Rethinking ERP Strategy for Uncertain Times Ahead

Corona pandemic has brought the global economy to a grinding halt and may even result in a widespread recession. ERP modernization, which recently resurfaced in the agenda of many organizations, will also need a revaluation. ERP system is a very high-value asset for any organization as it enables seamless, end-to-end integration across functions, and process standardization across geographies and business units.  Many organizations are either in the advanced stage of planning or have already undertaken ERP modernization by way of implementing Cloud ERP, microservices / API based architecture integrating many advanced technologies this year. In the time of disruption, the organization will be forced to look at their current investments, identify cost reduction options based on the severity and duration of the disruption, reprioritize discretionary projects with focus on short-term value realization.  Organizations should evaluate all options on multiple parameters to reach the best possible way of going forward.

Relook at the area of differentiation

Have a closer relook at what is the area of differentiation for your organization, and where you have a maximum gap, addressing them would bring substantial competitive advantage. Many a time a clean slate approach can be beneficial as you reprioritize your investments during the time of disruption.  A hard look at what is differentiator, level of customizations needed to achieve the differentiation, at what cost would go a long way in optimizing the overall approach.

Realign your short term goals with your long term vision

More often than not, you would encounter the fundamental question of whether to go for best of breed to achieve short term goals or align yourself with the overall vision to transform the entire business with modern architecture.  While realigning your short term goal, you should never lose sight of your overall vision and strategy and do not make any hasty decision to go for best of breed. You should be careful in aligning your short term goals keeping in mind competitive advantages you would gain by implementing full or a module of ERP, ROI you expect, time, and effort needed to execute.

Reprioritize projects that offer higher cost-saving opportunity

 Projects that offer significant cost reduction opportunities should be carefully evaluated against the projects that are meant to bring competitive differentiation. Cost reduction opportunity should also form an essential criterion for project selection in addition to factors such as competitive differentiation,   resource readiness, time to market, ROI. Quite often, there are significant cost savings opportunities in optimizing your existing ERP footprint by simplification of processes and retirement of cumbersome and potentially obsolete customizations.

Reevaluate your implementation roadmap

You need to reprioritize your implementation roadmap and adopt an agile approach to achieve near term objectives first.  There are several misconceptions about the suitability of Agile method for ERP Projects such as ERP is very complex and highly integrated, standardized software hence not suitable for agile delivery where user stories are developed and tested in sprints. In reality, Agile approach ensures faster realization of business benefits by way of greater involvement of user community, more accurate and timely feedback, shorter and multiple project sprints providing incremental benefits.

Economic disruption would result in the revaluation of the overall plan and reprioritization of projects. Adopting an agile approach, focusing on areas of competitive differentiation, reprioritizing projects based on cost reduction opportunity can be very beneficial for the organization in short as well as long term. This can be coupled with increasing in-sourcing of implementation by experienced in-house employees, which could be a win-win by reducing implementation cost while ensuring realistic requirement coverage and effective adoption.