Can ERP Projects generate a business case? Not only can they, but they must.
I treat the business case different than most. In the past the business case has been used to justify the project to management or the Board of Directors (BOD). It has been used to get the money.
In my view the business case becomes the project driver. It becomes the reason for change. It is the goal of the project. It is presented not just to the Board, but to the entire company. It becomes a goal not just for the BOD, but for all management. It becomes the foundation for the project. At every milestone we come back to the business case to re-confirm that the actions we are taking will result in attainment of the business case.
Development of the business case is not an easy process. But if we have followed the steps outlined in previous blogs, we have laid a foundation for examining the benefits of a new ERP system.
In the “visioning” workshops, we ask the question “how does this new process benefit the company?”. At this point management reviews the metrics for the “as is” process, reviews best practices their results, and establishes new metrics for the new business process. These metrics become the basis for the business case.
Each process owner will develop the business case for his/her business process.
Areas for consideration:
- Sales opportunity management – improve close rate, eliminate lost opportunities
- Product development – improve tome to benefit
- Customer service – improve accuracy, throughput, customer satisfaction, productivity
- Supply chain – improve supplier management, material spend, size of supply chain, supply chain velocity
- Manufacturing execution – improve productivity
- Quality – reduce cost of quality
- Finance – improve productivity, access to information, decision making, asset turns
Each of these areas has the potential for significant improvement. An ERP implementation should yield a three to four times return on investment.
When the business case is completed, the improved metrics should become part of the project charter and should become measurements that are tracked monthly by the management team as part of their objectives.