Starting an ERP project is a serious task that bears the main risk of not identifying effectively the key processes and their relevant information. Failing to do so may result in project difficulties and setbacks;
- Implementing unsuitable business models
- Frustrated users
- Deviation from your budget
- Angry management
How may you prevent these? By writing an appropriate ERP blueprint. The blueprint serves the organization as a good starting point to understand the scope of the project, what is expected by the stakeholders and is required for a successful implementation. By definition the blueprint is the basic layout of the business processes and how the ERP should cover them.
Writing the ERP blueprint document effectively will save you time, money and human resources later on. Trust me, I have written some lousy ERP blueprints in my life and the top management was not happy at all. Let me review 10 principles which if you follow, will lead you to an effective document that will really serve you later on the road.
First Principle – Define the ERP Project Principles
Define the principles for leading and managing the ERP Project – How work from various areas in the organization shall be integrated in the project. In other words, here you shall define the methods and business tools for dealing with the following:
- How required resources would be allocated
- How the project tasks will be defined and planned?
- How changes will be submitted, managed, executed and controlled (Change Control method)?
- How the project will be monitored and controlled?
- How will costs will be monitored and controlled?
Second Principle – Defining the Current Business Issues
This is the first step in defining an accurate project scope in which you determine what is the current business state. The business issues shall be defined from various aspects:
- Operational – which business activities are covered
- Financial – what is the financial state
- Managerial – how will the business area is managed today
- Procedural – what are the core business processes that are managed today in the business area
- Physical – what are the physical characteristics of the business area
- Digital – what are the digital characteristics of the business area; infrastructures and systems that are sued today
This step shall include a listing of all business issues that must be covered in the project. For example, Sales, Purchase, Stock management. Let us take for example the stock management – on the list this area will appear like this:
- Stock strategy
- Stock places
- Users and employees
- Stock management
- Stock evaluation
- Finding products on stock
- Current stock management system
After listing these issues, you must clarify what exactly the issue is: Are you having differences each stock inventory? Does it hard to find products on stock? Does the segregation in the stock hall supports our daily business? Using business cases analysis and financial or operational metrics can support you in describing the issue.
The result of such analysis is a list of expected improvements that the ERP should provide. This step can include risk analysis. For each of the issues mentioned above I recommend to conduct a small-scale risk analysis – identify opportunities address risks, and come up with actions either to develop those opportunities to mitigate or eliminate the identified risks. The goal is to determine how much your organization is ready to deal with those risks.
This stage may include determination of which risks and opportunities may affect your ability to implement the ERP system. The basics of this risk analysis is the issues mentioned in the previous stage.
The results of this stage will be a list of actions to address the identified risks and opportunities and action plan of how and these actions shall be integrated into the project.
At the end of this stage you
- Project Plan
- Project team with hierarchical structure
- Risk management plan
Third Principle – Define the Project Scope
With Project scope I refer to the planning of the:
- Specific project goals – what you would like to achieve in the project
- Deliverables – refers to specific goals of the project, for example, which system functions, functionalities will the ERP software deliver
- Tasks – what are the tasks needed to fulfill the deliverables
- Costs – what are the calculated or estimated costs
- Schedules – what is the time line of the project
In order to reach the most effective project scope you will have to involve key stakeholders like business owners. The business owners should be directly involved with each of the project deliverables.
Forth Principle – Define the Project Organization
The description of the project organization is needed to create later an effective resource planning for the ERP project. The project organization refers to the project team members in a hierarchical presentation which defines the relationship between project activities and the reporting to each other. The level of details depends on you.
The goal of the project organization is to shed a light on the actual project organization and the understanding of roles and responsibilities. The deliverables of this stage:
- List of team members and their roles
- Documentation of team allocations and assignments
- A graphic project organization chart which displays the project team members and their interrelationships for a specific project.
- List of resource assignments
- Definition of resources
Fifth Principle – the ERP Software and the Strategy of the Organization
Align the implementation for the ERP software and its planned business activities with the strategy of the organization. for designing and developing the ERP system. In other words, the project goals and deliverable must be aligned with the strategy of the organization and the ERP system should be implemented in a way that will maximizes the business values.
For example, if the strategy of the organization is to maximize contact and relations with the customers – you should mention it as a requirement. Or if the strategy is to lower levels of stock, make sure that the future ERP systems delivers the lists and reports that can support this expectation.
Sixths Principle – Develop Business Cases
Business Case in the context of the ERP system refers to a documented description of the business activities that will be covered by the ERP system. The business case is actually a result of the needs assessment; the understanding of business goals and objectives, issues, and opportunities and the recommendation and proposals for addressing them. The goal of the business case is to allow you to understand later on better how will the ERP system fulfill the the business needs. The description shall be done through several characteristics:
- Area: Sales, Purchase
- Organizational functions – which roles in the organization shall participate in the business case
- Business activities, for example submitting offer to the customer, processing purchase proposal, preparing production order
- Sequence of activities
- Additional systems like production time reporting system, salary systems, planning systems etc
The more detailed you are the better you will cover the business case and plan a better ERP solution. Let us take for example, entering a customer order. Somewhere in this process a user will need to enter prices. Now, how will prices be entered; what is the condition for the pricing? Is it according of quantities scale, does each customer has a unique price? will the system suggests it automatically without allowing the user to interfere? The answers will allow to understand what do you expect from the ERP system. Off course, the business owners should answer what are their expectations.
If you would like to take this principle one step further you may develop a road-map for the ERP software.
A ERP roadmap is a tool for communicating the company’s vision regarding the ERP system. For example – which future function will be needed based on future business plans. If you are planning to develop your customer relation activities in the next year – the roadmap shall include it. the result is – the ERP system should have a CRM module.
Seventh Principle – Outline the Benefits Realization & Strategy Management
With Benefits Realization & Strategy Management I mean the definition of the value that your company expect to get from implementing the ERP software. These benefits are normally aligned with the company’s strategy but I will leave for now. First let us see what our benefits expectations from the ERP system:
- Decrease administration time when processing order
- Increase number of going out offers
- Increase visibility of product data
- Increase transparency of processes
Pay attention that some of these are quantitative (1, 2) and some and qualitative (3,4). This stage requires the involvement of other stakeholders and process owners.
The next step is to try to assign to each benefit the expected ERP function. This way you know which ERP area or function is responsible for which business benefit.
Eighth Principle – Define Strategy and Methods for Measurements
The goal of this step is to define processes and methods of how results of project implementation will be measured, controlled and reported. The deliverables of this stage can be:
- Definition of the measurements or project key indexes
- For each of the above its measuring charts – the tool with which the data will be collected and analyzed
Ninth Principle – Plan the IT Transformation
An ERP implementation project will require some significant change to the information technology in the organization. The IT infrastructures may be various and may spread over multiple platforms, locations, environments and so on. This stage refers to the guidance and principle of conducting the conversion of the present IT infrastructure into the new structure. In other words, what is the current IT situation on the organization and what are the new requirements that will enable a smooth and effective implementation of the ERP software. A few examples:
- The server requirements – maybe to the current system is running with an old server ran by windows server 2008. The new ERP software requires windows servers 2012 – which may require new licenses, new hardware etc.
- The ERP client (the program with which the user operates the ERP system, for example the screen to enter customer orders) requires windows seven as a minimum. But you have still some computers that are running with older windows version. BUT – the ERP software offers also a web application with which users may access the ERP system via internet browser. So, what will it be?
Important to notice that this phase shall receive inputs from the Sixths Principle – Develop Business Cases. If one business case requires data export to other systems – you should make sure that the additional systems can also run and work with the new planned IT environment.
Tenth Principle – Testing and Integration
In this phase, (which for my opinion is the most critical for the success of the project, you will define how you will validate the integration of the ERP system and processes in the organization. This principle is simple – define the test and test scenarios with which you will validate and assure that the ERP system delivers what is expected of it. The test shall include the following areas:
- Data conversion – the conversion of various data types from the old system to the new system.
- ERP configuration – ERP configuration refers to the parameterizing of system components in order for them to answer the business requirements. For example, how the numbering of the products will function or how the numbering of customers order will be automated. The testing will define which ERP parameters are configured and they will be tested.
- User testing – the test that users will conduct in in order to validate that the system processes answer the requirements of the business processes.
This stage will involve members of all areas that are sung the ERP system.
In Conclusion
Writing the ERP blueprint is a difficult task but when done correct you will benefit twice
- Getting to know your organization better through the questioning , interrogating and learning
- Set up an effective list of ERP requirements that will sever as a solid base for the project and will set the course of the implementation project.
Good Luck.
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