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ERP Optimization Best Practices in ERP System Optimization


Use a Road Map

An information systems road map is just a breakdown of the development process into manageable steps. Ideally, the road map is already in place having been an essential part of software implementation.

"A comprehensive strategy includes a roadmap that not only gets you to the destination of a successful implementation, but also identifies and incorporates in the itinerary all of the opportunities to leverage ERP's capabilities along the way," says Chris Rafter, vice president of delivery, UC services, for Logicalis.

If you have a road map already, now is the time to review it again. Double-check the logic and guard against inflated expectations.

"Most ERP installations come with a huge expectation of all the business intelligence they will reveal," says Logicalis’ Chris Rafter. "That expectation too often turns to disappointment, however, when the ERP floodgates are fully opened and a torrent of data pours into the IT department."

Sophisticated analytical models can be incorporated into an instrument panel of real-time data on a dashboard that management can use to drive organizational performance. However, this can only be achieved if the dashboard planning was incorporated in the road map to begin with. Again, recheck your road map to ensure all steps are present and accounted for.

To be an effective tool, the road map must identify specific tasks to be taken in each phase of the project. If the road map is too vague, your ERP efforts will suffer.

"Careful and focused planning, using a road map jointly developed by the business and IT, can help gauge business value and help drive future applications investments," says KPMG’s Carter. "By analyzing core business processes—their performance, complexity, cost, utilization, and contribution to the business—an organization will be in a better position to eliminate ineffective areas and optimize the most valuable ones."

Of course, a road map is worthless if you never make the trip. Therefore a road map must be followed with deliberate and measured action. "If executed properly, a well-implemented ERP consolidation or upgrade can result in an increase in business information transparency; more informed decision making; better customer service; a more cost-effective supply chain; improved internal processes, and, ultimately, a quantifiable return on investment," says Carter.

To ensure ultimate success, stop along the way and reassess your ERP positioning.

"The key to ERP optimization is to measure baseline (pre-go-live) performance, set improvement targets (post go-live), and measure performance on an ongoing basis," says Eric Kimberling, president of Panorama Group. "ERP research shows that a majority of companies fail to do this as part of their ERP initiatives."

The Magic of Three

When deploying new feature sets or functionality, a good rule of thumb is to plot and test each step separately and then do so collectively in groups of three. It’s kind of like a dance: do step one, test; step two and test; step three and test; then test all three steps working together. Further along in your optimization, you can test those three steps in conjunction with the next three and so on. Of course, there are exceptions to this approach but by and large it is a simple means to catch problems in optimization early and more easily.

Gary W. Patterson, owner of the FiscalDoctor consulting firm and author of the newly released book Stick Out Your Balance Sheet & Cough: Best Practices For Long-Term Business Health suggests another 'magic three' approach to project leaders. He says always ask these questions:

  1. What are the three best opportunities I could create longer term and what do I need to do to best pursue those opportunities?
  2. What are the three top longer term risk area concerns of meeting ongoing project aspirations and CAPEX commitments and how would I react if those concerns materialized?
  3. What are the three most crucial infrastructure issues I face over the next one or two years to maintain ROI?

Change Management

High on the list of priorities should be: identify and involve end-users early in the optimization process. Since optimization efforts change or initiate new processes, change management should be an integral part of the endeavor.

Here are the best practices in change management for ERP optimization projects:

  • Determine when and specifically why to upgrade and/or optimize ERP applications. Actively involve all key stakeholders and identify both effort and benefits for each stakeholder group.
  • Create an end-user adoption plan with specific tactical actions, a progressive communication plan and measurable goals.
  • Identify what needs to be done, by whom and by when. Ensure accountability and authority coexist in the right proportions so that the person assigned to the objective has the power and the wherewithal to actually achieve it.
  • Choose one person to be accountable for change management introduction and enforcement.
  • Start with a quick-win if it makes sense in your overall plan. This will help demonstrate to end-users the optimization's potential and help build enthusiasm and support for the overall effort.
  • Conduct a post-audit of each optimization step that includes analysis of end-user likes and dislikes.
  • End-user dislikes can lead to poor adoption rates or employee work-arounds. Therefore, assess dislikes and determine whether to implement curative or enforcement actions. Typically, technical cures and training exercises garner better adoption results than enforcement actions and should be the preferred route as a general rule. However, enforcement should not be actively avoided and the policy for such should be included in the change management plan.
  • Evaluate 'likes' and discover why the feature/process has found favor with end-users. This could unveil your own company-specific best-practices in using the system. You may also discover process attributes that can be repeated successfully across the organization.
  • Ensure all controls are working effectively to increase adoption.
  • Evaluate the efficiency of integration with other applications and processes.
  • Monitor performance metrics established prior to implementation. Share these with end-users so they can see the results of their efforts. This is often an effective motivator for sustained use of ERP software.
  • Survey users and key stakeholders to ensure continued success.
  • Look beyond the technology to identify possible fail-points.

"Most ERP optimization failures are related to inefficient business processes or organizational change management issues," says Kimberling. "Very rarely is the software itself the cause of sub-optimization."

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ERP research shows that a majority of companies fail to measure baseline performance, set improvement targets and measure performance on an ongoing basis.


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