An ERP DIY is Just Alphabet Soup


ERP DIY shown in alphabet soup

You run your business every day and your experience qualifies you for your role.  But how often do you engage outside consulting firms?  Do you have a mature set of processes for engaging external System Integration (SI) companies for large complex IT programs?  And how will you determine the level of your participation in the implementation?

The Top 7 Reasons to Tap External Teams

You may have a smart and experienced IT team but owning a knife and a refrigerator does not qualify you to work for top chef Gordon Ramsay.  Understand that any new large implementation requires a balance of resources from the client and the experienced SI.  Building the right project team for your company’s transformation project is crucial.

There are seven primary factors that influence companies to seek outside consulting assistance in support of an ERP implementation:

1. Methods and Assets – Over the years, consulting firms have developed specific methodologies that facilitate a more efficient execution of a complex project. These methodologies are now a mixture of agile and waterfall techniques but are still largely written-deliverable-based and much of the content has been predefined and usable by the client.  Most SIs have also developed some level of pre-configuration or pre-development that they can bring to the table to assist in the acceleration or cost reduction of an implementation.   Examples include:

  • End-to-end methods
  • Solution BOM maintenance
  • Gap/Fit analysis
  • Data transformation
  • Testing
  • Business change management
  • Preconfigured assets

2. Industry Best Practices — As business processes evolve over time with the advent of innovative technologies, SIs tend to be the primary channel for the proliferation of these new practices. They bring preconfigured solutions and experienced staff to the table.

3. Technical Knowledge – ERP solutions tend to be very complex. The complexity comes to a quick boil if you are including SaaS solutions and/or making hosting decisions as part of your program.  The complexity is designed to allow the maximum flexibility in process configuration so that solutions can be applicable across many industries and enterprises.  Given this, they often require the application of a very specialized skill set to properly set up or deploy the solution.   Common skills focus on:

  • Software selection
  • Integration methods and tools
  • Technical architecture and performance
  • Process configuration
  • Security and compliance
  • Data transformation

4. Labor Capacity – Implementing an ERP solution requires a lot of resources. SIs have ready capacity and much of that capacity can be applied to a project.   SI sources from off-shore facilities are at a much lower cost than a client’s own on-shore resources.   Areas most often tapped include:

  • Testing
  • Training
  • Development
  • Basis/Dev Ops support
  • Data migration support

5. Program Experience and Decision Support – Two things most big ERP projects have in common are that they are transformational and Companies are faced with making a lot of big decisions and do not have a lot of experience in making them.  SIs can fill this void by providing experienced resources that have practical knowledge in the areas of:

  • Decision sequencing and input
  • Deployment planning
  • Risk assessment/Issue resolution
  • Solution alignment/Governance/Control
  • Estimating and planning

6. Cost Certainty – Large ERP projects are notorious for running over budget. It is common for these programs to be 20-50% over the planned budget.  Companies often engage SIs in fixed price contracts with the expectation that this will allow some mitigation of cost and budget risk.

7. Strategic Direction — If the company is embarking on a journey to structurally outsource more of its IT services, using the ERP implementation project as a platform can accelerate this journey and provide for a lower cost of operation.

Consider Staffing Percentages and Various Participation Models

Some projects are just too sizeable or too critical to do yourself.  It is important to know when it is time to hire a professional.  Analyze the total effort and skill sets that will be needed to implement an ERP system.  If you are replacing another system or systems, the endeavor will be much larger than you may think.

There is a high probability that the level of effort can be underestimated, which typically leads to failed implementations as companies cut corners on testing, training, and data transformation, leading to eventual business operational discontinuities at deployment.

Quite possibly, the split in client/vendor participation will change throughout the project, which will empower your internal team for the long-term and lower your SI costs where appropriate.  For example, you may want to go with a 50%/50% split in the initial planning and design phase with shared responsibilities.  This is consistent with industry best practices and will allow you to capture the maximum planning and solutioning value of the SI.

Client / Vendor Split Characteristics of Companies Successful with This Model
90% / 10%

 

 

Companies with well-established internal ERP capabilities and an operating template to be deployed.
70% / 30% Companies that have a strong intention to be self-sufficient and the internal capacity to allocate to the program.
50%  / 50%

 

Companies that have a desire to be self-sufficient but are restricted by internal capacity constraints or require access to off-shore resources to keep costs low.
30% / 70%

 

Companies that have no desire to be self-sufficient, are likely to outsource support, and are looking to hold the SI financially accountable for the implementation costs.
 10% / 90%

 

Companies intending to outsource future system’s support as well as outsource the business processes to the SI.

In order to become more self-sufficient in delivery over the course of the implementation, a move to a 30%/70% split should be executed in the template and pilot implementation.  Finally, moving to a 10%/90% split enables the use of the SI skill set in support of program governance, deployment planning, and program issue and risk resolutions.

Now You Have Something to Think About…

You know every program is different — no two programs are the same.  Your thoughtful consideration and decisions made at the onset of your journey will be the difference between success and failure.  Take time to understand “why” and “when” other companies seek outside assistance to strengthen transformation programs, and then began to think about how it would add value or address potential risks.

After you have taken a moment to look outside of your company, consider the participation roles and levels between external resources and your “smart and experienced” IT team.  The roles and participation levels should reflect what is needed for the specific phases of the program and how you intend to support and sustain your newly transformed enterprise.

Comment below or follow me on Twitter @UpperEdgeTed .

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