ERP reload

Peter Nevin

Peter Nevin is the former CIO of Sedgman and a member of the CIO Executive Council.

Enterprise resource planning (ERP) projects have been described ad nauseam. There are books, lectures, courses, consultants and vendors who will tell you the how, why and when of a successful implementation and the world is littered with lessons learned from the not-so-successful implementations.

Why another article on ERP? Part of the story of successful ERP projects remains untold: The role of the CIO at the very start of the project. There are countless books on initiating projects and establishing governance. However, in some cases there is a stage before that. It is the first actions that follow the ‘good idea’ — and it turns out they are frequently taken by the CIO.

Let me paint the picture: You have been working to get the existing systems to support the business needs of the organisation. A series of applications, some with some age, are loosely linked with interfaces and are embedded in business operations. They work, but are costly to maintain. And as the company pushes for efficiencies and is perhaps expanding, you can see there will be a need to further integrate the systems and replace the ever-growing in-house developed interfaces. The solution to the problem is ERP. But is an ERP project a problem too big right now?

The organisation may have developed to the point where an ERP is the right solution, but where to from here? ERP is a high risk strategy, but you are in the job to achieve the best outcome for your organisation.

To move from here to the point of project initiation, engagement, experience and documentation defines a significant characteristic of a CIO — that of the change agent. You have knowledge that will need to be injected into the organisation’s strategy, business plans and budgets.

The strategy must be communicated and accepted before you spend any significant amounts of money or establish governance structures to ensure business engagement. Incrementally build the process, all the while checking your assumptions that an ERP is the right solution. Here are some tips:

1. Know the market

   To establish a basis for cost modelling, you will need to take a guess at an ERP that will fit your organisation. The product is not as important as the ‘size’; determine whether the ERP solution is likely to be a tier one supplier or smaller.

2. Do your homework

   Know your existing IT spend, both operating and capital, and be able to predict costs post-ERP. You must also estimate the full cost of the ERP, which is no small task! The good news is these are only bottom line numbers. The people you are discussing these with will only care about the effect on the overall budget.

3. Threats and opportunities

   Build your understanding of the motivation for the ERP in business outcomes. Are the existing systems falling short of what is needed? What opportunities and improvements would an ERP give? You need to develop a simple version of the benefits of an ERP and the disadvantages of staying with the existing systems.

4. The CFO is your friend

   The CFO must support the funding component, but perhaps more importantly support the adoption of the financial core of the ERP into the finance group.

5. Discuss, discuss, discuss

   Begin a round of discussions with all levels of managers in the organisation and tune your rationale by working from the less senior up to the C-level executives. It takes time; build a case until you begin to create a wave of support.

6. Be prepared for the marathon

   Don’t be surprised if it takes time, perhaps years. Your role is to create understanding of the need for an ERP in the minds of others. Just as your understanding has perhaps developed over some years, you will need to bring others along on the same journey.

Finally, don’t become fixated. As an initiator of change you need to adapt to change yourself. If you cannot build a case or if your case is rejected, be prepared to defer or abandon the direction and seek an alternate solution. Creative solution finding is about finding the best resolution at the right time.

Tags: chief information officer, CIO, ERP projects, enterprise resource planning