In the February issue of Innovative Thinking, we talked about the role of the Scripted Demo in the ERP selection process. This month, we continue our ERP Done Right series - with an explanation of The Business Case - part of the foundation for effective software selection and implementation. Put your ERP Done Right articles together and you'll have a cookbook for great ERP results. Don't miss a single issue!
Our first webinar with Trilogy Solutions on Information Gridlock was a great success. Our next webinar on Information Access (Help, my information is locked up and I can't get it out!) will be held in mid April. Stay tuned for signup details.
The Business Case, an open and shut case! By Paul Sita, Principal, Innovative IT Consulting, LLC. Paul can be reached at 631-549-1685 or firstname.lastname@example.org.
We know we need a new system. Do we really need to bother with a Business Case? Clients frequently ask whether they really need to develop a business case for their ERP initiatives. Comments heard include: “Everyone around here knows we need to change systems since they’re really old!”, or “Our inventory is screwed up and new systems will help us straighten that out.” So do we really need a Business Case?
The short answer - ABSOLUTELY!
As with most steps in the ERP Process, it’s OK to scale that step and do it to a greater or lesser degree of formality, but skipping steps is a sure-fire way to fail. This is especially true of the Business Case, which should be the foundation for your initiative. Documenting the reasons why you’re starting a complex project will give you something to come back to time and again to validate your efforts and help keep you on track.
What is it exactly?
The Business Case is, simply put, a concise statement of the business background behind your decision to pursue an ERP solution. You should be looking to answer several key questions:
- - Why are we looking to implement ERP?
- - How long will it take?
- - What will the benefits be?
- - How much will it cost?
- - What resources will we need?
These are estimates only. In developing the Business Case, you should be talking ranges of cost, time and resources. This is meant to frame the project and scope, and give management and everyone involved the opportunity to relate the investment to the return, and the effort to the benefits. It also helps to start the planning process.
So, statements such as: This will take a team of 4-6 people, dedicated 50 % to this project over a period of 8-12 months, plus hardware and software investment of $600 – 800K, is perfectly acceptable.
Getting on the record. Another side benefit of documenting the business case is to get “on the record” with certain business issues and problems that have been lingering in the company. If you have problems with inaccurate inventory, or if the lack of sales information is really holding you back, the Business Case document is a great place to state this and get cross-functional approval to address those issues. Many problems that linger as standalone issues, can get addressed through an integrated initiative such as ERP since they are viewed as “coming along for the ride”.
If you as the key driver within your organization believe that certain issues need to be addressed the Business Case is really an opportunity for you to frame those issues in a politically correct way and generate additional support for tackling them.
How formal does it need to be? Customers who are concerned about the effort it takes to put together a business case generally assume that answering these questions requires a lot of analysis, what-if’s, ROI calculations and other deep work. It doesn’t have to.
The Business Case needs to be appropriate to the size of your organization, the formality of your budgetary approval process, and the culture and posture of your management team when it comes to company-wide initiatives. Generally, the shorter and more simply put, the better.
Frequently the Business Case is an opportunity to just put on one piece of paper all the reasons, frustrations and problems that a company is experiencing that it hopes will be solved by the new ERP system. It doesn’t matter if some of those problems are actually business process issues. Very often a new ERP system is the catalyst for finally addressing and tackling those lingering systemic issues.
So, things such as: “Having all our customer information in one place to avoid inaccurate customer quotations” are perfectly good statements that belong within a business case. es it is.
Benefits. Identifying the benefits you are looking for really lays the foundation for the project initiative.
If you believe that you are aiming for reducing inventory levels by 15 % without impacting service levels, then state that. If you don’t hit that target, it doesn’t mean that your ERP initiative was a failure. It will take time, after the implementation and go-live, to achieve those results. What it does however, is put a focus on certain issues that help you, your consultants, and implementation partners to guide you toward decisions in how to use the system to deliver those results.
The Business Case becomes a guide and a charter that you and your team can refer back to time and time again as you move through the implementation process. In many cases, the Business Case gets distilled into the Project Charter and Objectives. Summing up - an open and shut case! Shorter is better. Bullet points are better than lengthy text. Diagrams and charts are excellent. If you have a lot to say, say it and then put together an executive summary.
And get back to the 5 questions. If you can’t answer them quickly and to the point, then you haven’t made the case! And if you need help, call Innovative, the ERP experts.
Preventing fires, not just putting them out!
By John Pellegrino,Principal, Innovative IT Consulting, LLC. John can be reached at 631-549-1685 or email@example.com.
During our recent webinar on Information Gridlock a question was asked about how you start operating more strategically if IT is continually putting out fires. The answer to the question is simple -- start by asking yourself another question – how do I prevent this fire from happening again?
From theory to practice. As an example, many years ago I inherited responsibility to maintain an inventory system for a manufacturing company. In this system the on-hand quantity at any given time was recorded in the finished goods item file. Also, the on-hand quantity for any production lot was stored for each lot of the item. Both were updated based on transactions, such as receipts from the production floor and shipments of sales orders. Logic states that at any given point in time the total quantity in all the lot records should add up to the quantity on the item file.
However, at the end of my first month there, I received a report showing me which items had a discrepancy in the total. Of course, I put out the fire by correcting the data, but I took the key next step of asking myself how I could prevent this from happening again, and started putting things in place to help prevent the fire. First, I asked for the report to be run every night and given to me. Then, every time I had a discrepancy I knew it had happened the day before. Then I traced transactions from the day before until I found and fixed the program that was not updating things correctly. After a few months of this (I kept putting out the fire by fixing the data) I eliminated all causes of the fire (I found 3 causes) and retired the monthly report.
Stop before you act. A few minutes of planning is all it takes to change from addresing problems to solving them. There is always a way to prevent fires if you give it enough thought and attention. Like most adventures, it starts with the first step, so ask yourself how can I prevent this fire from happening again?
Sign up for our webinar series! Our IT success webinar series continues in April with a session on Information Access.
Word Scramble time.
“A statement of reasons and benefits for an ERP initiatve. (2 words)
_ _ _ _ _ _ _ _   _ _ _ _ S N S B I E C U E A S S
Answer to last month's word scramble.
“A situation or kind of transaction that occurs in your business." (SCENARIO)
Welcome to DEL Labs. Innovative is proud to welcome DEL Labs to our growing family of clients. DEL is a leading manufacturer of cosmetics and OTC pharmaceuticals including Sally Hansen nail care and Orajel. Innovative will be helping DEL gather business requirements and lead the software selection process as DEL looks to modernize its legacy systems environment.
A Look Ahead To Next Month
In April we'll continue ERP Done Right when we discuss ERP implementation with Big Bang or Phased Implementation - which approach is right for you?
We want your feedback. Contact us