In Search of Business Value: How To Achieve The Benefits of Erp Technology
In Search of Business Value: How To Achieve The Benefits of Erp Technology
In Search of Business Value: How To Achieve The Benefits of Erp Technology
Introduction
However, despite the benefit appeal of information technology, managers need to understand the
primary drivers of technology benefits realization and avoid the many obstacles to full benefit
achievement. Many of the drivers are related to employee and technology alignment with overall
strategy; an organization’s employees are ultimately the ones that will determine the benefits and
overall success of an implementation. By focusing on using ERP as a tool to achieve overall
business objectives, IT and corporate managers will be able to better maximize the potential
benefits of any particular system. A comprehensive benefits realization program is needed as a
part of any IT implementation to ensure that this maximization occurs.
This paper will discuss the obstacles and drivers of technology benefits realization and focus on
how managers can optimize the potential of information technology. In particular, this paper will
outline the obstacles to technology benefits realization and the “levers” managers can use to
realize IT benefits using their existing people, processes, and organizations. In addition, the
paper will outline specific tools and approaches for leveraging the possibilities of technology,
including performance measurement, organizational design, process improvement, training and
communications.
An understanding of the topics presented in this paper will ensure that managers understand the
organizational challenges of benefits realization, as well as how to leverage their people to
achieve the benefits promised by technologies. In addition, this paper will allow managers to
maximize the potential return on IT investments within their organizations. Only by
understanding these concepts and tools described above will managers be able to drive their
organizations to high performance and maximum operational efficiency.
There are a number of reasons that companies implement cutting-edge technologies as part of
their IT strategies. Cost pressures, organizational inefficiencies, and hype are all common
Given the millions of dollars that many companies spend on IT projects annually, these figures
can be disturbing to management and shareholders. To many CFOs and other managers, it is
difficult to fathom the thought of a $5 million to $40 million-plus IT investment without
knowing what the exact benefits payback will be. Many companies develop business cases to
justify IT investments to gain budgetary approval, but very rarely is any type of follow-up
analysis done to determine what the actual benefits of the implemented technologies are. While
many IT projects are positioned to deliver nonquantifiable strategic benefits, it is difficult to
justify current and future IT spending without a more disciplined approach to such investment
decisions. Clearly, there are a number of compelling reasons to incorporate a benefits realization
approach into any IT implementation project. This type of approach addresses the
above-mentioned difficulties in measuring and understanding the actual benefits of information
technology.
• Cultural Change
Based on the results of the cultural assessment, there may be areas that need
improvement to enable the large-scale changes required of the project. Given the
challenging nature of cultural change at many companies, it is recommended that
managers focus on the largest gaps rather than try to change each and every aspect of
culture that needs to be addressed.
• Communications
To ensure acceptance of the new technologies, it is important to effectively communicate
changes to end users. This should be done through a variety of channels and should be
targeted for each audience.
• End-User Training
Using the detailed process models developed above, it is important to then develop
end-user training that not only helps end users understand how to use the new
technologies, but also how to perform their new processes and job functions. Many
training programs underestimate the value of the latter.
• Benefits Measurement
Here is where the real value of benefits realization comes into play. As mentioned, most
companies do not measure actual benefits after implementation, but a comprehensive
benefits realization approach does. It is imperative to compare actual results to projected
departmental and individual results to identify any potential benefits gaps. It also enables
managers to understand what they are doing well and ensure that they continue to realize
the benefits in these areas. Unfortunately, no matter how well managers have
incorporated the subsequent activities (discussed above) into their project plans, there are
almost always areas where full benefits are not achieved initially.
Engineer
Phase Go-Live
Business Case/Corporate Metrics/Benchmarking
OCM/Cultural Assessment
Cultural Change and Communications
IBPM/BPR (Level 1-3)
Operational Metrics/Benchmarking
Org/job design planning
Detailed process design (Level 4-6)
Individual/Dept Metrics/Benchmkg
Org/job design implementation
End-user training
Reward design/imp
Benefits measurement
Root cause analysis of benefits gaps
Implementation of corrective action
Many of these activities are included to some degree as part of overall project plans. Benefits
realization in and of itself does not offer any groundbreaking activities that have never been done
before. The challenging aspect, however, is ensuring that all of these activities are implemented
effectively and in alignment with the technical aspects of the project. This is where benefits
realization provides real value — by ensuring that all of the activities are completed in an
integrated fashion and that post-implementation activities measure and ensure benefits are
actually realized. The activities prior to implementation are intended to establish a foundation for
benefits realization potential, while post-implementation activities are intended to measure and
ensure that the benefits come to fruition.
While benefits realization focuses on an integrated set of activities, it also entails a number of
tools that can be used to effectively perform the tasks:
• OCM Tools
In order to measure a company’s cultural gaps, it is helpful to conduct an Organizational
Culture Inventory (OCI), which measures the current and ideal culture in 12 different
areas. This tool helps identify the biggest gaps to enable these areas to be address as part
of the IT project. If the large gaps continue after go-live, there will be significant
end-user resistance to the associated changes.
Why should a company implement this type of benefits realization approach? This paper
identified some of the challenges organizations are facing in terms of measuring benefits, which
is one primary reason for including this type of approach as part of a project plan. However,
there are several other reasons that justify the need for these activities:
Clearly, there are a number of ways that an effective benefits realization approach can create
value for IT managers and companies in general.
Conclusion
Given the above discussion of current IT challenges, it is clear that there is a need to ensure that
companies more fully realize the potential benefits of technology. Unfortunately, investing
millions of dollars in new information technology without a compelling justification and
validation of this justification is not acceptable in today’s increasingly competitive environment.
By understanding and integrating a comprehensive benefits realization approach into IT
implementations, managers will ensure that their projects are rolled out successfully and that the
projects translate to wise investment decisions for the company.