ERP Project Governance: A Comprehensive Guide on How to Avoid Chaos
Updated: Aug 1, 2022
Running a complex business without integrated digital enterprise systems in current times is challenging. Business leaders should understand that digital transformation will help them stay competitive in the current tech-driven world.
Enterprise Resource Planning (ERP) helps manage functions like human resources, finance, marketing, and supply chain management through a consolidated platform. It reduces process times and enhances collaboration through centralized company-wide data. Although ERP software is a digital transformation solution for businesses, most enterprises dread project failure.
Ineffective project management usually causes ERP projects to struggle to realize significant enterprise benefits. Core groups of individuals often maintain governance and direct ERP implementation. You can ensure that your business stays on track from the planning phase to when you go live through ERP project governance.
Poor ERP software implementation can wreak havoc and limit your ability to stay productive, secure, and responsive to customer requirements, reducing your competitiveness. Governance issues are the primary reason most ERP projects fail to attain their goals.
This comprehensive guide outlines the importance of project governance and explains how to avoid chaos during implementation.
What’s ERP Project Governance?
ERP project governance entails the provision of strategic direction, planning, control, and monitoring of the potential risks and success factors for ERP software implementation. Even with the best software, ineffective ERP governance can fail to yield desired results. Meeting customer expectations helps businesses stay competitive and grow revenue. Innovative technologies like ERP manufacturing software automate and optimize operations for maximum efficiency. The first step is usually choosing a specific vendor and ERP manufacturing system.
After selecting software, you must integrate the new system into your business through an effective and sustainable implementation plan. This intensive strategic effort needs project governance for success.
Positioned a level above project management, ERP project governance entails examining issues such as:
External factors that can affect success.
Unlike ERP project managers, whose primary role is to meet short-term targets, project governance involves monitoring broad objectives and milestones. It needs you to align and ensure cohesion between project and executive business teams.
The most crucial aspects of project governance are clearly defined roles and reporting channels. These provide decision-makers with insights to help them understand their obligations.
Importance of Project Governance in ERP
Digital transformation is a significant investment. All businesses naturally want ERP software to match their expectations. This is only possible through project governance, which provides a framework for success.
Digitally transforming enterprise-wide systems and processes has long-term implications. It requires a comprehensive plan driven from the top and led by a strategic plan. Project governance helps avoid resource wastage, acting as an ERP risk mitigation mechanism.
Completion of tasks, training coordination, and liaising with implementation partners are often left with the project manager. But a lack of governance may cause the failure of adoption of the ERP manufacturing software.
In some instances, poor project governance leads to ERP failure. Without the proper guidance, it is easy for a company to focus on the wrong aspects. As a result, your project may cost more and take longer to produce the desired impact.
Developing ERP Governance Practices
Here are a few tips to help you develop ERP project governance for your business.
01. Create Strategic Alignment
The foundation of project governance should be aligning the executive and project teams. Irrespective of how good your ERP software and plan are, a lack of alignment from the top management to the project team will lead to project failure.
Align all the key decision-makers for the ERP project to organizational and project goals. Misalignment in the executive team will likely lead to a disjointed workforce. Make your project vision clear from the beginning and communicate it with all stakeholders.
02. Build an Overall Decision-Making Framework
Successful EPR implementation relies on intelligent and informed decision-making. But seasoned business leaders know how fast analysis paralysis can affect an enterprise. Untimely decision-making can derail project timelines. With so much riding on your decisions, you can find yourself stalling.
It is always best to take time and determine how to tackle decisions from the word go. Have in place well-defined approval processes and ensure all team members understand their roles.
03. Develop an Executive Steering Committee
It can be confusing when too many individuals take control of different project aspects. Creating an executive steering committee designates a group of people to make strategic decisions that facilitate ERP implementation.
The executive steering committee should comprise C-suite executives like the Chief Financial Officer (CFO) and the Chief Operating Officer (COO), plus members of your company's board.
04. Leverage Your Business Case for Decision Making
If you developed an ERP business case before kicking off the project, it should highlight the goals and specific benefits your company expects to achieve from ERP implementation. Referring to your business case allows you to make swift and strategic decisions.
For example, suppose your team receives a customization request that doesn't align with your goals. The business case will make it easy to reject the proposal and avoid wasting resources.
Provide Guardrails for Your ERP Implementation
The failure of ERPs doesn't happen by chance. Like a car that veers off the road, the most common causes of ERPs stem from lacking the right guardrails on the path to success. Project governance delivers a framework that keeps your project and team aligned and on track.
Whether upgrading from basic software or replacing a legacy system, implementing modern ERP solutions will help streamline processes and workflows. It will also make data more available and give your deeper insights into business operations.
When your ERP project team and steering committee members work harmoniously, you increase your chances of success. However, to achieve success, you need a strategic plan and alignment from the highest levels in the organization. This makes it essential to establish ERP project governance from the start of your digital transformation process, throughout the project, and after going live.
If you need help planning for your company's digital transformation, let us help you turn your ERP vision into a reality.