Benefits realisation in ERP projects

How can an organisation embarking on an ERP project ensure that the benefits they believe can be delivered are actually achieved? John Donagher, principal consultant at Lumenia discusses.

The reality in many cases is that business benefits are loosely identified at the start of the project in order to support the business case and then forgotten about. Clearly this approach means that the prospect of actually delivering those benefits is greatly compromised. Our experience in Lumenia suggests that benefits are much more likely to be achieved if we ensure that management take ownership for delivering those benefits.

The phrase “buy in” is often used in relation to benefits, meaning broad agreement with the concepts of any benefits that have been documented and verbal expressions of support. Ownership takes buy in to the next level, requiring people to take responsibility for the achievement of each benefit, to demonstrate their commitment to delivering that benefit at each stage in the ERP selection and implementation projects and, ultimately, to be accountable for the outcome.

Ideally the Benefits Realisation process should begin with the generation of a business case for the ERP project prior to system selection. The business case should include realistic and measurable benefits, with owners assigned to each benefit. Where possible, benefits should be measurable and linked to the business’s KPIs. It’s important to include intangible or qualitative benefits at this point as well – even if a benefit can’t be measured now it should still be recognised as part of what you’re trying to achieve.

One of the challenges in setting KPI targets or valuing potential savings is a natural reluctance for people to sign up to delivering something specific when they’re still unclear on what the system will actually be able to do. Usually these reservations can be overcome by being conservative with targets, setting target ranges (best/worst case) and committing to a process of on-going re-evaluation of the benefits throughout the selection and implementation projects.

One of the advantages of identifying benefits prior to system selection is that the business requirements relating to the realisation of quantified benefits can be used as one of the key drivers for the selection and implementation of any new ERP solution. The benefit owners also need to be involved at various stages in the implementation to ensure the project team are focusing on benefits delivery and that the identified benefits are still achievable; this is important as decisions relating to project scope or business processes could compromise the delivery of expected benefits. Even after go-live there should still be a focus on benefits, as some benefits may not accrue until the system goes live.