Top trends in erp 2017v8.compressed

Why read this report?
This report is intended to give senior business decision makers an impartial
view of the issues, opportunities and challenges presented by the next
generation of ERP solutions.
Who should read this report?
Any senior decision maker in an organisation looking to increase efficiency in
their operation or increase the performance of their current ERP investment.
About the author
Jim Foster has over 20 years experience in leading and advising Enterprise
Resource Planning (ERP) implementation programmes.
As a Partner in PwC Consulting, he led the UK SAP and ERP Financial Services
consulting practices.
He established Timeline Consulting as an independent provider of ERP
Programme Management and Advisory services, working with clients to
optimize the value from their investment in ERP solutions.
.
Introduction Page 1

The broken promise
The promise of Enterprise Resource Planning (ERP) systems was that it would
be possible to replace a number of systems with one easily customisable,
integrated solution operating on a single database and with a consistent set of
user screens.
The reality has been different.
ERP systems are often complex to implement, leading to:
• Costs exceeding budget
• Delays in project completion
• Difficulty in responding to changing business requirements
• Focus on getting the solution to work, rather than educating users in
how best to use the system to support business operations
Once implemented, ERP systems:
• Require users to adopt a disciplined approach to using the system in
the right way at the right time
• Are usually cumbersome to use, with users often needing to access a
number of screens to complete a single transaction
However, a lack of focus on managing user adoption allied to the difficulty in
using the system can result in users failing to use the ERP system in the way
that it was intended. As a result:
• Users continue to use informal systems (paper and spreadsheet
based)
• Data maintained by the system is incomplete and inaccurate
• Reporting is time-consuming and inconsistent
• Anticipated Benefits are not fully realised
As a result, it is not surprising that Gartner reports that between 55% and 75%
of ERP projects fail to meet their planned objectives. This is in addition to the
high profile ERP project failures experienced by companies that include
Hershey, Nike, HP and Waste Management.
The current ERP challenges
Page 2

What is next generation ERP?
There is now a next generation of ERP solutions, Cloud ERP solutions, that pro-
vide an opportunity to deal with a number of the problems that organisations
have encountered in implementing and operating the traditional On Premise
ERP solutions.
Cloud ERP solutions are typically licenced on a per user subscription basis and
provide less opportunity for customisation. The Benefits that organisations can
realise from adopting Cloud ERP solutions include:
• Reduced Cost
• Quicker Implementation
• Greater Flexibility
For example, PwC has estimated that, over a 5 year period, the costs of a typi-
cal On Premise ERP solution are over three times those of an equivalent Cloud
ERP solution.
Although there are Cloud ERP solutions available, for example Netsuite, SAP Business
ByDesign, that can meet the needs of a number of business functions, most Cloud ERP
users are adopting solutions that meet the requirements of a specific set of business
processes, such as Salesforce.com for Customer Relationship Management, and Work-
day and SuccessFactors for Human Capital Management.
At the same time, many of the suppliers of On Premise solutions are introducing im-
provements to their solutions, particularly in the areas of:
• Reporting/ Analytics, to make all data available in real time.
One of the key innovations has been the availability of In Memory Database
technology with products such as SAP HANA and Oracle Database-In-Memory
• User Interface, to make the solution easier to use, and to allow them to be used
on multiple types of device.
IInnffoorr has introduced the Infor SoHo user interface as the standard front-end to
its various ERP solutions. SSAAPP’’ss Fiori applications deliver a consistent front end
to the most heavily used SAP transactions, and its Personas development tool
can be used to simplify screens, removing unnecessary fields and information.
OOrraaccllee is also introducing a simplified User Interface for its ERP products.
Consequently, many organisations are adopting a Hybrid ERP approach that involves
integrating a Cloud ERP solution with an existing On Premise ERP solution.
Next generation ERP
On Premise Cloud based
Typical One Time Costs $80m $7m
(Average)
Typical Ongoing Costs $17.5m $21.3
(5 Year Cumulative Average)
Typical 5 year Costs $97.5m $28.3m
(Average)
Source: ERP in the cloud. Is it ready? Are you?
Page 3

McLaren - Leading the way since 1963
One example of an organisation that is adopting the Hybrid ERP approach is
McLaren, whose Chief Information officer, Craig Charlton, stated recently;
“The monolithic ERP is dead…..It’s now about a core
central ERP surrounded by business networks and
cloud-based solutions, and having a robust integration
layer so you can move the data between the platforms”
Benefits of the hybrid approach
Talking in ‘SAP business trends’ Craig talked about the development of his dual
axis approach to on premise and cloud based ERP management. Creating
greater mobility and access for their workforce throughout the world. This
approach has also underpinned any future scale and device access without the
need for capital cost traditionally associated with an ERP system refresh.
Next generation ERP
Page 4

We consider that there are two key challenges in delivering on the
opportunities offered by the Next Generation of Hybrid ERP solutions:
• Solution Integration, and
• Project Execution
Solution Integration
To deal with the challenge of integrating On Premise and Cloud solutions,
Gartner considers that companies need to develop a “Post Modern Application
Integration Strategy”, but predicts that “through 2018, 90 percent of
organizations will lack a postmodern application integration strategy and
execution ability, resulting in integration disorder, greater complexity and cost.”
Project Execution
Unfortunately, the availability of a New Generation of ERP software will not, in
itself, result in reducing the percentage of ERP projects that are considered
failures, nor avoid project disasters.
It is important that the lessons learnt from these failed On Premise ERP proj-
ects are applied in ensuring the success of Next Generation ERP projects.
Next generation ERP Page 5

Project success factors
We have identified 8 critical areas for consideration to
avoid ERP project failure. We discuss the implications
of these factors on projects involving Cloud ERP
solutions in more detail in the following pages.
Next generation ERP
Page 6

The plan should take into account all the activities, covering the following
workstreams, required to deliver a successful ERP project:
• Solution Development
• Solution Acceptance
• Data Migration
• Business Adoption
• Technology Infrastructure Design and Deployment
• Service Introduction
For a number of these workstreams, key considerations in preparing plans for a
project involving a Cloud ERP solution are included in the following sections of
this report:
• Solution Acceptance (Page 9: Requirements & benefits management)
• Data Migration (Page 10: Data management)
• Business Adoption (Page 11: Business adoption)
Key considerations impacting other workstreams of a Cloud ERP project include:
Workstream Key Considerations
Solution Development Take account of all solution development, for
example Integration, and not just configuration
of the Cloud ERP solution.
Technology Infrastructure Design Inventory existing end user devices (PCs, tablets,
and Deployment mobile phones) to determine that operating
software is at the correct version level to operate
the ERP solution
Security of system access
Service Introduction Development of processes for managing regular
software releases
Planning Page 7

In resourcing each work stream, key considerations for a project involving a
Cloud ERP solution include:
Workstream Key Considerations
Solution Development Ensure that, in addition to Solution Configurers,
the project team includes Solution Consultants
who understand the options available in the
Cloud ERP solution and the implications of
selecting particular solution options.
Ensure that there are effective working practices
in place between developers working on the
integration of the On Premise ERP and
Cloud ERP solutions
Data Management Involve individuals who will have ongoing
responsibility for management of
data quality
Involve data security specialists.
Service Introduction Ensure that support arrangements include
resources that will be responsible for managing
the business adoption of regular releases of the
Cloud ERP solution
Resourcing Page 8

Requirements Management
Requirements Management is the process for defining
requirements and monitoring their delivery through the
design, build, testing and implementation phases of a
project.
Cloud ERP solutions offer less options for tailoring the
standard solution to meet user needs. Consequently,
there is likely to be a gap between the requirements de-
fined by users and the solution that is delivered. It is im-
portant that there is visibility of which, if any,
requirements will not be met, that this is approved and
is reflected in the anticipated benefits.
Requirements & benefits management
Benefits Management
Although almost all projects are justified on the basis of
a business case that sets out, and attempts to quantify,
anticipated benefits, our experience is that little atten-
tion is usually paid to these until after the solution has
been implemented. Not surprisingly, the anticipated
benefits are rarely fully realized.
This is borne out by the Association of Project Manage-
ment’s The State of Project Management Survey 2016,
which reported that:
• 45% of the 317 organisations surveyed
identified Benefits Realisation as one of the
three most difficult processes to adopt
• 31% of these organisations never or sometimes
delivered the full benefits of its projects
Addressing this issue is of significant importance given the ex-
pectation of the benefits that adoption of a Cloud ERP solu-
tion can deliver.
The key features of an effective Benefits Management process
should include establishing for each Anticipated Benefit an
Owner who is accountable for the realization of the Benefit.
As part of this accountability, the Owner should:
• Define a Benefit Realization Plan, defining the
activities to be performed in order to realize the
Anticipated Benefits
• Define a Benefit Realization Profile, setting out the
level of benefit to be realized over time
• Provide a monthly report containing information
on the current level of Anticipated Benefits,
particularly taking into account approved changes in
scope, and the status of defining and implementing
Benefit Realization Plans
Page 9

In a recent survey by Panorama Consulting, The 2016 ERP Report: Organi-
sational Change Management, Data Issues were the most cited reason (by
49% of respondents) for delays that their organisation had experienced in
its ERP projects.
It is important that effective management of data starts early in the proj-
ect and, importantly, continues throughout the lifetime of the system.
For each Data Object that is required, it is important to:
• Understand how data will flow between the On Premise ERP,
Cloud ERP and other solutions, and establish where the “Master
Record” will be maintained. This provides a key input to defining
the Application Integration Strategy
• Determine Data Sources, Level of Completeness/ Cleanliness,
Volumes to be migrated, Method of Extracting, Transforming and
Loading, and Ownership
Data management Page 10
• Establish procedures for testing the quality of Data Loading, and
for conducting Dress Rehearsals to confirm the sequence and
timing of data load and acceptance during Cutover
• Ensure that the Owner of each Data Object is responsible for
maintaining the quality of the data throughout the lifetime of the
solution in accordance with agreed data management processes
It is also important to understand how the security of data that will be
held outside the organization will be managed. Key questions to be ad-
dressed include:
• What are the security arrangements?
• What data encryption is used?
• Who has access to the data?
• Can relevant regulatory requirements be met?
• What happens if there is a security breach?

Many project teams focus their efforts on training users to understand HOW to
use an ERP system, but far less effort on WHY they need to use the system in
the prescribed way.
We consider that this need for explanation is even greater for Cloud ERP solu-
tions, which are provided typically on a “multi-tenanted” basis where all user
organizations use a similar version of the solution. There is the opportunity to
configure the solution to meet the requirements of individual user organisa-
tions, but these are far fewer than for On Premise ERP solutions. Although this
provides benefits in terms of cost and speed of solution build, it puts much
greater emphasis on the need to work with users to explain the rationale for,
and gaining their acceptance of, adopting a standardized solution.
Business Adoption Page 11

Adoption of a Cloud ERP solution
can be viewed as providing a “low
cost of entry” but it is important that
the Total Cost of Ownership for the
lifetime of the solution is under-
stood.
Key implications to consider include:
Cost Element Key Considerations
Software Cloud ERP solutions are sold typically on a subscription basis, involving a monthly fee based on the number of
users. As such, it represents a more attractive alternative to the “up front” purchase of On Premise ERP software
licences that may or may not be used.
However, the annual subscription fees are likely to be greater than the annual licence cost for an equivalent On
Premise ERP solution, and over time the total licence costs will converge.
There may also be costs for specialist Application Integration software to support the integration of data between the
On Premise and Cloud ERP solutions
Services Development Costs are likely to be lower than for an On Premise ERP solution, given that there is less opportunity
to configure the standard solution.
However, Business Adoption Costs are likely to be higher given the need to ensure that users are committed to
using a standard system that may require changes in working practices.
Hardware If the solution is operated on a public cloud, the costs of acquiring hardware to operate the solution will be re
placed by a subscription for using the public cloud service. As with software licence costs, consideration should be
given to the total cost involved throughout the lifetime of the solution.
It may also be necessary to upgrade or replace PCs to ensure that they are capable of operating the Cloud ERP
solution, and there may be a requirement to acquire additional devices, such as tablets, for users to access the
solution.
Resources New versions of many Cloud ERP solutions are released on a regular basis, and users have to adopt these. Support
resources need to be in place to ensure that users understand the changes made to the solution and the
implications that these have.
The costs of ensuring that data quality is maintained throughout the lifetime of the solution should also be taken
into account.
Cost management Page 12

Because of the potential benefits and the low cost of entry of ERP solutions,
there is a risk that user departments initiate projects and fail to put in place ef-
fective processes for monitoring, managing and reporting the status of the
project.
This includes implementing a project organization structure and a set of
governance meetings that ensure the flow of accurate and timely information
on Progress, Costs, Risks and Issues, and Solution Scope from members of the
project team to the Project Manager and then to key decision makers and
stakeholders.
Governance Page 13

The growth in adoption of Cloud ERP solutions is evidence of the potential
benefits that Cloud ERP solutions can provide.
However, it is important that organisations approach the project in the correct
way to confirm that a Cloud ERP solution is the right solution and, if so, to en-
sure that these benefits are realized and that the project failure is avoided.
Conclusions Page 14

Your 12 Month ERP Action Plan
We believe that it is important for organisations to be clear about the actions
they plan to take in response to the opportunities provided by the Next
Generation of ERP solutions. To help organisations to do this, we are offering to
develop a 12 Month ERP Action Plan at a Fixed Cost.
To do this, we will:
• Provide you with a questionnaire about the solutions used currently
to support your key business processes
• Analyse the responses to your questionnaire and meet with
key individuals in your organisation to discuss your responses in
more detail
• Develop and present a customised 12 Month ERP Action Plan
The Plan will cover the recommended Actions in one or more of the following
categories:
• Define/ Refine Strategy for Adopting Hybrid ERP
• Select Additional Software
• Implement Additional Software
• Enhance Existing Solutions
• Optimise Usage and Benefits of Existing Solutions
What next?
01372 824 770
enquiries@timelineconsulting.co.uk
Page 15

01372 824 770
enquiries@timelineconsulting.co.uk
For an impartial and objective view on your ERP investment please contact
one of our experienced consultants
About Timeline Consulting
Timeline Consulting is an independent provider of Enterprise Resource Planning (ERP)
Programme Management Consulting Services.
We provide a range of services that are intended to assist our clients in ensuring that
their ERP implementation programme is delivered to scope, schedule and budget.
We have provided these services to some of the UK’s largest organisations on
engagements ranging from a number of days to a number of years.
Our team of consultants has hands-on experience of leading and advising ERP
implementation programmes for some of the world’s largest users of ERP solutions

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