Episode one: Getting your ERP business case right

For many organisations, an Enterprise Resource Planning (ERP) system is the backbone of their business, enabling key processes like finance, manufacturing, and logistics. In today’s fast-paced landscape, leaders aim to enhance their ERP solutions by migrating to modern, often cloud-based, technologies to simplify and automate processes, improve data accuracy, and support strategic decision-making.

However, an ERP transformation presents both opportunities and risks. A crucial initial step is crafting a compelling business case, which serves as the contract between the project delivery team and the business, outlining the transformation's cornerstones and outcomes. The business case presents the overall return on investment, summarising costs, benefits and risks of the ERP transformation.

In our work with numerous organisations, we've found that those emphasising the following five pillars as part of their business case are more successful in their ERP journey:

Implementing a new ERP solution can sometimes seem like the only way off a 'burning platform.' Yet, risk mitigation is just one potential outcome of a transformation. The business case must clearly articulate desired outcomes, such as process simplification and standardisation, and how these align with the organisation's strategy. Stakeholder buy-in and a unified understanding of the need for change is essential. Projects often fail when there are multiple, conflicting reasons for the change, indicating lack of a shared 'north star.'

Strong executive sponsorship is vital after defining 'the why.' Sponsors should be invested in the project outcome and have the organisational capital to unify teams, navigate challenges, and influence decisions. This role is active, advocating for change and guiding the organisation on its journey. Successful sponsors foster collaboration, enable governance, and navigate stakeholder networks, often including consultations with the Board and investors.

A detailed analysis of costs and both financial and non-financial benefits is a key business case element. This helps stakeholders understand the investment's value and make informed decisions.

Good business cases include the full cost for the implementation including internal and external labour, licensing and support. It should also consider the operating costs post go-live.

Benefits are often estimated broadly rather than based on scope. A detailed understanding at the process level can guide decision-making and inevitable trade-offs.

Benefits are usually overstated, and costs understated - consider that when approving the business case.

The Steering Committee typically holds key decision-making authority, supported by a forum for business and technology design decisions. The business case must clearly outline the governance structure, decision-making rights, and escalation paths. Proactively identifying and mitigating risks is crucial for smooth implementation.

One of the first key decisions a Steering Committee needs to make is on the business case itself. An independent assessment and analysis of the business cases to provide challenge can provide confidence in the process undertaken as well as the integrity of data used. A summary report can be shared with the Board and other stakeholders as input into this important decision.

The business case is not a static document. In a fast-paced world, change is inevitable, and project delivery does not occur in isolation. As the project progresses, assumptions should be revisited, requiring a flexible business case that adapts while maintaining the 'north star.'

ERP transformations offer significant opportunities to enhance operations and achieve strategic goals. However, these benefits are realised through meticulous planning and risk management, particularly by establishing a robust business case. By following these five steps, leaders can navigate ERP complexities, ensuring their program is strategically aligned and set up for success.