ERP implementations can be highly disruptive to business as usual and may not deliver on its business case, which is why having a capability model in place to identify potential traps and gaps is imperative for successful delivery.
The corporate and government landscape is littered with ERP road kill, the result of troubled and/or failed projects that started off with compelling business cases but ultimately failed to deliver to expectations.
One of the chief challenges of introducing a new ERP system is that there are situations where not all systems and processes can interface with the new solution. The job of the business case is to make clear how an ERP can deliver significant benefits to the business and deliver a competitive advantage.
However, the business case often doesn’t identify gaps in business capability, which systems are in or out of scope in the project, or the potential impact on integration with out-of-scope systems.
Failing to articulate and communicate the impact of out-of-scope integrations and processes can prove to be fatal for new ERP solutions. Why? Because expectations will not meet reality when it’s unclear across the business that gaps exist and furthermore that the new ERP system will not bridge this gap.
The Impact of the Gap and Disruption
An ERP implementation can be very disruptive to business, with the more typical impacts including:
- Blowouts in cost and time, draining funds from the business
- Poor delivery of the benefits without enhanced business capability or value creation
- Consumption of talented resources in the business goes well beyond everyone’s expectations
- The impact to smooth operations of BAU of a ‘just get it live’ mentality by cutting scope and quality when the project starts to fail
Each of these issues can lead to the organisation not having the budget or motivation to drive out fully the planned benefits and user take-up.
These issues are not an indictment of the software’s quality or functionality; rather it is the reality of what can happen when the business fails to fully mitigate the risks of impact of both the in-scope and out-of-scope items in the project, coupled with the failure to provide a clear vision of what the system should be supporting the business to achieve.
So how can organisations ensure that they set their ERP implementation up for success? The answer is to define the Business Capability Model before the project starts.
How Capability Modelling can Help
A business capability model captures the core elements of an organisation in a structured way, defining ‘what’ the business does (or needs to do) in order to fulfil its objectives and responsibilities.
This differs from ‘how’ processes are – or will be – done. Capabilities within a business rarely change, while the processes do. Capability modelling offers a risk mitigation strategy for ERP projects to ensure that the identified capability gaps are actually documented, filled and supported.
Capability modelling also provides the business with a framework to align IT procurement and application roadmaps to business strategy to ensure that the right building blocks are enabled and ready in the right order for successful implementation.
It is a business tool, first and foremost, that can guide how technology can support the business across all technology layers. One of the key benefits of using capability modelling in an ERP project is the ability to apply the framework to what is and isn’t within scope, whilst also flagging any points of integration with other systems such as payroll or rostering.
This is critical to ensuring all stakeholders, project teams and users involved in the project are clear about what the ERP project will deliver, how these systems interact with the new ERP and where the risks lie.
Capability Modelling and Processes
Capabilities are easily confused with processes and ‘how’ activities are performed, not ‘what’ those activities are. The ‘how’ is regularly referred to as the operating model within the business.
The diagram below demonstrates where capability modelling sits in relation to processes and business strategy and planning.
Mapping out key roles and unique capabilities, where they sit and what capacity is required is critical for defining what is in scope and importantly what is out of scope. This drives an understanding of what capabilities and the reach within the business that the ERP solution will enable, both now and in the future.
Ensure Capability Modelling is the First Step of the ERP Implementation
The capability model will provide the context and baseline from which to plan the program and provide clarity on what parts of the business will be impacted, the size of the impact and the business and technology changes that will take place.
As simple as this sounds, identifying the impacted areas and gaining consensus across the organisation that this is accepted and understood sets a strong platform for success your ERP project.
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