You may have an outline strategy for ERP but the business case for change may not be fully understood. We can quickly determine the likely costs, benefits and strategic imperatives for an ERP project. Using our experience and market knowledge, along with a set of proprietary assessment tools, we can quickly determine the key factors to support an ERP investment decision and prepare a business case for ERP to seek Board approval.
Developing a Business Case for ERP
Developing a business case for ERP consists of two main elements, namely, identifying and documenting ERP benefits and budgeting for ERP.
Identifying and Documenting ERP Benefits
Identification and (where possible) quantification of benefits prior to selecting a new ERP solution is essential for two reasons:
- To support a solid business case that will secure funding
- To inform priorities and decision-making during the selection and implementation of the new ERP solution.
We will work with the senior managers in your organisation to identify the improvement opportunities enabled by ERP and, where possible, quantify these in financial terms. All quantified benefits will be realistic and achievable and will be signed off by the business as part of the process.
We will capture the benefits identified in a sophisticated benefits model that allows us to calculate multi-year return, linked to planned organisational growth.
Budgeting for ERP
It’s easy to underestimate the cost of business systems change. Business cases are often based on indicative figures provided by ERP vendors at the early stages of selection processes. Such costs are almost always understated and, in any case, form only part of the cost of change.
Lumenia takes a much more holistic and realistic view of project costs. Using the extensive experience of our consultants and our knowledge base of hundreds of ERP projects, we can generate a realistic indicative estimate of ERP costs which considers internal and external costs broken into operational and capital spend, so that multi-year financial analysis can be undertaken.
Download the Lumenia Budgeting for ERP Report from the Insights section of the website.
The Importance of an ERP Business Case
Most organisations will demand a solid business case for an investment of the scale of ERP. So the most fundamental reason for building a business case is to secure approval for the spend. Many business cases are based on loose, risk-based justification - for example that the current system will soon be unsupported and so a new solution is required. However valid this justification may be, failing to identify other business drivers and opportunities for improvement that can support a business case can mean that other potential benefits are not realised. It can also mean that general business buy-in to the project is not achieved and the project is seen as a simple technology refresh. Such assumptions are a recipe for costly project failure. So a robust and well thought out business case is key to ERP project success.
How we add value
- We deliver an expert, independent and realistic view of the potential benefits to your organisation of implementing a new ERP solution.
- We quantify those benefits in financial terms, providing a key input to your business case.
- We ensure business engagement with the proposed ERP project before it even starts through having managers sign-off on the benefits for which they are responsible.
- We provide a ready-made starting point for the requirements analysis and definition phase of the software selection project based on the benefits that have been identified.
- We provide a realistic and detailed estimate of likely ERP and other business application project costs. This includes both internal and external costs, and how the costs break down between recurring and capital expense.
- Our estimates are built using comparative analysis of projected costs versus other similar projects that have we have undertaken (client confidentiality is respected at all times). You benefit from our extensive project experience.
- Working with us means you won’t need to engage with software vendors too early and you can avoid the prospect of recurring software vendor sales calls about your potential project.
- A document containing a structured breakdown of projected project costs, both internal and external.
- A clear list of assumptions underlying the cost projections and of the risks associated with the project.
- A detailed statement of business benefits (quantifiable and intangible) that will result from the implementation of the proposed solution.
- All financially quantified benefits will be realistically achievable and approved by the business manager responsible.
- A business process change document summarising what will need to change in the current business processes to realise the benefits that have been quantified. This will form the starting point for the functional requirements documentation that will be developed as part of any future software selection process.