The history of ERP is littered with organisations that have implemented an ERP solution, but been disappointed with the results, which include poor business outcomes, failure to realise benefits and unknown or uncaptured value.

Gartner’s research indicates that around 60 percent of organisations don’t measure application benefits realisation. Project satisfaction levels are similarly dire, with 26 percent not meeting expectations or “disappointing” and another 48 percent damned with the faint praise of being “somewhat successful.”

The problem is that most organisations fail to properly identify, then track the business outcomes and harvest the benefits from their ERP investments. Disciplined value measurement is often absent, started too late, not sustained or treated as something that IT or “the project” should take care of.

The focus of postmodern ERP is on improved business agility and flexibility. Those organisations that have successfully renovated their core ERP will achieve a 75 percent improvement in IT response agility and cost-to-value outcomes by the end of 2018, according to Gartner. Yet, benefits delivered by postmodern ERP strategies will only be improved with a far more disciplined approach to benefits realisation. This needs to be an integral part of the ERP program and project approach.

Achieving value from ERP investments
If you’re seeking to transform your ERP, consider the following:

1. Build benefits realisation by taking a holistic view
Adopting a postmodern ERP strategy increases complexity, which in turn complicates benefits realisation and potentially dilutes the focus on it, especially since a postmodern ERP strategy involves a more federated set of solutions.

For example, a company might implement a SaaS human capital management system, a core ERP system for financials and procurement and a specialist cloud solution for workforce planning. Each solution is treated as a separate project with its own business case. However, the business cases vary significantly in detail, rigor and scrutiny of ROI.

Take a consistent approach across the individual projects that form part of a postmodern ERP strategy, while recognising that there may be differences between them, for example, in the scope, duration, timing and nature of benefits.

Don’t assume that adopting cloud applications will magically provide value. It is still necessary to link business objectives to your postmodern ERP strategy to ensure that value is realised, whether you adopt on-premises or cloud applications.

Benefits realisation from ERP investments has more in common with a marathon than a sprint. Sustain focus on benefits realisation from the moment the starting gun sounds (that is, when work on the postmodern ERP strategy is initiated) through every mile of the subsequent program and project(s), and into the post-race recovery period.

2. Build and execute to a benefits framework
When a business case has been developed and approved, its development team may fall into the trap of thinking that this is “done” and can be filed away for revisiting long after the project has been completed or never. The approved business case must immediately feed into the benefits framework. This framework will provide fundamental support in the delivery of the business case — at least the value side of it.

Start by identifying business outcomes and strategic, tangible and intangible benefits through a robust business case process. Then you can institute a rigorous value measurement by building and executing to a framework, thereby achieving real business value.

3. Employ a strategic top-down, bottom-up and middle-out approach
While it is understandable that ERP initiatives are often launched because of an executive mandate, this leads to big problems with benefits realisation. When the time comes to build a business case, there is no insight into how to drill down from the top-down mandate to achieve benefits realisation within the business case.

To overcome this, employ a strategic top-down, detailed bottom-up and middle-out approach to benefits realisation for your postmodern ERP projects by building your business case, benefits framework, benefits model and measurement/tracking bottom up.

4. Translate intangible benefits into tangible value
All too often, intangible or soft benefits are dismissed as unimportant or “nice to have,” because they don’t translate into ROI — at least not directly. Little business focus is paid to them as a result, and this often leaves “money on the table.” Intangible benefits can translate into tangible benefits, however — it just takes more scrutiny to identify and capture them.

It’s important to convert intangible benefits into tangible benefits to improve net business value by following the “chain of consequences” of delivering the intangible benefit. In other words, derive the tangible benefits from intangible benefits. If you perceive none, consider if the intangible benefit really is a benefit or merely something aspirational or perceived. Accept that sometimes you can’t build a chain of consequences, and that intangible benefits are important because they help build executive and management buy-in.

ABOUT DENISE GANLY//

Denise Ganly is a research director at Gartner, covering ERP strategy, business cases, benefits realisation, selection and change management challenges facing organisations with enterprise-class applications. She is speaking about postmodern ERP at the upcoming Gartner Application Architecture, Development & Integration Summit in Sydney (24-25 July 2017).