Before jumping into an ERP implementation, organizations should develop a strong business case that justifies its potential investment in ERP software. If your organization has great difficulty doing this then it may be safe to assume that your organization does not actually need ERP software – at least for the time being.
While developing a business case requires time and effort, it shouldn’t feel forced. If the primary reason your organization wants ERP software is because “everyone else has it,” then that subconscious motive will come to the surface when other reasons for ERP prove difficult to justify.
Many organizations implement ERP software to improve and streamline their business processes but the truth of the matter is that some organizations benefit more from redesigning business processes without implementing ERP software. Even if your organization does decide to implement an ERP system, don’t assume that the software will replace the need for business process management. The project team still needs to document then improve, optimize or reengineer broken and inefficient processes. If your organization is not prepared to do this, then it is better off not implementing ERP software. More than likely, ERP software will only bring measurable improvements to your organization when the software does not dictate business processes in areas of competitive advantage.
If your organization understands the importance of business process management, and the role it plays in an implementation, then ERP software may be a worthwhile investment. Organizations that identify competitive advantages from the beginning of the initiative are much better positioned to receive benefits from ERP software because these organizations do not allow their competitive differentiators to be standardized by software “best practices.” Standardizing all of your organization’s business processes to fit software functionality turns a potentially beneficial ERP implementation into an expensive undertaking that just might move your organization five steps backward from where it stood initially.
Another important consideration when deciding whether or not to implement ERP software is the amount of risk involved. If your organization is prepared to accept the potential risks inherent to ERP implementations, then it will have a more accurate idea of whether the benefits truly outweigh the costs. Potential risks include budget overruns and organizational difficulties associated with process changes and role changes. Your organization should only implement ERP software if you are prepared to combat change difficulties with an extensive organizational change management plan.
Put simply, when organizations understand the risks, recognize the need for process improvement and reengineer processes before implementation, ERP software is a worthwhile investment. To learn more about how to ensure that your organization’s ERP investment is worthwhile, be sure to register for our free webinar this Thursday, ERP Project Planning.