Five requirements management considerations for ERP implementation
So, you’re ready to implement a new ERP or upgrade your existing solution. But have you planned for how you’ll manage solution requirements to ensure a successful project? Without a strategic approach to requirements management, most organizations will struggle with meeting the needs of its stakeholders; resulting in organizational disruption, delays, and potentially project failure.
The implementation of enterprise software represents change. How well organizations prepare for, and manage that change, is a significant predictor of success. According to a 2017 report from the Project Management Institute (PMI), organizations waste on average $97,000 for every $1,000,000 invested due to poor project performance.1 There are other startling statistics; a 2012 study by McKinsey and Company in collaboration with the University of Oxford found on average large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted.2 They also found 17 percent of projects perform so poorly, they threaten the existence of the sponsoring organization.
The change associated with ERP projects can take several forms, most commonly the “Big T” (large-scale enterprise transformations), the “little t” (minor transformations in one or more business functions), and “lift and shifts” (essentially technology upgrades). In all cases, success requires a strong collaboration amongst the affected stakeholders.
ERP vendors have spent billions of dollars optimizing their software, providing vertical-specific work flows and recommendations, to improve business processes efficiency. For organizations to realize the value and benefits from their significant investment in enterprise software, it is important to consider organizational culture, business processes, resources (people, financial, equipment, and technology), and the implementation methodology. The most successful ERP projects are guided by a project management framework, which serves as the wrapper for the activities and tasks associated with requirements management, which in turn guides the ERP’s configuration. With the appropriate level of management, oversight, and rigor, organizations can overcome the hurdles and the dramatic let down commonly associated with ERP implementations.
Below are five aspects of requirements management to consider when starting an ERP project.
Thorough and proper stakeholder analysis is essential to ensuring the final implemented ERP solution meets or exceeds the sponsor’s expectations. During the stakeholder identification processes, remember to consider the following categories for inclusion in your analysis. Missing any one could be the difference between success and failure.
The value proposition
The ideal starting point for any ERP implementation is a needs assessment, where the organization clearly defines the problem and opportunity they are attempting to address. The next step is to conduct a cost benefit analysis and develop a business case for the initiative. During this process, the goals and objectives of the project are strategically aligned to those of the organization.
A properly defined ERP business case will be referred to and updated throughout the lifecycle of the initiative, and potentially referenced for several years afterwards. The business case will help to ensure a common understanding of the initiative, and defines the value the ERP program will deliver to the organization. With careful planning and consideration, a well-crafted business case can significantly increase the likelihood of a successful ERP implementation. With the approval of the business case, the organization should commence work on the project charter, the document that formally authorizes the project.
Failure to establish clarity on what the team is trying to achieve is a leading cause of project failure. To increase the likelihood of positive results, take the time to create the business case and project charter at the onset.
Approach and plans
Supporting the implementation framework are many plans designed to align stakeholders based on the approved business case and charter. A few key deliverables that are often overlooked include:
- Strategy for traceability, and the traceability matrix
- Requirements management plan, and business analysis plan
- Test strategy, acceptance criteria plan, and integrated change management plan
The best tool for collecting requirements is a MoSCoW traceability matrix. With the proper use of this tool, project teams can capture, prioritize, trace, and track the requirements over the duration of the initiative. The test strategy and the acceptance criteria plan provide the guidance to ensure the items documented in the MoSCoW traceability matrix have the necessary approval for migration to an operational state.
Thoroughly analyzing requirements is perhaps the single most important activity within a project. These activities and tasks focus on the identification, prioritization, specification creation, approval, and validation of solution requirements. The specifics are documented in the strategy for traceability, requirements management plan and business analysis plans. The first iteration of the MoSCoW traceability matrix provides a baseline measurement for future comparison and effective decision-making. This baseline represents the known universe of work to complete the ERP implementation. Once baselined, any changes must follow the integrated change management plan. The purpose of integrated change management plan is not to eliminate change, but rather to define a process allowing the proposed changes to be properly identified, evaluated, and escalated to governance as appropriate.
Many ERP projects focus on functional requirements, typically referred to as RICE (Reports, Interfaces, Conversions, and Extensions). The most successful ERP projects look beyond RICE and consider business, stakeholder, non-functional, and transition requirements. This holistic approach to requirements analysis and management helps to ensure all aspects of the project are considered, and the organization is prepared for the transition to operational state following go-live.
Focus on requirements management
ERP projects are strategic investments in an organizations future; designed to improve business process and drive efficiencies, they should not be viewed as IT projects, although IT has a key project role. A focus on requirements management can help organizations overcome the doldrums of missed expectations and poor execution. A holistic focus on all requirements, will result in higher levels of user adoption, and an increased ROI, resulting in tangible benefits.
1 Project Management Institute, 2017 Pulse of the Profession Success Rates Rise, Transforming the high cost of low performance
2 McKinsey and Company, 2012, Delivering large-scale IT projects on time, on budget, and on value
Featured white papers
ERP Implementation: 9 steps to success
The 9 proven steps you should follow when implementing ERPDownload
ERP Implementation Checklist
Over 120 actionable steps to implementing a new ERP successfullyDownload
Manufacturing ERP Implementation Checklist
Over 70 actionable steps to rolling out new manufacturing ERP softwareDownload
Implementing ERP and setting expectations
Our advice on setting expectations for your ERP implementation project
Why a food specific ERP system is a must-have
Key features and requirements food companies should consider when searching for an ERP
Multi-Tier ERP Implementations
Learn more about multi-tier ERP implementation and why you might need one