Apr 20 / Stéphanie Gamelin

ERP implementation : How to get a true return on investment ?

Gartner research has found out that globally from 55% up to 75% of all ERP projects fail. The definition of ‘failure’ varies but certainly means the projects did not reach their objectivesIn worse cases, the new systems did not work in any meaningful way or the cost overruns were 100% or more.

Organizations use IT systems such as Enterprise Resource Planning (ERP), Field Service Management (FSM) or Customer Relation Management (CRM) to manage large volume of operations and information every day.
Considering the breadth of features and capabilities offered by these systems, it’s easy to miss out on key benefits that they can provide.
Organizations need an ERP solution that’s capable of keeping pace with their speed of growth. It should be mapped to their current processes and robust enough to support long-term growth.

When a company incurs an expense, it’s only right that it expects to get something in return. When it comes to ERP projects, companies are looking for strictly monetary value, either through savings over time or better efficiency and profitability going forward. One large financial cost that many companies choose to accept in the interest of modernization and improved business outcomes is the implementation of an ERP. When designed to suit specific industries, these systems can be the foundation for optimized operations, but that must be balanced with the money, time and effort that teams devote to deploying and utilizing the platform.
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So what are some of the major root causes for missing optimal Return On Investment while implementing a new system or migrating to a new one ?

The reasons why ERP implementation fails include failure to set up realistic expectations, failure to embrace change, lack of commitment by key stakeholders, lack of competent project managers, failure to modify or align the system with business processes, insufficient data cleansing, lack of testing

As the business landscape transforms constantly, organizations face the need to deploy new ERP systems in some parts of the business, while continuing to use old ones in other parts. In the situation of a merger and acquisition, a complex IT landscape is inevitable.

According to Gartner, one of the biggest challenges regarding IT and ERP development in large organizations is that they have too many systems in use.

Even within one system itself, there's a challenge of diverse usage. In business processes such as purchase-to-pay or order-to-cash, companies have corresponding blueprints and instructions. However, in different regions, with different vendors, end customers, and products, one version of the process may look substantially different from the next. This causes a huge number of variations per system, which increases the demand for support from IT and therefore the cost of maintenance.

Digital transformation trends also have a significant impact, as well as burden, on an organizations' IT and ERP systems. As business leaders race to implement new technology to improve the end-consumer experience, more effort is required in IT and ERP development projects

When companies start an IT or ERP deployment initiative, it's often difficult and time-consuming to understand business requirements. A common way to gather these insights is to have dialogues and discussions with employees. However, this method can only paint some parts of the picture, as everybody is explaining their own process variations, problems, and best practices.

One of the biggest challenges in designing an IT and ERP system is to meet business needs with the given resources.
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ERP Optimization with process mining

Let’s define what we mean by ERP optimization. In short, this is the process of analyzing people, processes and technology to determine if anything is keeping the company from unlocking its ERP system’s full potential. These could be known issues, or an analysis could unveil new challenges.

It is a fact that many organizations struggle with a successful deployment and implementation of an ERP system. Many issues can arise after implementation because the system isn’t a good fit with the company’s business operations.

Proper event data analysis will not only provide with useful information about how the business processes are actually being executed but also enables organizations in avoiding costly errors throughout the ERP life cycle.

One way to reduce the complexity is to gain insight into the as-is processes and user habits, identify problems, and optimize through process mining.

Process mining is nowadays a real and effective tool to cut on costs and time consumed on fairly complex processes or company structures. Even at smaller companies, after growth, with established processes or after merger & acquisitions, process mining comes handy to optimize a company and its processes.

Process mining, will help understand how well the business is currently using IT and the ERP solutions, and it will provide both a holistic view of the processes as well as a detailed analysis of top process variations and bottlenecks.
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How can Process Mining bring value across the ERP lifecycle ?

Process Mining benefits to each stage of an ERP implementation :

A baseline for a new ERP or upgrading to a new version :

By having a solid understanding of your process landscape, you can choose an ERP that fits your organization – not the other way round. Process mining allows businesses to create a process efficiency baseline by using data from the existing system to identify optimal processes and best practices as well as highlight inefficiencies and limitations. These data-driven insights can help build a robust business case on the shortcomings that have to be addressed and on the new functionalities/capabilities that are required for ensuring optimal business outcomes. This baseline also serves as an objective benchmark against which to measure the performance of the new ERP system.

Implementation phase :

Once best practices are identified, process mining can simplify the steps for defining an optimal template. Then it can be used to perform fit gap analysis where the new template is tested on a current implementation. These insights can then be used to adjust the template for the ERP deployment, or you can prioritize change management for an existing system.

Post implementation :

After the implementation of a new system, it is vital to monitor adoption rates and when a company integrates its new system, process mining analysis and optimization ensure leveraging the ERP system, to then ensure success and lasting business value. Process mining reveals deviations from the desired state. This enables IT and business management to quickly respond to incorrect actions problems. In the post-migration stage, process mining technologies can be used to monitor the performance of as-is processes in the new ERP system and compare them to should-be benchmarks to make incremental adjustments and maximize performance.

Pursue Continuous Improvement on your ERP System

Process improvement is a sustained, ongoing strategy rather than a one-off event or activity. That distinction is especially significant in the context of ERP systems as they are the central instance for the planning, control and execution of all business processes.

Process mining technologies can definitely play a critical role in reducing the costs, risks and complexities of ERP migration programs. They provide a data-driven model for the day-to-day monitoring of ERP systems to continuously identify opportunities to increase efficiencies, optimize performance and enhance the ROI of ERP systems.
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Stéphanie Gamelin

Stéphanie est une experte avérée de la gestion des risques et des revenus des fournisseurs. Spécialiste de la gouvernance, transformant les performances commerciales de bout en bout grâce à la gestion des finances, des données et des risques pour les organisations axées sur les clients.
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