Panorama Consulting Group Announces Three-Day ERP Boot Camp

Panorama Consulting Group, an independent ERP consulting firm, today announced open registration for the firm’s upcoming ERP Boot Camp to take place December 8^th through the 10^th in Denver, Colorado. The three-day session is a highly focused and intensive ERP training course designed to teach attendees the best practices associated with successful ERP implementations.

Eric Kimberling, president and founder of Panorama Consulting Group and highly respected expert in the ERP market, hosts this interactive session. Eric will be joined by a panel of independent and technology-agnostic ERP experts to help round out the educational experience.

This unique, continuing education opportunity is designed for practitioners eager to become better implementation project managers, successfully manage their ERP initiatives, and incorporate best practices into their organizations. This course is also an excellent training session for new ERP consultants and students focusing on information technology and project management.

ERP Implementation Boot Camp Topics

• Overview of common ERP implementation challenges and obstacles
• Fundamentals of ERP implementation project management
• Deep dive analysis of ERP implementation benchmarks and best practices
• Implementation lessons learned from ERP implementation failures and lawsuits
• Group critique and assessment of your implementation plan
• Interactive case studies and exercises
• Expert panels and Q&A sessions
• Networking with industry peers

ERP Boot Camp Registration Includes

• Three-day ERP Boot Camp (8 a.m.–5 p.m. daily, including breakfast and lunch)
• One year of complementary access to Panorama’s premium ERP research and content
• Complementary copy of Panorama’s forthcoming eBook entitled “Breakthrough ERP Strategies and Solutions”
• One-hour follow-up phone and webcast consultation from one of Panorama’s senior ERP implementation experts
• Workbook of ERP Boot Camp training course materials, including sample implementation tools and templates
• A 5% discount on follow-up consulting services or workshops from Panorama Consulting Group

Registration is open to all CIOs, COOs, IT directors, ERP implementation project managers and team members, ERP consultants, educators and students.

“ERP implementations are challenging and overwhelming, especially without the right expertise and tool set,” said Eric Kimberling, president of Panorama Consulting Group. “Our clients have been asking us to train their teams to implement more effectively, which is why we’re offering this year’s ERP Boot Camp. It is a unique way for us to train practitioners on the tools and methods that make our implementations so successful.”

Early bird registration discounts will be available until November 19th. Interested parties can learn more about the event and register online at: http://panorama-consulting.com/services/complementary-erp-consulting-services/erp-boot-camp/.

The ERP Boot Camp training session is a new offering that augments Panorama’s core ERP services of ERP selection, ERP implementation, and organization change management.

Panorama Consulting Group Launches New Online ROI Calculator for ERP Software Investments

Panorama Consulting Group, an independent ERP consulting firm, today announced the release of an online ROI calculator. The ROI calculator will assist website visitors in reviewing the potential return on investment and benefits received from ERP software purchases.

The new ROI calculator was created with the data collected from various internal and external research sources. It is designed to be a high-level estimate of potential ROI based on user estimates of tangible costs such as inventory, SG&A, and labor and intangible costs such as average on-time delivers, average financial close time, and order fill rates. The ROI calculator will use these cost estimates and an employee count to calculate ERP software users and ERP investment costs which include ERP license costs, project management, and ERP implementation costs. The final calculation provides both a return on investment calculation and a payback period in number of years.

“In today’s volatile economy, companies need to know that their ERP software investments are delivering measurable value,” said Eric Kimberling, president of Panorama Consulting Group. “Panorama helps clients select and implement software in such a way, so we wanted to provide the ERP community with a high-level summary of what we do for clients on a daily basis.”

The ERP ROI calculator is available at: http://panorama-consulting.com/resource-center/erp-roi-calculator/.

Panorama Consulting Group Issues Call for Participants in 2010 ERP Benchmark Survey

Panorama Consulting Group, an independent ERP consulting firm, today announced its sixth annual ERP benchmark survey to collect qualitative and quantitative data regarding actual results from across the globe.

The survey is designed to collect information relative to project scope, ERP implementation cost and duration, as well as the ERP vendors considered and ultimately selected. Survey questions cover traditional ERP software packages, software as a service (SaaS) ERP solutions, and open source providers. This year’s study includes a number of new areas of focus compared to previous studies including more detail about scope and modules implemented, cost, and hosting solutions.

“Our research has proven to be the industry’s leading independent source for companies looking to select and implement new ERP software,” says Eric Kimberling, president of Panorama Consulting Group. “This year’s study will take our research to a whole new level in terms of detail and statistical analysis.”

In exchange for participation, each submission will be given a complimentary copy of the new report. In addition, one company will be selected as the recipient of an Enterprise Systems and Processes Audit Program to be performed by Panorama Consulting Group and valued at $16,000. The winning company will receive a complimentary, two-week business systems and processes review. This evaluation is designed to measure the potential for realizing additional business benefits and increasing cost savings with the organization’s current ERP software package or legacy systems. The winning company will be notified by December 31, 2010.

The survey is available at http://Panorama-Consulting.com/resource-center/erp-diagnostics/. Prior survey results and analyses are available in Panorama’s online resource center at http://Panorama-Consulting.com/resource-center/.

Nick Macera Joins Panorama Consulting Group as Director of ERP Implementation Services

Panorama Consulting Group, an independent ERP consulting firm, today announced the addition of Nick Macera as Director of ERP Implementation. Mr. Macera joined the company to lead Panorama’s growing team of implementation consultants.

After an extensive career working in IT management roles, Nick Macera brings real world information technology experience at major corporations within the manufacturing, retail, airline, and food service sectors. Nick has led ERP selection and implementation projects, as well as global rollouts of Tier I ERP software packages. In addition to his ERP-related skills, Nick also possesses a strong IT skill set that includes business transformation, organizational change management, analysis and implementation of business process improvements, utilizing Total Quality Management (TQM) techniques, EDI systems, and Sarbanes Oxley compliance. Nick was a previous client in his role as CIO for a well-known international manufacturing company and joined Panorama in early 2010.

“Nick has an extensive background and strong track record in global ERP implementations, so he is a very valuable addition to our team,” said Eric Kimberling president of Panorama Consulting Group. “In addition, hiring a former client into this key leadership role is a testament to the strengths and value that our clients see in the work we do at Panorama.”

Panorama Consulting Group’s service offering includes independent ERP selection, ERP implementation, and organizational change management consulting.

Panorama Consulting Group Announces Record Growth in 2009

Panorama Consulting Group, an independent ERP consulting firm, today announced record growth for the year ended December 31, 2009.

Panorama’s service revenue increased 68% in 2009 from the previous year ended December 31, 2008. This revenue spike supported a corresponding increase in profits of 233%. In addition to the record revenue and profits, Panorama was able to increase overall headcount by over 100%.

“Our strong 2009 results are attributed to particular growth and strength in our ERP implementation and organizational change management practice areas. While we grew across many sectors and industries, collaborations with mid-size clients contributed to most of our growth,” states Eric Kimberling, Founder and President of Panorama. “Strong growth in a weak economy is a testament to the value and objectivity we bring to our clients. More than ever, clients are turning to us to help them manage business risk, control costs, and optimize business benefits of their investments in ERP and enterprise software. In many cases, companies with challenged ERP implementations are turning to Panorama to get their initiatives back on track. ”

Panorama’s growth was facilitated by the addition of a number of new clients. These new client engagements included Champion Window, Maxon Lift Corporation, dpiX, Bioness, and Penworthy for ERP software selection and Nufarm and Focus on the Family for ERP implementation. In addition to the ERP selection and implementation projects, Panorama also led Focus on the Family through an organizational change management project and Alliance Laundry Systems through an organizational readiness assessment.

Panorama’s sales pipeline is strong, and Kimberling expects growth to continue throughout the 2010 fiscal year. It is estimated that 2010 will bring an additional year-to-year growth of 135%, and there is the potential for this figure to increase even further.

Panorama Consulting Group’s service offering includes independent ERP software selection, ERP implementation and execution, and organizational change management consulting.

For additional information on Panorama’s ERP selection services, please visit Panorama’s website at http://panorama-consulting.com.

Michael Kalkman Joins Panorama to Augment ERP Implementation Team

Denver, Colorado – Panorama Consulting Group, an independent ERP consulting firm, today announced the addition of Michael Kalkman as Senior Project Manager. Mr. Kalkman will join Panorama’s growing ERP implementation team.

Michael Kalkman is an ERP implementation project manager with over 20 years experience in project management, engineering, manufacturing, distribution, logistics, and operations management. He has led and delivered enterprise level ERP software projects across financial, distribution, construction, printing, mining, and manufacturing companies and not for profit organizations.

Prior to joining Panorama, Michael has led a number of ERP projects at a variety of companies including Stolle Machinery Company, The Summit Group, Sunrise Medical, Denver Management Group, JD Edwards, Stanley Aviation Corporation, and ADVO. This experience has given him a great deal of expertise within a number of industries and an in-depth knowledge in a host of ERP software packages.

“Michael brings a wealth of ERP software experience to complement our talented and fast-growing implementation team,” states Ross Patterson, Panorama’s Director of Implementation Services.

Panorama Consulting Group’s service offering includes independent ERP software selection, ERP implementation and execution, and organizational change management consulting.
For additional information on Panorama’s ERP implementation services, please visit Panorama’s website at http://panorama-consulting.com/services/erp-software-implementation/.

About Panorama Consulting Group

Founded in 2005, Panorama Consulting Group is a niche-consulting firm specializing in enterprise resource planning solutions for mid-market companies globally. Independent of affiliation, Panorama helps companies in ERP software selection, ERP implementation, and organizational change management to assure that each of its clients realize the full business benefits of their newly purchased ERP system. More information is available at http://www.panorama-consulting.com.

Panorama Releases a 2009 ERP Report Focused on the Use of ERP Software Within the Aerospace and Airline Industry

Denver, Colorado – Panorama Consulting Group, an independent ERP consulting firm, today released a new ERP report focused on ERP software usage within the aerospace and airline industry.

This portion of Panorama’s 2009 ERP Report outlines the use of ERP software at companies within the aerospace and airline industry and also includes a comparison of ERP results to other industries. This study includes metrics on ERP implementations and reviews data for average project budget, implementation timeframes, and actual project costs. The 2009 ERP Report also covers implementation variables such as the level of software customization and ERP modules deployed.

The report reveals that Oracle is the leading ERP software vendor within the airline and aerospace sector. Oracle holds 35% market share and is followed by SAP with 30%. The remaining market share is divided among various Tier II ERP vendors.

“This latest report demonstrates the breadth of enterprise software options available to companies in the aerospace industry,” states Eric Kimberling, President and Founder of Panorama Consulting Group. “Our experience in this industry vertical shows that the available ERP solutions are just as diverse as the needs of our clients in the space.”

In addition to ERP market share, the study reviewed ERP implementations and ERP project variables such as implementation timeframes, cost, and module usage. “The average implementation time for aerospace and airline companies is 28 months, which is significantly greater than the average ERP implementation timeframe of 19.8 months. This extended implementation helps support the report’s data that showed the aerospace and airline industry is much more likely to exceed other industries in overall ERP spending. Our survey data shows the average cost of ERP implementations in this segment is $31.5M, which compares to $8.5M in other industries. This variance is attributed to the fact that this is a complex industry. In order to satisfy quality and regulatory needs, aerospace and airline companies need to have well-defined and tightly integrated business processes, which tends to increase implementation duration and cost,” states Kimberling.

Panorama Consulting Group offers independent ERP software selection and implementation expertise, as well as tools that help aerospace and airline companies reduce their total cost of ownership and optimize measurable business results.

For additional information on Panorama’s ERP service offering or to download the entire report, please visit Panorama’s website at http://www.panorama-consulting.com/resource-center/.

About Panorama Consulting Group

Founded in 2005, Panorama Consulting Group is a niche consulting firm specializing in enterprise resource planning solutions for mid-market companies globally. Independent of affiliation, Panorama helps companies in ERP software selection, ERP implementation, and organizational change management to assure that each of its clients realize the full business benefits of their newly purchased ERP system. More information is available at http://www.panorama-consulting.com.

Panorama Releases a 2009 ERP Report Focused on the Use of ERP Software Within the Hospitality and Entertainment Industry

Denver, Colorado – Panorama Consulting Group, an independent ERP consulting firm, today released a new ERP report focused on ERP software usage within the hospitality and entertainment industry.

This portion of Panorama’s 2009 ERP Report outlines the use of ERP software at companies within the hospitality and entertainment industry, including a comparison of ERP results to other industries. This study includes metrics on ERP implementations and includes average project budget, implementation timeframes, and actual project costs. The 2009 ERP Report also covers implementation variables such as the level of software customization and ERP modules deployed.

The report reveals that SAP is the leading ERP vendor for hospitality management and entertainment software usage. Oracle and Microsoft follow SAP, with the remaining market share divided among Tier II ERP vendors. These Tier II ERP software vendors retain a 24% market share, which is fairly comparable to Tier II ERP usage within other industries.

“As with past ERP studies, the 2009 ERP Report reveals that large Tier I ERP solutions are not the only viable software options,” says Eric Kimberling, President and Founder of Panorama Consulting Group. “There are plenty of Tier II and industry-focused ERP vendors that can meet the complex requirements of companies within the hospitality and entertainment industry.”

In addition to market share, the study also reviewed ERP implementations and ERP project variables such as implementation time-frames, cost, and module usage. “The average implementation time for hospitality and entertainment companies is two months greater than ERP implementation time-frames in other industries. This extended implementation helps support the report’s data that showed the hospitality and entertainment industry is much more likely to exceed budget estimates. Our survey data stated 67% of ERP implementations in this segment went over budget, which is 10 percentage points higher than in other industries,” says Kimberling.

“In today’s evolving business environment, the hospitality and entertainment industry is very concerned with maximizing profits and minimizing expenses. Their aggressiveness with reducing waste and controlling costs needs to transfer over to their ERP projects so they can truly obtain a rapid return on investment. If the right ERP solution is selected and implemented with experienced ERP consultants, the ERP solution will translate into more efficient and optimized day-to-day operations,” says Kimberling.

Companies such as Panorama Consulting Group offer independent ERP software selection and implementation expertise, as well as tools that help hospitality and entertainment companies reduce their total cost of ownership and optimize measurable business results.
For additional information on Panorama’s service offering or to download the entire report, please Panorama’s website at http://www.panorama-consulting.com/resource-center/.

About Panorama Consulting Group

Founded in 2005, Panorama Consulting Group is a niche consulting firm specializing in enterprise resource planning solutions for mid-market companies globally. Independent of affiliation, Panorama helps companies in ERP software selection, ERP implementation, and organizational change management to assure that each of its clients realize the full business benefits of their newly purchased ERP system. More information is available at http://www.panorama-consulting.com.

Panorama Consulting Group Issues Call for Participants in 2009 ERP Benchmark Survey

Denver, Colorado -Panorama Consulting Group, an independent enterprise resource planning (ERP) consulting firm in Denver, has announced a new survey to collect qualitative and quantitative data regarding corporate experiences with ERP implementation. Survey questions address the scope, cost, project structure, project duration and overall satisfaction of ERP implementations using Tier I, Tier II, software as a service (SaaS) and open source providers.

“Our 2008 survey showed that corporations often rated ERP implementations with Tier I and Tier II software unsatisfactory for reasons such as extended time-frames, budget overages and problems with organizational changes,” says Eric Kimberling, president of Panorama Consulting Group. “Over the past year, however, the market has shifted. Not only are companies looking for better results for less money and with less staff but SaaS and open source software are being heavily promoted as cost-effective alternatives to traditional ERP packages. As third-party consultants who help companies evaluate the risks and rewards of various ERP options, we are very interested to see if this new climate and these new offerings actually bring about a higher percentage of successful ERP implementations.”

Participants will receive a free copy of the study’s results and analysis when it is released in early 2010. The 2008 survey results and analysis are available at http://panorama-consulting.com/resource-center/.

About Panorama Consulting Group

Founded in 2005, Panorama Consulting Group is a niche consulting firm specializing in the enterprise resource planning (ERP) market for mid-sized companies in North America and Europe. Independent of affiliation, Panorama helps firms evaluate and select ERP software, manages the implementation of the software, and facilitates all related organizational changes to assure that each of its clients realize the full business benefits of their ERP implementation. More information can be found on its website at www.panorama-consulting.com.

Fixing a Failed ERP Implementation

Most of my entries in this blog have focused on proactive measures that can be taken to ensure ERP or IT success. However, what happens if you're already in the middle of a failed ERP implementation?

The good news is that troubled IT implementations can be fixed, even if they are way over budget, behind schedule, and creating great organizational strain. In these types of instances, I often advise clients to reposition their projects as business improvement projects rather than IT projects.

At this point, you have forget about ERP. During or after a failed implementation, the software is likely creating huge difficulties. Just the mere mention of the letters E, R, and P probably cause employees to cringe, so it's important to focus less on ERP per se and more on how you are going to fix your business operations. With this change in mindset, you use ERP only as necessary to make business improvements to get your organization back on track.

Here is an approach I suggest to get a failed implementation moving in the right direction again:

1) Assess each area and department of the business that ERP is affecting. What are your key performance measures (order fill rate, time to close books, order accuracy, etc.)? Where are your biggest operational pain points? This will require you to reach out to key business stakeholders to get them involved, if they aren't already.

2) Develop two-tiers of potential solutions: stop-gap / "quick fix" solutions and long-term solutions. Determine the costs and time required to implement each of the options.

3) Prioritize your problem and solution combinations to arrive at the top 5-10 areas where you will realize the most immediate business impact at the lowest cost (low hanging fruit). Many of these solutions may or may not involve ERP functionality. It may require more training of the system, configuring the system to support new solutions. My experience has shown that business
processes and organizational change management are the most common problem areas in failed ERP projects, so many of your solutions may not even involve changing the system or implementing new functionality.

4) Begin implementing these low-hanging fruit solutions. The goal should be to build organizational momentum and confidence with these "quick wins."

5) Once you get some quick wins in place with the shorter-term solutions, begin prioritizing and implementing your long-term, more permanent fixes the same way you did with your short-term problems.

6) Begin implementing long-term solutions as time and resources allow.

By following this approach, you will better position your organization to make your troubled implementation a success and optimize the business benefits of ERP.

To-Be or Not To-Be: When and How to Design Business Processes for your IT or ERP Project

One of the most contentious issues in the world of ERP and IT is how much attention to give to as-is and to-be business processes.

Opinions on the issue run the whole spectrum on how this should be addressed; some people feel that companies should let their ERP systems dictate what new processes will be, while others feel that as-is and to-be processes should be documented and analyzed in detail before selecting IT software. Many people, including myself, feel that the approach should fall somewhere in between.

It is helpful to break down the issues and look at each individual aspect of business processes to decide which approach is best for your company and your IT or ERP implementation.

As-Is Processes
This is one of the more controversial aspects of ERP projects. In my experiences with clients implementing ERP, IT, or any other large business change initiative, there needs to be a decent amount of attention devoted to defining current business reasons. The benefits of doing so are three-fold:

1) It helps get alignment and understanding among various business units and geographies on how things currently operate. More often than not, especially in very large organizations, many managers and key stakeholders do not have a big-picture view of what other parts of the organization are doing. Documenting as-is business processes helps develop clarity on what is working well and what is broken with the current business processes.

2) It helps define how employees are doing their work now, which will help define the gaps between the current and future states. This is critical when it comes to organizational change management and training initiatives later on in the project.

3) It helps determine the key operational pain points, and therefore the to-be processes and business requirements during the software selection process.

This is not to say, however, that companies should spend an excessive amount of time documenting or over-analyzing current processes. At a minimum, organizations should develop level 1 detail around their current processes.

To-Be Processes
This area is very important as well. In order to develop the appropriate business requirements and select the software that is most effective for your business, you need to understand how you want your business processes to look in the future. Doing so provides four key benefits:

1) It helps you define your future operational model and business processes independent of software. This allows you to think out of the box and look for opportunities to score big wins by leveraging IT as a tool to enable measurable business improvements. If you skip this step, you are more likely to be influenced by sales messages instead of functional fit.

2) In conjunction with the as-is processes, it helps you identify the gaps between the current and future jobs, roles, and responsibilities. This is critical from an organizational change management perspective.

3) It helps define key performance indicators to help drive business improvements and accountability. With new processes come new responsibilities and opportunities for improvement, so you need performance measures to enable this.

4) It helps prioritize customization, integration, and report-writing needs after the software is selected. Without this understanding of where you want your organization to go from an operational perspective, it is very difficult to determine where customization and additional development is appropriate.

In short, I have found it helpful to view the business process aspects of your IT projects independent of the software itself. Your future strategic direction and business processes should drive the IT project, not the other way around.

Read more blog entries in our corporate ERP blog on our website.

Planning for IT and ERP Success

Ensuring a smooth ERP migration is complex, and every implementation entails a certain level of business and technical risk. There are a number of factors that affect an implementation's level of risk, including the number of sites that you are going live with, how many legacy systems are being replaced, and how many users will be affected.

In general, the variables that are most likely to reduce the business risk of your migration include:

1) Phased instead "big bang" approach to migration - cutting over your systems all at once generally increases your risk, particularly on large projects across multiple geographies/countries.
2) Sufficient Training - the better training you provide users, the less problems you will see.
3) Legacy System Planning - what are you going to do with your systems after go-live? Will you run them in parallel for a short-period until you know the new ERP system is functional? If so, have you budgeted these costs in your ROI? Failure to answer these questions before go-live will create significant problems at cutover.
4) Thorough Testing - Unit and integration testing is very important; you significantly reduce your implementation risk if you have thoroughly tested the solution with real data and real user profiles before go-live.
5) Provide Plenty of IT Support - expect more support center call volume and staff accordingly during go-live. You will also want to make sure you have clearly defined escalation procedures in place for ERP issues that your support staff isn't able to handle.
6) Develop a Contingency Plan - what will you do if your system does go down? Do you have manual processes you can revert to if needed? By expecting the worst case scenario, even though it is unlikely, you will reduce the risk of a massive business failure.

It all boils down to ERP risk mitigation, and the addressing the above issues will help minimize the level of risk exposed to your business. It is important to ensure that your project plan, budget, and staffing all consider these items.

Aligning ERP & IT with Your Overall Business Strategy

One of our recent blog entries discussed how to define to-be processes as part of a successful IT implementation. Based on this entry, one reader questioned whether or not this is feasible if the IT project is not aligned with overall business strategy.

This reader is absolutely right: aligning an ERP implementation with a company's overall business strategy is a difficult and often overlooked component of a successful project. I think the main thing needed is to take a top-down approach to defining business processes and then ultimately arriving at an ERP solution that fits the overall business.

In other words, before you can configure a system to enable your desired to-be processes, you need to define what these to-be processes look like. In order to understand your to-be processes, you need to know your operational strategy. And before defining your operational strategy, you need to define your overall corporate strategy and objectives.

So this is why the appropriate approach to ensure a successful ERP project that is aligned with the overall corporate and operational strategy is to:

1) Define your corporate strategy and objectives. I typically look at a 3-5 year horizon when helping clients through the process. I also challenge them to answer the question: "where do you want the company to be in 5 years?" Also, "what operational strategy is required to enable this higher-level corporate strategy?"

2) Once you have clearly articulated the company strategy, then you need to
define your "to-be" business processes that will enable this corporate and
operational strategy.

3) Then, establish the performance measures at the corporate, operational, and
business process levels. These measures should help you identify how
successful you have been in executing against your defined strategy. They
should also align with reports that come out of your ERP system.

4) Finally, you can begin designing, configuring, and testing the system to ensure that it is aligned with #1-3.

The unfortunate thing is that most companies start with #4 and skip steps 1-3.
By following all four, however, companies can be better prepared to ensure ERP
alignment with overall company strategy.

ERP Readiness Benchmarks: Do Companies Know What They're Getting Themselves Into?

One of our recent posts highlighted the importance of assessing readiness before any ERP or large IT project. Panorama Consulting Group provides a free on-line ERP readiness assessment tool, and the preliminary results from participants so far reveal some interesting thoughts.

It should be noted that the sample size is still relatively small (38 companies so far) and the initial data analysis is not yet validated in detail, but the initial benchmarks are interesting. For example:

1. 42% of participants say that their operations are poorly integrated across office locations
2. Over 50% of participants rate their current organizations poor in all the major areas we asked about: responsiveness to customers, efficiency, effectiveness, visibility to operational data, and integration between systems
3. Over 90% of companies have experienced a significant organizational change (in addition to ERP) over the last 3 years
4. Only 20% of participants have dedicated business process, performance measurement, or organizational change management groups in their organizations
5. 55% say employees at their organizations are poor at adapting to change
6. Only 15% of those planning to embark on an ERP project have completed a business case or ROI analysis

While we can begin to draw several conclusions from some of the data we've collected so far, the most significant observation is that organizational change management will be crucial to the success of these projects. These companies will face great obstacles during their implementations, and they will find it very difficult to deliver measurable business value without solid organizational change and benefit realization plans.

More data analysis over time will continue to shed light on organizational readiness. I'll keep you posted on the results. In the meantime, feel free to visit our resource center for more ERP tools and information.

The Hidden Costs of ERP

A common problem with many ERP implementation projects is inaccurately projecting total project costs. In order to achieve a high ROI on projects, costs need to be controlled and constantly compared to benefits. Some of the common indirect or hidden or costs of ERP projects include:

• Internal company resources to make decisions on ERP requirements, help with system design, and perform testing. Aside from a full-time core team, most ERP projects require the involvement of 3-5 part-time subject matter experts for each full-time core team member.
• Internal or external resources to manage data conversion, interface development, and report generation
• Employees to support communications, training material development, and training deployment activities
• Time that senior management is involved in decision-making and conflict resolution
• Design of business processes, particularly if the project involves a large, multi-national company with fragmented operations
• "Backfilling" project team members with contract or other employees that manage day-to-day activities while the team members are working on the implementation project
• Travel and expenses for team members, particularly if dealing with a global project. Project budgets should assume at least 15% of total consulting costs for travel, then double this amount to account for internal project team travel.

Obviously, these are not all the costs associated with an ERP project, but they are the ones that are most likely to be overlooked during the budgeting and planning process. These costs should be included in the ERP business case and budgeting process.

Building an IT or ERP Business Case

One of the biggest selling points that ERP or IT software vendors use is that implementing their product can result in a short payback period with a healthy Return on Investment (ROI). While there is some truth to this possibility, such an ROI is only achieved if you develop a realistic business case.

Here are some commonly overlooked aspects of developing a solid business case that will drive measurable business results:

1. Identify Hidden Costs. Many costs associated with a large IT or ERP implementation are obvious. For example, software licenses, implementation services, and data conversion are all direct costs that make it into most business cases. However, there are others that are not so obvious, such as internal resources required to support the project team, costs to backfill the day-to-day work of project team members, process improvement, training, and organizational change management. All of these costs should be included to accurately reflect the true project costs.
2. Document the Costs of Benefits. In many cases, technology makes a company more efficient, which may ultimately result in a headcount reduction. However, there are costs associated with reducing staff, such as severance. In addition, there is usually a short-term decrease in efficiency as employees learn the new system, even though there are usually long-term benefits associated with making employees more efficient and effective. These costs should be quantified in a business case as well.
3. Track Benefits After Implementation. Developing a business case is only half the battle; tracking and realizing business benefits is the other half. Prior to go-live, it is important to develop lower-level operational measures that directly relate to the dollars identified in the business case. These measures should then be assigned "owners" within the company who will be responsible for monitoring and tracking actual results. Then, after go-live, actual business benefits should be measured and compared to the business case on a regular basis to identify areas for improvement.

Obviously, there are many other aspects to developing a business case. By avoiding these common pitfalls, however, you are much more likely to have an air-tight business case that drives measurable business results.

Everything Changes - Organizational Change Management in IT / ERP Implementations

Organizational change management is one of the most overlooked areas of large IT or ERP implementations. Several published studies cite this oversight as one of the most common causes of IT project failures.

So what does a large IT or business improvement project need to do from an organizational change perspective? Many of the more successful projects will focus on spending more on training, while others may focus more on communicating business changes through a formal communications plan.

A better way to think of organizational change management is as a comprehensive benefits realization program. Instead of thinking of change management in the traditional sense, such as focusing on formalizing communications, training, or organizational design, an alternate approach is to think of it as one of several mechanisms that can be used to drive tangible business value and optimize the potential benefits of the IT or business change you are implementing.

This shift away from using organizational change as a means to an end accomplishes several things. First, and probably most importantly, it focuses your project and business resources on activities that will improve the business from a quantifiable Return on Investment (ROI) perspective. For example, a large consumer products company implementing SAP determined that it was going to achieve most of its tangible business value from three major areas in the business: Finance, Global Purchasing, and IT. So rather than reorganize the entire company's job and work roles as a result of the SAP project, it focused on those three areas where it had identified 80% of the ROI in its business case.

In addition to the tighter focus on ROI, a comprehensive benefits realization approach also focuses on activities that will drive true business value, regardless of whether or not those activities are related to change management. For example, it allows you to discover business processes that are inefficient by measuring process results. By measuring processes against benchmarks and identifying areas with the most room for improvement, a benefits realization approach allows managers to continuously improve results after the IT or business implementation. It focuses attention on measurable continuous improvement rather than conducting change management just for the sake of it.

In other words, it is helpful to treat organizational change as one of many possible enablers of business change rather than a final solution. Focusing on ROI and business value allows you to implement organizational change activities that add tangible value and minimize time and money spent on those that do not.