Timing is everything?
Having read through your documentation, reviewed the possibilities and sounded out colleagues and contacts then how does one convince a business under the pressure of an economic recession to do anything about upgrading their ERP system? This is the case if the system performance is deemed to be acceptable and therefore not seen as a priority.
The first point about timing is that a large number of businesses start their annual budgeting process in September. This major exercise will often include re-visiting the Business Plan as well, that is their longer term plans, often three, or more likely, five years into the future.
In my experience of planning in difficult trading conditions it is important to:
1) Get your point across succinctly and with impact.
2) Keep it simple and focused on the key issues and options.
In the absence of any detailed investigation and analysis into the options for the ERP systems in the company (maybe you have been to a briefing or seminar, at best), then I am going to suggest a possible way forward. Remember though the main objective is to get this issue on the table of the planning managers.
I would start with a common endpoint for all options:
Extended Support for R11/10 ends Q3 2013 (actually November)
At this point in time the business needs to be up and running on a new ERP platform – R12.n, Fusion Applications or a completely different system.
In order to accomplish this two main project workstreams need to have been completed – Technical and Functional - leading to an installed, user accepted, and functioning ERP system.
Next, allow six months for support and bug fixing/patching post go-live:
Go-live of new system must be end Q1 2013
This may look obvious to functional and technical folks but adequate resources need to be built into the business plans of the organisation.
Whilst the objective is to work backwards, at this point, I would consider making an estimate of how long it will take your organisation to authorise any decision, starting from the point that you have reached to date. Taking a ‘today’s’ date as the end of Q3 2009:
Authorisation of ‘New’ ERP in place by end of Q1 2010
Six months, may or may not, be a good estimate for your organisation. Once the decision is made, allow another 6 months, say, to recruit staff and build the project team etc.
Once the above are in place then we have the main planning assumption:
Implementation Project Time Span = 10 quarters = 30 months = 2.5 years.
That is: Project team in place (End Q3 2010) to Go-Live (End Q1 2013).
I would suggest that for most organisations, commercial or public, a R12 re-implementation project should be achievable within the above timescales.
Logically, a R12 upgrade project should be simpler and more easily attainable within the same timescales and decision times can be extended. A 15 month upgrade project would leave ample time to research and authorise the project. This could well be applicable to Not for Profit organisations which are risk-adverse, need more time to obtain budget approvals and for which the R12 enhancements may have less of a business case.
However, if the business decides to wait for Fusion Applications and not to be an early adopter. It will hold until the start of Q3 2010, before implementing this version. This scenario only allows nine months to transition from 11i to Fusion Applications.
Financially, it will be difficult to assign definitive costs to any of these options at this stage. However, the majority of the expenditure will be in 2011 and/or 2012, which means that any estimates will be in the business plan rather than next year’s budget. Previous upgrade costs could provide ballpark figures suitable for this purpose.
Notwithstanding this last point, do not under estimate any need to progress patching updates, data cleansing and improvements in the use of the existing systems. This should be included in the 2010 budget. Ideally, funding should be obtained for the information gathering and project planning phases that should be completed in 2009/2010. Backfilling existing staff to allow them to familiarise themselves with R12 would be money well spent. As would investing in staff with skill sets not normally available in the business.
Naturally, different scenarios can be looked at depending on your business capabilities and constraints to arrive at the final direction that the business wishes to take in the future.
In conclusion, it is important to have a strategy in place and therefore it is vital that technical, functional and financials teams are collaborating to evaluate all the options and their acceptability to the business.
The worst case scenario is to be left with insufficient time to plan and execute a controlled, successful transition to the new system.
I trust that you have found this article useful. If it stimulates the above collaboration then it will have achieved its purpose.
Any suggestions, experiences or feedback would be most welcome.
