Building the business case for ERP (Part 4)

In this article, we’ll finalise the business case process and look at ways that the business case can improve ERP project success.

We’ll also address the topic of project risk so that your decision-makers will know that this hasn’t been overlooked.

Step 7. Wrapping it up for presentation

Highlight the key themes in the Executive Overview

At this point your business case is filled with all kinds of information, and it will take some effort by the time-pressed decision-makers to identify the important reasons for selecting this particular investment. That’s why your job now is to identify and present the key themes or central ideas that make this investment stand out from other funding candidates.

In the business case, themes are the supporting narratives about how the enterprise goals will happen with this proposed ERP system.

If the business goal is “Increase our footprint in Africa” then a valid theme for the business case would be “Build a centrally accessible platform to support business expansion”.

Build the Recommendation to conclude the Executive Overview

You’ve done all the foundation work, now wrap it up neatly and deliver it. Don’t leave it to the decision-makers to “connect the dots” about the proposal.

Your recommendation will include your findings from:

  • Financial metrics
  • Intangible benefits
  • Risk assessment (see below)
  • Sensitivity analysis (how sensitive the business case is to changes in assumptions and input data)

Your recommendation should be concise (not more than 1 paragraph) and:

  1. Make the recommendation
  2. Specify a time frame for decision-making
  3. Summarise the high-level financial metrics
  4. Express the proposed outcome

Example:

CompanyX (Pty) Ltd should implement Sage X3 without delay. It has a predicted IRR of 109%, an NPV in excess of R2.9m, ROI of 195% and a Payback Period of 14 months – all better metrics than CompanyX’s hurdle rates. Intangible advantages include improving CompanyX’s competitiveness by enabling support for the Internet of Things projects that are currently being evaluated, as well as new revenue generation capabilities that will be enabled by a higher level of customer insight.

How your business case drives ERP project success

29% of IT projects came in on time and on (or under) budget with all features as originally specified. The other 71% were classified as failures or challenged. – Standish Group research 2015

The business case is the Executive Sponsor’s most valuable resource

According to numerous studies, the single greatest predictor of project success is the involvement of a committed and active Executive Sponsor. There are several reasons:

  • The sponsor makes sure that the project’s goals are aligned with the company’s strategy
  • The sponsor enlists support and overcomes resistance from other executives
  • The sponsor provides ongoing direction as the effort unfolds
  • The sponsor overcomes the “decision latency” that stalls or delays progress

Unlike the project leader, who focuses on day-to-day execution, the Executive Sponsor’s role is much more strategic. This person focuses on creating conditions for success, instead of tactical implementation.

When the original sponsor becomes distracted with other tasks or is replaced by another manager who will need to understand the original goals of the project, the business case should be the first point of reference.

Also, the project team’s “high” during the early stages typically falls as challenges are encountered. Obstacles, schedule slippages, and unplanned overtime drain energy. The Executive Sponsor can keep the team motivated by emphasising their important role in making the business payoffs a reality.

The business case addresses concerns regarding project risk

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As we have seen, IT projects are famously prone to failure, and this will almost certainly be on the minds of the executive decision-makers. The fact that your existing ERP system is regarded as mission-critical will only add to those concerns.

You can ease their concerns by proactively addressing the main areas of IT project risk. This should be done in its own sub-section in the Executive Overview (don’t be tempted to bury it elsewhere).

Example of a business case risk assessment:

The 7 areas of systemic project risk that have been evaluated (with our findings) are:

  • Business requirements – the business requirements are known
  • Design skills – we have the necessary skills to design the solution
  • Development skills – we have the necessary skills to develop and implement the solution
  • Technical risk – we are dealing with known, existing technologies
  • Vendor risk – we have a highly referenceable vendor that has the skills, resources and experience we require
  • Timescale risk – the project timescales are considered reasonable to ensure safe implementation
  • Failure risk – the business consequence of this project failing is that the intended savings and process improvements will not be achieved, and the targeted operations will revert to their original state

It is our considered opinion that the levels of these risks are acceptable and, with the mechanisms that will be put in place to mitigate project failure, we are confident of a successful outcome to this project.

Conclusion

The new capabilities that a modern ERP system can support – such as Cloud, AI and IoT – will add considerable value to your business, and, more importantly, provide future sources of competitive advantage that are sustainable.

Upgrading or replacing your current ERP system is a major investment in resources and money, but a solid business case can help your decision-makers recognise the value of the project and approve your proposal.

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2019-10-21T07:16:14+00:00