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Taking the Functionality Out of ERP Selection and Implementation Decisions

Taking the Functionality Out of ERP Selection and Implementation Decisions

Over the years we have learned a lot about ERP initiatives. Many of these lessons have come the hard way – costly, time-consuming, company-consuming projects that left us scrambling to find benefits to justify the costs. If you ask almost any ERP project manager what, in hindsight, they would do differently, the answer is the same: Do not customize the software! In spite of this advice, each time an organization starts an ERP selection or implementation project, the going-in assumption is that the software must handle the unique aspects of the business.

After having personally managed several ERP implementations (and consulted with others on numerous projects), I developed the following model to simplify ERP and many other business / IT initiatives. My goal in developing this model was to improve the likelihood that we would make more rational decisions about where to accept “vanilla” or standard functionality and where it makes sense to invest in changes to the standard functionality. I have used this model very successfully on both large and small IT initiatives. For an ERP implementation, using this approach has reduced the project timeline by as much as 50% and the budget by as much as 40%.

I have also used this model when integrating business processes and systems. For example, I recently used this approach to get rapid agreement (about 30 minutes) on a payroll consolidation decision. The goal was to consolidate the three separate payroll systems used by three separate divisions into one system. The meeting participants came to the meeting prepared the make the case for why we should consolidate the other two divisions onto their payroll system. We spent about 20 minutes going through the following model and then 10 minutes agreeing that, since our payroll activities were “parity”, any of the three systems would keep us at payroll process parity. We then chose the payroll system that had the best support model (and thus, took functionality out of the payroll decision). Nice, easy, and simple.

So, without further fanfare, the model is:

Using this model, we evaluate our business activities in two dimensions. The extent to which they differentiate us in the marketplace and the extent to which they are mission critical to us.


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Tags project managementERPNickolaisen ModelNiel Nickolaisen

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