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ERP Readiness Audit

ERP Readiness Audit is the process used to find out the readiness level of the organization to execute the ERP project initiative and identify specific areas to focus on in its preparation process.

ERP Readiness Audit is the ideal first step for Organization to take in its ERP Project Initiative. This would help Organization to clearly understand its current Readiness level and have an action plan to be fully ready to implement the ERP Project successfully. The key business users should be involved in this audit phase, so that they assume ownership of the ERP project initiative.

The purpose of the Readiness Audit is to

  • Evaluate the level of overall preparedness of the organization to carry out a successful ERP implementation.
  • Assess effectively the readiness of the client employees to adapt a new ERP system
  • Develop employee buy-in to the project Readiness Audit to gauge how prepared the organization is, has to be done with a minimum target score, below which the ERP implementation has to be postponed. The organization should then first concentrate on improving the business process, systems and procedures before initiating the ERP       Implementation. Many ERP implementations fail not because of any technical defect in the software but because the organization is not ready for it yet.

ERP Readiness Audit – Project Methodology

ERP Goal Setting & Total Cost of Ownership (TCO)

ERP Goal Setting

ERP Goal Setting is one of the first tasks to be done before the start of the ERP Project Implementation. This would help organization to set its goals and proper budget for the ERP project implementation.

ERP goals are to be drafted to ensure that there is a clear definition and understanding of the business value that the ERP project is intended to deliver. These benchmarks become the baseline metric for all decisions made regarding the design, execution of business processes and implementation of the ERP solution. With clear goals, the chances for a smooth implementation will increase and return on an ERP investment will be optimized. For the success of any ERP implementation the company should be aware of the business objectives.

ERP project road map should be defined with the clear functional & technical business requirements to meet the present & future objectives of the organization. These requirements should be prioritized in terms of Mandatory Requirement & Wish List, so that the focus is on the mandatory requirements and we keep the Wish List away from the ERP project implementation scope. ERP project goals for management, business & IT would be Strategic, Operational & tactical. These goals should be Identifiable, manageable and tangible, so that it is measurable at the end of the ERP project implementation.

ERP Total Cost of Ownership (TCO)

Total Cost of Ownership (TCO) is the total cost (initial & recurring) of Software, Services, Infrastructure & Resource, Miscellaneous & other related factors for the successful ERP project implementation. TCO has to strike the right balance between cost-efficiency and the fulfilment of business requirements.

Business alignment of ERP solution is key for TCO. Lower TCO and higher value are achieved by considering the complete life cycle of ERP solution & aligning the ERP solution’s design and ongoing costs with key business metrics. Making IT costs clear to the business users upfront, facilitate better decisions about allocating resource, reducing total cost, and ensuring better alignment of IT investment and business value. Globally it is proven that organizations with ERP Center of Excellence (COE) drive better TCO numbers than those without a COE. COE help organizations leverage, build, retain in-house talent & core knowledge for deploying critical skills across the business and limit dependency on external resources post ERP Implementation project. Other COE benefits include greater consistency; maximum reuse of solution investments; increased opportunities to share lessons learned across organization; simpler maintenance of data & process standards; increased ability to recognize & correct IT solution challenges.

Simplified, standardized, unambiguous solutions are the best and lowest-cost way to support the organization’s business objectives. Solution complexity is defined as the increasing number of components or the degree of modification / customization applied to a standard ERP solution. Solution complexity, often cited as the greatest cost driver, increases directly the TCO.

Key factors influencing TCO

  1. Company Size & Structure
  2. Profile & Number of ERP Users
  3. Depth & Breadth of ERP functionality to be deployed
  4. Business benefits to gain from ERP deployment

ERP Goal Setting & TCO – Project Methodology

ERP Business Process Re-engineering (BPR) & Request for Proposal (RFP)

Business Process Reengineering

Business Process Reengineering (BPR) is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed. BPR is clearly for organizations, which need a ten-fold increase and not for say a 10% increase. BPR focuses on processes and not on tasks, jobs or people. It endeavours to redesign the strategic and value added processes that transcend organizational boundaries. Organization should have process maps to give a picture of how work flows through the company. It is the critical link that the reengineering team can apply to better understand and significantly improve the business processes and bottom-line performance.

BPR quantifying issues:

  • Define which business processes must change
  • Define who collects the BPR metrics
  • Define which ERP processes must change
  • Analyze when BPR monitoring must be done

BPR Benefits:

  • Fuel business improvement
  • Align of ERP & business processes
  • Design inter-linking business processes

BPR Limitations:

  • Extend project tenure
  • Increase ERP project effort & cost
  • Mostly it is technology oriented

 

Business Process Re-engineering – Project Methodology

Request for Proposal

Request for proposal (RFP) is involved at an early stage in ERP procurement process. ERP Vendors / service providers are called for, often through a bidding process, to submit their proposals. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly up front. The RFP would direct the structure and format for the ERP vendor to respond. Effective RFPs reflect the strategy and short/long-term business objectives, providing detailed insight on who is the right vendor for the given requirements. RFP drives the organization to specify what it requires, to ensure that vendors respond factually to the identified requirements. RFP generally follow a structured evaluation & selection procedure, so that the organization can impartially decide on the right ERP vendor.

ERP Product / Vendor Evaluation & Selection

VELCOM leads clients through a comprehensive ERP product / vendor evaluation & selection to ensure that ERP product & vendor are aligned with the organization’s specific business objectives. ERP Product & Vendor Evaluation & Selection would ensure that the Organizations decide on the right Product & Vendor to realize the complete benefits from their ERP Investment. Good care taken during the evaluation & selection of the right ERP product & implementation vendor, ensures brighter chances of the ERP project implementation success,

ERP selection is quite different from purchasing off-the-shelf software e.g. accounting, payroll etc. Lesser skill / effort is sufficient for evaluating such software as it has pretty standard practices and it does not impact the business as a whole. Greater the care taken during evaluation & selection of ERP product & vendor, lesser the time for implementation & greater the chances of success. Investment required for ERP project is significant and an inappropriate selection of ERP & vendor could prove to be dreadful.

Hundreds of ERP companies (Vendor, system integrator, consultant etc.,) offer various solutions range from legacy systems to only point solutions (and still calling them ERP!) with countless number of unique attributes, which needs to be sorted through. Given this scenario,

  • How can an organization make an intelligent decision on whom to trust with this mission critical system?
  • How to sort out the ERP products / vendors with expertise in customer specific business industry from the vendors trying to force-fit their ERP applications into customer business model?

This is one of the most critical & expensive decisions for the organization to make and it will take lot of hard work & commitment. For organizations that don’t have either time or expertise or both, necessary to make this critical decision, should employ the right ERP consultant to reduce the risk & increase the project success probability. This will enable organization to focus on what it can do best and leave this critical responsibility to the expert. It can have the peace of mind of knowing it does not make the common first timer mistakes.

ERP Product / Vendor Evaluation & Selection – Project Methodology

ERP PRODUCT / VENDOR — EVALUATION & SELECTION COMPONENTS

ERP Program Management

ERP Program Management would facilitate the Client & Implementation Vendor teams work together and ensure that the ERP Project Implementation is completed within the agreed timelines and budget.

A comprehensive program management practice would ensure that all business requirements (functional & technical) are realized through successful ERP implementation. Poor project planning is one of the top challenges encountered during ERP project execution. The methodologies used in project planning and the way they are used go a long way in determining the success of the project.

Effective program management supported by People, Process, System etc., helps achieve integration of the two key elements of Successful ERP project implementation:

  • The delivery of the technical, content-specific elements of the ERP Software
  • The delivery of the functional business requirements of the ERP System

ERP Implementation is never an easy or simple initiative but most of the pitfalls can be avoided by putting in place a strong program management structure.

Organizations carry the misconception that vendor project methodologies fully address the program management complexity only to find later that significant issues & challenges in delivering the ERP initiative still exist. In order to ensure a successful ERP implementation, an approach that integrates vendor project methodology with the additional business activities required to successfully deliver an ERP system has to be in place.

The program management structure must also ensure that the business transformation activities, necessary to enable a functioning business platform, once the ERP goes live are planned.

Few of the key business transformation activities related to ERP Project are:

  • Business process analysis (AS-IS & TO-BE Processes)
  • Design requirements for customizing “out of the box” functionality to “must have” current processes
  • Integration requirements for necessary legacy systems
  • Resource requirements to execute the change
  • Understanding the scale of data conversions and related data cleansing
  • Coordination of business resources for testing and validation of functionality
  • Training users of the system
  • Determining organizational adequacy
  • Communicating change to stakeholders

ERP PROGRAM MANAGEMENT COMPONENTS

ERP Post Implementation Audit

ERP Post-Implementation Audit (PIA) is done after completion of the ERP Implementation Project. This would help organization to realize the complete benefits from its ERP Investment.

PIA purpose is to evaluate whether project objectives were met, to determine how effectively the project was run, to learn lessons for the future, and to ensure that the organization gets maximum possible benefit from the project. A forward-looking audit can discover many tips and strategies for improvement. PIA should be conducted after the ERP system has reached a relative stage of maturity, and once business process change caused by the ERP truly takes effect on the organization. PIA would assist organization to effect needed changes in organizational plans & processes and realize potential operational & strategic benefits.

In case of an initial ERP project failure, an important role of PIA is to redefine and/or limit the scope of the ERP project, and promote learning & system acceptance through user training and stakeholder commitment to the ERP project. Weaknesses identified during the audit, due to lack of controls, poor implementation processes, non-mitigation of associated risks to acceptable levels, should be brought to the attention of the concerned responsible for corrective action.

Follow up activity after PIA can be categorized into following stages:

  • Steps to overcome productivity downside by redefining jobs / roles, establishing new practices, fine-tuning ERP system, and owning of the new information series created by ERP.
  • ERP functionality enhancements involve skills development, structural changes, process integration and add-ons
  • Involve business transformation, where the synergies of people, processes, and technology can reach their peak.
  • Audit outcomes would then be used to resolve problems in these stages and push the organization upwards to realize additional system benefits.

ERP Post Implementation Audit – Project Methodology

ERP POST IMPLEMENTATION AUDIT COMPONENTS

ERP IT Infrastructure Audit

IT Infrastructure Audit (IIA) would help organizations to understand its current IT Environment, have an action plan to realize the optimal benefits from its IT Infrastructure Investments.

IIA is about safeguarding assets, maintaining data integrity and operating effectively to achieve the organization’s goals or objectives. IT Infrastructure Audit helps to

  • Determine controls in the IT Infrastructure
  • Understand & evaluate each control
  • Assess compliance
  • Assess controls to reduce / mitigate risks
  • Validate server configuration for efficiency & security
  • Gather complete hardware asset list & determine risks
  • Check hardware specific productivity drains
  • Identify cause for frequent problems
  • Ensure backup systems are adequate & monitored regularly

IT Infrastructure Audit objectives are:

  • Continuity (consistent system reliability & availability – backup & ability to recover)
  • Management & maintenance (additions, change procedure, upgrade & documentation)
  • Security (appropriate physical & logical access)
  • Provide reasonable assurance that control objectives are being met
  • Substantiate risks due to control weaknesses
  • Advise required corrective measures

Documentation of policies, procedures, practices & org structures designed to provide reasonable assurance that business objectives would be achieved & undesired events will be prevented or detected and corrected.

ERP IT Infrastructure Audit – Project Methodology

IT Infrastructure Audit scope includes review of the existing IT environment including Gap analysis & Recommendations pertaining to:

Submit Action Plan to optimize the IT Infrastructure of organization from the perspective of ERP Project Implementation.

ERP Talent Sourcing Practice

Organizations need right people for their IT operations (CIO, IT Head, EDP etc.,), Business operations (Finance, Manufacturing, Sales, Purchase etc.,) to manage their Enterprise Business Software (ERP / SCM / CRM / BI) Project Initiatives.

ERP Service Providers need right ERP consultants with skills like — Domain Expertise; Product Knowledge & Certifications; Implementation Experience; Cultural Fitment; Relationship Management, Overseas Exposure etc.,

VELCOM Talent Sourcing practice helps customers with right talent at the least time & effort for such requirements.

ERP Talent Sourcing Practice – Services

Permanent Recruitment Services:

  • Resource Requirement Planning
  • Profile Finalization: Drafting the right job description, right roles & responsibilities to the particular profile
  • First Level Screening: Initial screening to ensure that the resource overall fit to the profile & budget

Interim CIO Services – For Enterprise Business Software(ERP / SCM / CRM / BI)Project Initiatives:

  • Strategic IT Road Map Planning
  • Day-to-day Project Management
  • Short term or Part-time IT expertise to assist customers in meeting their business objectives
  • Assist / Transit to fill the gap in case of planned or unplanned departure of the customer IT Resources

ERP Talent Sourcing Practice

Organizations need right people for their IT operations (CIO, IT Head, EDP etc.,), Business operations (Finance, Manufacturing, Sales, Purchase etc.,) to manage their Enterprise Business Software (ERP / SCM / CRM / BI) Project Initiatives.

ERP Service Providers need right ERP consultants with skills like — Domain Expertise; Product Knowledge & Certifications; Implementation Experience; Cultural Fitment; Relationship Management, Overseas Exposure etc.,

VELCOM Talent Sourcing practice helps customers with right talent at the least time & effort for such requirements.

ERP Talent Sourcing Practice – Services

Permanent Recruitment Services:

  • Resource Requirement Planning
  • Profile Finalization: Drafting the right job description, right roles & responsibilities to the particular profile
  • First Level Screening: Initial screening to ensure that the resource overall fit to the profile & budget

Interim CIO Services – For Enterprise Business Software(ERP / SCM / CRM / BI)Project Initiatives:

  • Strategic IT Road Map Planning
  • Day-to-day Project Management
  • Short term or Part-time IT expertise to assist customers in meeting their business objectives
  • Assist / Transit to fill the gap in case of planned or unplanned departure of the customer IT Resources