tool or template to get the best results and proceed to the next step of the project. This icon denotes a slide with an associated activity. The activity can be performed either as part of your project or with the support of Info-Tech team members, who will come onsite to facilitate a workshop for your organization. This icon indicates that the organization must complete an activity for a specified project deliverable. The activities have been designed to assist in the completion of the project and ultimately help you build your ERP foundation.

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