SmartAdvice: Consider Long-Range Vision For IT When Upgrading ERP Systems
Get users on board early and incorporate company strategy when planning an ERP upgrade, The Advisory Council says. Also, adopt cybersecurity policies to head off cyberthreats and consider getting a technology-risk insurance policy; plus, measure a project's business value before it gets started.
Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers three questions of core interest to you, ranging from career advice to enterprise strategies to how to deal with vendors. Submit questions directly to firstname.lastname@example.org
Question A: Our ERP system is nearing the end of its supported life. How should we decide whether to upgrade to the current version of that product, switch to a different vendor's ERP suite, or go with best-of-breed products?
Our advice: This is a big decision; make sure it's consistent with corporate strategy and with a long-range vision for IT. We suggest the following:
Understand the impetus for change
Is the push for a new system coming from users, and what is it based on? Is the system less reliable as it ages? Are there user requirements that aren't supported? Is the human interface annoying?
Or is the push coming from IT? Has the code been "enhanced" to the point where nobody wants to make the next modification? Is maintenance consuming all your development resource?
If the users aren't dissatisfied with the current system, you have a problem. Users know that changing ERP systems is as enjoyable as by-pass surgery.
Build a cross-functional selection team
Your best hope for installation success is to convince the users that the new system is theirs. Include politically powerful users in the selection process. Constrain IT to technical evaluation. Let the users make the final choice.
Understand company strategy
If there's a written strategy, review it as a team; then have the strategic movers in the company brief the team on what's really important. Absent a written plan, settle for a verbal briefing.
Build an IT vision that supports the company strategy
The Advisory Council defines vision as "a clear, inspiring description of an ideal future condition, robust enough to provide context and priorities for operational initiatives." You should be able to create an IT vision in an intensive weekend off-site.
Do gap analysis
This is the point in the process where you list all the features needed in the new system.
The list will necessarily include things users have asked for recently, but beware--that list will often be "last Thursday's problem." The big wins come from the list of features driven by the vision you've created.
Review your Enterprise Information Architecture
Even if you have one, remember that technology is moving fast. Be cautious with an EIA that's more than 18 months old.
In your review, be sure to consider whether now is the time to move to portals, to deploy collaboration, or to build a command-and-control center?
Create a vendor short list
You don't need to spend time on a request for information. The Internet is rich with material on ERP systems, including automated "short-listers." Use the Internet to get down to four or five vendors who appear to have the features in your vision and an architecture you're comfortable with, and then go right to an RFP.
Select your solution
What we said in the "team" paragraph bears repeating. Let IT take the lead in evaluating technical viability, performance, and cost. Let the users take the lead in evaluating features and function. Insist that the users go physically to at least one reference site for each vendor on their short-short list. The payoff in user energy during installation and long-term user satisfaction is enormous.
A general comment on "best-of-breed"
Unless your IT staff numbers more than 100 and your CEO doesn't care about cost, we don't recommend "best-of-breed" anything.
Whether the issue is hardware from six vendors, middleware from six vendors, or applications from six vendors, there will be a huge integration cost in dollars, talent, and time, and those costs will never stop. Your vendors will not coordinate their new releases, nor will they do integration testing for you. Remember Sisyphus.
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