ERP Selection: Overstuffed like Thanksgiving?

Whenever the Thanksgiving holiday approaches in the US, I wonder whether Enterprise Resources Planning (ERP) selection teams are “overstuffed” with requirements. Like my tendency to over eat on the holiday, are there ERP teams attempting to digest a “laundry” list of requirements from their business users as the selection process proceeds? Are these lists beneficial or does the very “wish list” nature of many requirements detracts from the main criterion for success: picking the most appropriate application? I have responded to requests for proposals with 1,000 plus requirements; in some of these projects the selection tended to focus on all of the gaps at the expense of the overall business transformation desired.

Business users are asked for their requirements, but rarely for how critical new business goals or transformation will be achieved. When someone says, “the system must be able to explode a BOM and ship components on a sales order”, the requirements seems clear and concise. But, do we really need a bundle (a specially designated BOM for this purpose) or can the sales order have one item that generates additional line items at no cost or at the customer’s price? Is the requirement to have the customer order one item and have multiple ship or have the customer order one item and the warehouse creates a group (kit) of items as those items are picked and shipped as one? If the users are not careful and objective driven, the requirement may be defined based on how the existing system was designed and new process alternatives may be missed.

Back to overeating on the holiday scenario, why does this happen? For me, Thanksgiving is a once a year opportunity to have turkey, dressing and cranberry, so I tend to eat too much. Like Thanksgiving, many ERP selection teams are given one opportunity to raise requirements and list their needs for the new system. This may add to the urgency users feel to throw out all types of issues and needs rather than focus on priority requirements.

So how do we break the cycle of overloading on requirements while under the gun of a tight ERP selection time frame? One approach is to start with the samples of the beginning and end documents and reports for business processes. These reports and documents can be used to identify the key requirements and provide examples of key existing functionality and bring some otherwise generic needs to life. Let’s address a couple of examples:

•  Customer purchase order - are these channel partner orders where the end customer must be tracked? What data must flow from the customer PO all the way to the invoice, such as the PO and line number?
• Sales order confirmation – are these sent to the customer or only used internally to check accuracy? For a customer facing version, the content can identify data and process requirements, like the link to the customer’s PO number and version.
• Sales order packing slip – do some customers have specific requirements to aid in their receiving process such as serial number bar codes? Are there bundles or kits with the components shown or hidden?
• Sales order invoice – what is the frequency to issue? Does the customer have a centralized accounts payable function? Are there required customer account codes such as budget codes or general ledger accounts?

For each key document, a sample should be collected for each variation (e.g., different by customer or customer segment, etc.) to show the events and data driving variation. Customer and regulatory requirements are key here, but how variations are managed is as well. By taking samples or desired end results, the selection can focus on the processes necessary to achieve those goals.

Most companies have complexity that is important to manage and requirements help to assess whether each ERP solution will be a good fit. What must be added to the conversation and analysis are the perspectives on managing differently that transcend any one requirement to provide the visibility into the new process approaches necessary to drive change and enhanced business results.

About Kirk:

During his 30 year consulting career he has led many ERP selections and implementations, primarily in the manufacturing, distribution and high technology industries. During a recent two year respite from consulting, he was an executive leading a global supply chain organization using Microsoft Dynamics AX. As the global supply chain director, he appreciated the opportunity to “eat his own dog food” by running the business processes and technology he helped the company select and implement.

Kirk’s published works include this monthly blog, magazine articles, conference presentations, and the book Lean Distribution, which focuses on the relationship between ERP and lean operations in the supply chain.