Previously, many Enterprise Resource Planning (ERP) solutions were customized for individual clients, however over the years this has shifted towards the development of standardized business processes that fits the needs of many verticals and/or industrial applications. But how easy is it to implement these standardized processes and what does it take to fit your business into a standardized ERP platform?

 

What is Fit-to-Standard?

The need for companies implementing ERP systems have been largely identified as similar across various industries. This similarity has enabled ERP providers to develop standardized processes per industry that are pre-configured within the system. These standardized processes serve as a foundational baseline when constructing the ERP setup for a company, where discussions focus more on “Do the standard solution fit, if not what adaptation of the business way of working is needed?”, rather than designing a customized process work-flow in the system from scratch.

 

The need for Fit-to-Standard ERP systems:

 

The reasons companies frequently opt for standardized processes during ERP implementation can vary significantly among organizations. However, several factors are commonly observed across the market.

• Cost: One significant factor influencing the choice of standardized processes is cost, and more precisely, the total cost of ownership (TCO). By developing a standardized ERP system configuration for a specific market, ERP suppliers can avoid the need to construct unique architectural frameworks for each client. Moreover, employing an established standard process for discussions enhances efficiency, as it simplifies the task of identifying necessary changes compared to developing requirements from the ground up with regards to their architectural feasibility. Consequently, this methodology saves both time and cost for the supplier, which reflects positively on the price towards its customers.
• Best practice: Many organizations that opt to implement ERP systems and standardize their processes do so based on the assumption that the industry-wide requirements used as a foundation for the ERP frameworks are not only sufficient but optimal. This creates a form of trust for the organization that the preconstructed setup in the ERP system, often for business support processes, is best practice. Consequently, rather than adapting the ERP system to align with current business processes, the organizations reorganize their operations to fit the standardized business processes as structured in the ERP system.
• Continuous improvements: ERP systems continuously develop over time with improved functionality and addition of new features, leading to most providers offering regular system updates. The timing and frequency of these updates can vary depending on the specific ERP system, typically occurring annually or biannually. By adhering closely to standardized processes, system upgrades can be implemented with relative ease. However, substantial modifications to the system, such as aligning it with current existing business practices and deviating from standard configurations, may hinder the organization’s ability to run updates effectively. As a result, many installations of previous generation ERPs operates without support at high risk and frequent issues. This technical debt produces unfavorable impacts across the organization. By following established standards, one significantly reduces the likelihood of this issue.

The implementation process of standard ERP solutions

The process of implementing an ERP standard system will inevitably vary depending on the organization. However, there are several common steps that are specific for the standardized process that are typically observed across most ERP standard implementations. Below is a high-level summary of these steps;

• Walkthrough of standardized process: A common practice during an ERP implementation is for the implementation partner to conduct a walkthrough of the preconfigured standardized processes within the system. This is typically executed through workshops that include the implementation partner, system architects, and business representatives from the organization.
• Capturing business requirements: Although the standard ERP configuration is generally considered best practice, it must still be tailored to meet the specific needs of the organization. Consequently, the standard systems present configuration options, and the focus is to select and detail an option.
  To achieve an optimal configuration design, it is essential to invest in educating the business representatives in the new system. This will enable them to critically assess existing business processes and collaborate with the implementation partner to identify opportunities for improvement.
• Adaptation of system: ERP architects focus on making the required adjustments to the preconfigured ERP system based on the identified business requirements. These changes ensure that the system is properly aligned with the organization’s needs while maintaining the integrity of the standardized process.

 

The best-practices for success:

An ERP implementation is a challenging project for most companies. The ideal prerequisites with clear requirements, sufficient funding, top management support, capable implementation partner, and availability of experienced business resources are rarely met. To balance priorities and align with the given situation, and yet ensure an efficient program when building several new teams a common understanding for selected implementation method is crucial. Both system vendors and implementation partners offers implementation methods and these methodologies offer a structured framework, outlining key activities to be carried out by the business. However, several additional factors are critical to the success of the ERP standard implementation. Below, we highlight some of these key factors.

Essentials for ERP success

• Set a target state: It is crucial to establish a clear target state for the implementation. This clarity empowers business professionals to make informed decisions, as they will have a clear understanding of what way the organization is headed. A common target state and guideline for ERP standard implementations is for organizations to adhere to standards to the greatest extent possible. Exceptions to this rule should typically only be made due to legal requirements. This approach will reduce the need for extensive discussions about “who’s way of working” one should follow within the organization and creates a just change for all parties involved.
• Defining a roadmap: ERP implementations are often regarded as the most significant IT transformations an organization will undertake, and due to their scale, they are typically executed in multiple releases. To ensure successful implementation it is crucial to approach the implementation in a well-structured manner, carefully considering how to set up the scope for each release. This involves leveraging the standardized processes of the ERP system as a foundation while also considering the company’s unique characteristics, such as size, structure, and geographics. In addition, the existing landscape is a crucial element, and it is essential to comprehend how it can be effectively replaced.
  One intermediate approach is to structure the roadmap based on capabilities. By mapping the capabilities utilized across different departments within the organization, a clear pattern and logical approach for the ERP implementation will emerge. The goal of this approach is to prioritize key capabilities during the initial implementation. Still, one must consider constraints when replacing existing solutions. This step-by-step approach is advantageous from a structural perspective, as it facilitates smoother integration of process components and ensures system coherence, ultimately optimizing operational efficiency as the implementation progresses.
• Scope control: During a long implementation program business develops and new requirements and priorities evolve. Consequently, it is essential to regularly review and adjust the scope and roadmap to accommodate for these changes. The detailed plan for each release typically adheres to the predefined implementation process, with each activity dependent on the successful completion of the previous one. Consequently, the waterfall planning approach is often utilized for managing detailed activities during ERP implementations. However, an agile approach should be applied at a higher level, primarily for managing the scope of each release and overall roadmap, to ensure that business needs are continuously addressed and met throughout the implementation process.
  While changes to the scope are inevitable and to a certain extent should be encouraged, it is concerning when the scope not only changes but expands significantly.
  A recurring challenge that organizations often encounter when implementing ERP standard, frequently resulting in scope expansion, is the accurate identification of authentic business requirements. This difficulty often stems from business representatives challenges in distinguishing between descriptions of existing workflows and true requirements, particularly during the early stages of implementation. This is often derived from their unfamiliarity of the ERP system and its possibilities. To mitigate this risk, it is beneficial to establish structured forums that facilitate discussions between business representatives and the ERP architects. This collaborative environment facilitates the integration of diverse competencies, drawing from both business expertise and in-depth ERP knowledge, thereby ensuring the development of a good solution.
  When implementing an ERP standard, organizations will adopt a single system to cover a broad spectrum of business processes, contrasting with the typical current situation where multiple systems are in use. As a result, any modifications made throughout the standard process will likely trigger additional adjustments. It is therefore important to continuously reassess and ensure that all aspects of the process are thoroughly accounted for during the business requirements gathering phase.
• Minimum Viable Product – MVP: Even when requirements are articulated effectively, the sheer number of them can become overwhelming, leading to the critical issue of prioritization. To address this, the concept of a Minimum Viable Product (MVP) approach is commonly advocated. This entails that organizations should prioritize and protect their most valuable requirements throughout the implementation process. The MVP concept can therefore serve as a strategic framework, offering essential guidance and support in the decision-making process, particularly when it is necessary to prioritize and reduce the number of requirements.

Authors

Ida Svensson, Johan Saks and Mattias Lindeborg