People with long and deep experience of ERP are usually able to predict with a fair amount of accuracy whether a planned ERP project will succeed or fail, after only a short conversation with the executive decision-maker.
The obvious conclusion is that these experts, perhaps somewhat intuitively, determine whether the proposed approach is likely to work or not without getting into the details. Simply put, their ERP strategy sets an organisation up for success or failure even before tactical plans are made.
This Industry Insight describes a framework that links the business objective of the ERP initiative to the type of ERP project that will be required. What is required is to think through the changes that BPR and ERP projects precipitate, both the desired changes and the consequential ones. I use an analogy to simplify this process to a model that the executive decision-maker can use to set strategy - the concept of 'degrees of freedom' from the world of physics.
All aboard
The simplest explanation of degrees of freedom in physics is that an item is said to have a degree of freedom for each independent movement that is allowed. For example: a train is allowed freedom to move in only one physical dimension and is constrained in the other two. Its controls are intended to manage movement in the one dimension, forward or backwards, and no other. A train cannot turn left or right, nor can it go up or down. A car has the freedom to move in two dimensions and has controls to manage that freedom of movement. An aircraft has the freedom to move in all three physical dimensions and has the complex controls required to manage that movement.
In a One Degree of Freedom ERP project, the focus is solely on changing the ERP system. Other considerations are secondary: business process changes will only be done because the system change demands it, not the other way round. Similarly, people will be trained or changed to operate the system; the system will not be tailored to achieve people and/or organisational objectives.
A Three Degrees of Freedom ERP project is where the stated intent is to change everything simultaneously: the people organisation, the way business is conducted, and the system for doing so.
Meryl Malcomess is marketing director of Syspro.
A good illustration of a One Degree of Freedom change is a company that is making a change to its system in order to make it run better. It is not trying to optimise business processes or to rationalise the organisation. It is, however, forced to make changes in the procedures followed (business process change) and therefore, at least some training is required (people organisation change) as the system change is implemented.
A Two Degree of Freedom ERP project allows the freedom to change simultaneously in two of the three dimensions of change. For the executive decision-maker thinking about ERP, one of those changes will always be to change the ERP system. The other will be to either change the business processes simultaneously or to change the people organisation simultaneously with the ERP system.
An executive decision-maker who wants to put in a new, superior ERP system that will allow him to implement completely new business processes because he wants to target a new market sector, is thinking about a Two Degree of Freedom project. He should allow freedom of change along the business processes axis as well as the systems axis to achieve his goals. However, the changes required from his people and his organisation should be limited to what is strictly necessary.
Transformation
A Three Degrees of Freedom ERP project is where the stated intent is to change everything simultaneously: the people organisation, the way business is conducted, and the system for doing so.
Examples are a start-up venture, or where a business unit, formerly part of a large corporation, is set up as an independent business with its own system, new organisational functions that differ from what came before and new business processes coming into force simultaneously.
Naturally, every case will have nuances that make it unique. A One Degree of Freedom ERP project in a small company and a One Degree of Freedom ERP project in a large business are very different projects. Different projects typically aim at different magnitudes of change; both desired and consequential, for each of the three dimensions. These are mostly considerations of the magnitude of the change.
Thinking through the business objective will lead the executive decision-maker to a degree of freedom classification for their proposed ERP project. Before locking in on a specific project approach, though, it's best to consider the risks and rewards, which are different for each type of project.
* Meryl Malcomess is marketing director of Syspro.
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