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Implementing an ERP Solution? Don't forget to revisit your
operating model!

Ask the majority of CIOs the appeal of implementing a global ERP solution and they'll list all the standard benefits: ability to replace disparate local systems; reduction in technology complexities; improved ability to implement global processes to streamline operations; and seamless integration of data across functions and regions. However, CIOs also know the horror stories related to these complex initiatives and are rightfully careful to figure out the proper risk mitigation strategy prior to kicking off such a project. One leading mitigation strategy involves Change Management, focused on helping the business community understand the rationale and impact of the new system, along with the associated communication and training. However, an area often overlooked is the Change Management aspect associated with the IT organization, which often requires the need to revisit the IT operating model, which can in itself be as daunting as implementing an ERP system.

At the forefront of the need to evaluate the operating model is governance. While most IT professionals understand that customizing an ERP solution is not a best practice, it is still very common with initial ERP launches. Most often, this is due to the relationship between the business and IT. In a traditional model with disparate local systems, the main responsibility of IT "business liaisons" is demand management. In this mode, the business users define how they want the systems to behave, and the requirements are passed along from the liaisons to developers to make changes. With a global ERP solution, these resources need to shift from being order takers to driving global processes, bringing regional leaders together to help define requirements and make decisions. The required skills may not be inherent in the existing IT staff, as there is a need to have personnel that fully understand the business processes and industry practices for a given function.

Adding to the challenge is that in many cases, business units are not aligned globally. This makes it difficult to change the way IT operates, as they are moving ahead of the business and may feel like they are losing alignment. However, this should not dissuade organizations from making the necessary change. To help facilitate the new model, the CIO will need to convince the regional leaders to appoint resources to help create and manage global processes. A practice used by many crafty CIOs is to recruit respected business managers into the IT organization, to help facilitate the development and management of global processes. Such a move is often needed to help build credibility and get business functions to adapt to new ways of working.

At the next level of the organization, the role of technical experts shift from understanding the internals of code to knowing options for configuring software packages and how modules interact. While developers can adapt to new programming languages (e.g. shifting from C++ to Java), the leap from coding to ERP subject matter expertise is not a simple task. CIOs will need to rethink the future of their technical resources, a task that may require eliminating valuable contributors. The sourcing model for these types of resources varies, with a split between hiring application subject matter experts or contracting with consultants on a project-by-project basis.

Perhaps the most visible need for a shift in skills with the user community comes at the lowest level of the organization. In companies with a high number of local systems, first level support is typically provided by onsite resources. The user community becomes used to initiating support requests informally, in many cases just walking up to the appropriate cubical to ask questions. This level of support is preferred by users, as they have immediate access to help with a known resource that speaks their native language. When shifting to a global ERP instance, it is very difficult to coordinate first level support in this manner. Most organizations chose to outsource this work, leaning on service providers that have the ability to take on support across the globe, using a diverse set of call centers to cover all required languages. If choosing to outsource, CIOs will need to decide whether to bundle other help desk functions such as desktop support or keep them separate.

Finally, as the new IT global operating model is established, processes and accompanying roles and responsibilities will need to be revisited. The organization must shift from locally defined processes to new ways of working which require communication and handoffs across the globe. These processes will need to be rolled out as part of the ERP launch, so that the organization understands how to handle requests, incidents, and basic user support. As it is typical that some shift to outsourcing will accompany an ERP implementation, CIOs will need to evaluate their ability to manage vendor relationships. Retained leaders will need to transition from managing internal resources to vendors, a move which requires a significant change in mindset and management styles.

Practice of:
  • Demand management
  • Custom development
  • Onsite support
  • Task management
  • Local processes
Shifts to:
  • Process governance
  • Deep expertise of packaged applications
  • Global help desk
  • Vendor management
  • Global processes

The evaluation and planning for change should be a parallel work stream with the technical aspects of an ERP implementation. Some changes will be necessary early in the project, for example hiring new business liaisons to focus on global processes as part of requirements definition. With the right adjustments to the way IT operates, the risk of disruption of a new system will be minimized.

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