Go Lean: Minimize customizations and reduce overall TCO in Oracle ERP implementation (Part 3)
There are many ways to achieve Leaner ERP implementation, and I have discussed some of the strategic levers for it in my previous blogs Go Lean (Part 2) and Go Lean (Part 1) like senior management and executive sponsorship, robust decision making framework, effective change management approach, upfront planning for middleware and reporting platforms, solution design workshops, selection of appropriate edge products and leveraging localizations. However, there are many tactical and operational levers also available for enterprises to adopt, which are primarily part of implementation execution cycle. I am discussing here some of these levers and best practices to minimize customizations:
- Boot Camp Trainings - Before initiating the solution design phase, organizations must seriously consider to conduct the boot camp trainings on chosen ERP to their key super users, business analysts and implementation core team, facilitated by System Integrator (SI). The intent for boot camps must be training to the team for vanilla features and functionalities of ERP relevant to their industry processes. This will enable them to bridge many gaps and requirements through seeded ERP functionality, and increase the overall fitment of the package application, leading towards reduced customizations.
- Harmonization of Requirements - If organizations are implementing the solution for multiple business units and/or geographies, all the global as well as local requirements must be captured and harmonized in early stage of the project from all in-scope business units and geographies. It enables the design to be standardized and common. If this is not done effectively, it causes major scope creeps during later phases of the project, and organization ends up with plethora of change requets and new customizations to meet local requirements. Organization must also avoid any silo approach for each business unit, location or department, and capture business unit specific or mandatory statuary and legal requirements in the initial phase of the project itself
- Design of Foundation Elements - The design and key attributes for foundation elements of an Oracle ERP must be finalized during initial global solution design phase based on harmonized requirements and future needs of the organization. Some examples of foundation elements are Ledger Architecture, Legal Entities, Chart of Accounts, Calendars, Multi-Orgs Structure, Item Segments, Costing Method, BOM Structure, Inventory Orgs, Matching options and Document Sequences etc. It helps to avoid any unnecessary customization or rework due to changes in foundation elements during and after the implementation. Many organizations spend huge effort and cost to tweak these foundation elements after the implementation like COA restructuring exercise
- Personalization instead of customization - Project team can choose to build Personalization instead of customizing ERP directly depending upon the magnitude and complexity of the requirement. For simple requirements like hiding a field on a screen, turning on a validation, defaulting values in a form etc., the business super users can extend the application. ERP providers offer Personalization capabilities, which eliminate the need of technical development. This approach can be many times more cost effective, less vulnerable to future upgrades and easier to maintain and support
- Tighter controls through KPIs and ROI framework - Organizations must define a detailed business case for implementation program including quantitative business benefits and KPIs. The project KPI measures must be at the execution level, and not at the business performance level. Organization must also link these KPIs to the approval process guidelines for PMO with a conservative budget approach for any proposed customization. The detailed ROI framework, approval process and hierarchy must be defined in advance to perform detailed due-diligence for the need of customization. The ROI framework should include gap justification through ROI calculation based on pre-defined KPIs and cost for development and maintenance effort. This ROI framework and budget constraints approach help organization to keep customization in control
- Selection of Third Party Tools - There are many areas in ERP where organizations have to take call between build versus buy to select specific solution on top of ERP platform. E.g., Sales tax data repository, Invoice Printing solution, planning tools, collaboration suite, Business Rule Management tool, Archive and Purging solution, Data Masking solutions, monitoring tools and so on. The organizations must evaluate all the requirements including priority, costing of tool, fitment to ERP, future upgrade support from vendors, maintenance cost etc. against the capabilities provided by vendors, ERP available options versus customization cost. This provides ample opportunities for organization to reduce overall TCO
Beyond what I stated above, there are other operational levers available for organization to reduce implementation cost, which also leads to reduced TCO. Some examples are like leveraging pre-built solutions and accelerators from SI partner, Usage of reusable custom components e.g. data migration scripts during roll-outs, templates driven approach during various phases of implementation etc.
Overall with the usage of right set of Strategic, Tactical and Operational levers, organizations can go lean on customizations. Applicability of these levers is heavily dependent on a client situations and business/IT context of the implementation program. In my professional experience as program manager of various large implementation programs, I have encountered many situations where despite using all these levers, eventually PMO had to approve major customizations, however I feel confident to state that the project team did everything to avoid the same using the levers stated above. Overall the right decision is a decision towards reducing the overall TCO for the organization, whether it is through customizations or without it. (Though good majority of the times, it is by going through without customizations) This is specifically important for SMEs (Small and Medium Enterprises) who cannot afford the high front end as well as maintenance cost associated with customizations.
I hope my blogs on this subject will help you to adopt Leaner ERP. If you'd like to share your viewpoints/experiences on this topic, please write back through the comments section.