ERP Administrative Challenges Brian Jensen Deloitte & Touche LLP February 2011
ERP Administrative Challenges Enterprise resource planning (ERP) implementations over the last two decades have generated significant value for companies. Yet only a portion of this value comes from the initial implementation; because of the magnitude and complexity of the effort and the immediate change that results, the rest of the value generally comes later, as the organization learns how to manage the administrative challenges associated with an ERP implementation and effectively take advantage of the new system s capabilities. 2
Course Objective After this presentation, you will better understand the administrative challenges associated with an ERP implementation and will be better positioned to leverage a Center of Excellence to help address these challenges. Support 3
Administrative Challenges 4
Administrative Challenges: Business Alignment ERP Solution scope and boundaries Business priorities and alignment Changes to the organization Business requirements Budgeting Compliance 5
Changes to the organization Go Live Scope M&A Event #1 M&A Event #2 6
Administrative Challenges: Data Management Master Data Management Data Governance Data Quality Privacy Reporting Back-up and recovery Archiving 7
Administrative Challenges: Data Management What happens when you have an immature master data management and governance program? ERP Go-live: = 1 year later: = 8
Administrative Challenges: Change Governance New business requirements Helpdesk and errors Competing priorities Promote to production Code and configuration management Solution document repository Training 9
Administrative Challenges: Support Strategy In source/outsource/offshore/near shore Change timeline Technology environment Change processes and workflow Enhancements Patch management Talent retention 10
Center of Excellence (COE) 11
The case for an ERP Center of Excellence Enterprise resource planning (ERP) implementations over the last two decades have generated significant value for companies. Yet only a portion of this value comes from the initial implementation; because of the magnitude and complexity of the effort and the immediate change that results, the rest of the value generally comes later, as the company learns how to take advantage of the new system s capabilities. 12
The case for an ERP Center of Excellence Companies should establish a new organization that allows for continuous improvement of the ERP solution and the processes it supports to realize the entire value of their investment. This organization, or center of excellence (COE), forms a crucial link between the business, the ERP solution, and the information technology (IT) department to achieve the company s goals and performance objectives. 13
The case for an ERP Center of Excellence The historical approach of separating IT and business does not work with ERP. This is true for implementations where cross-functional, integrated teams are used to develop complex solutions and for maintaining and improving the ERP solution. 14
The case for an ERP Center of Excellence The ERP solution and work related to the solution will continue to require collaboration between cross-functional business and IT professionals. 15
Center of Excellence COE organizations have many similarities with ERP implementation project teams in that they require similar disciplines. One critical area where COE design may differ from an ERP project is in reporting relationships. ERP projects are temporary entities and traditionally have ad-hoc or nontraditional reporting relationships. COEs, on the other hand, are permanent sustaining organizations and should have formal and structured reporting relationships. 16
Center of Excellence There are three primary reasons why companies should look to set up a COE: 1 2 To provide the structure and culture for continuous improvement and benefit realization To support the integrated and crossfunctional complexity of the ERP solution 3 To create a mechanism for ERP knowledge retention and management 17
COE Organization COE Leadership Operational PMO Functional COE Change & Learning Technical 18 ERP Service Desk
COE Organization Structure: Operational PMO Program Mgmt Business Alignment Testing Compliance/RM Operational Release Mgmt PMO Budgeting COE Leadership ERP Service Desk 19
COE Organization Structure: Functional COE Leadership Functional Functional Architect Finance Material Mgmt Manufacturing HR BI ERP Service Desk 20
COE Organization Structure: Change & Learning COE Leadership Chng Architect Documentation Communications Training Change Mgmt Change & Learning ERP Service Desk 21
COE Organization Structure: Technical COE Leadership Technical Tech Architect Tech Ops Application Mgmt Security & Controls Network/Infrastructure ERP Service Desk 22
COE Organization Program Mgmt Business Alignment Testing Compliance Release Mgmt Risk Mgmt COE Leadership Operational PMO COE Functional Functional Architect Finance Material Mgmt Manufacturing HR BI Chng Architect Documentation Communications Training Change Mgmt Change & Learning Technical ERP Service Desk Tech Architect Tech Ops Application Mgmt Security & Controls Network/Infrastructure 23
COE Scope Considerations Application integration Applications that are tightly integrated with the ERP solution should be included in the scope. Breaking tightly integrated solutions leads to sub-optimization and redundant staffing. Value chain A logical and sequential subset of the enterprise value chain centered around the ERP solution should be included in the scope. Breaking the value chain creates siloed solutions and limits the COE s ability to make strategic improvements (e.g., shop floor execution should not be separated from production scheduling and inventory management). Enterprise span 24 Solutions that span the enterprise (e.g., information analytics and reporting) should not be in the scope and will often have separate COEs.
Conclusion An ERP implementation is a significant investment and, for most companies, is just the starting point for achieving the desired benefits. The COE provides the organizational focus and level of integration needed to fully realize the benefits that the ERP solution allows. 25
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