One of the main reasons an organisation should invest in an upgrade or replacement of its current ERP should be to support strategic decision making. This means to supply information that allows executives, managers, supervisors and staff to take decisions which enhance the essence of the business with a view to enabling the organisation to thrive, writes Dr James Robertson.
The absence of this decision support is the fundamental reason why a survey of executives in the Financial Mail found that “19 out of 20 ERP implementations do not deliver what was promised” and why a Gartner survey of 1 300 organisations in Europe reported that “most organisations are not making better decisions than five years ago”.
Precision engineered strategic configuration and taxonomies
Precision engineered strategic configuration and taxonomies mean 20% work and 80% of the strategic value.
How does this work in practice? Firstly, define, document and publish “the essence of the business and how it thrives”. Then define precision engineered strategic taxonomies. These taxonomies must be highly structured, highly hierarchical and strategically focused.
By “strategically focused”, Robertson means that every level of the taxonomy should have between five and 10 items in the hierarchy (seven is optimal).
Where appropriate these should be ordered in such a way that the most strategic elements are at the top of the list and the most operational at the bottom of the list. However, where there is a logical progression viewed in terms of the essence of the business, this logical progression should dictate the default sort order.
Once the content of each taxonomy in each module has been determined this way, it will form the basis of precision configuration of the entire ERP and associated systems to one consistent, congruent and uniform standard across all systems in the enterprise and all modules in the ERP.
Uniform and consistent taxonomy standards rigorously enforced with stringent discipline across the entire enterprise will ensure that all systems integrate seamlessly.
But there is a catch. The real cost of a comprehensive, engineering standard (zero probability of failure) full blown ERP implementation is very substantial.
If the basic ERP is functioning reasonably well at a tactical and operational level, it is almost impossible to justify the real cost of a full implementation or re-implementation. A full blown re-implementation will re-do the 80% of the work that is already working more or less reliably before the 20% of strategic investment can be leveraged. There is, however, an alternative course of action.
Precision engineered strategic taxonomies and the data warehouse
One of the reasons most organisations do not get executive value is that the operational ERP implementation is so poorly structured that it is extremely time consuming and costly to extract the most basic strategic information let alone to create a competitive resource.
This manifests frequently in a sub-standard or almost non-existent data warehouse or a data warehouse that is extremely costly to operate but which fails to deliver strategic information.
This introduces an interesting and highly attractive opportunity.
Users could leave the operational ERP configuration largely unchanged, save for limited incremental enhancement and introduce an excellent new data warehouse implementation using the same strategic taxonomies as described in the previous section – with the exception that users may not develop the taxonomies in master lists like the Item Master or Materials Master down to the full level of detail.

Map the unstructured data in the operational ERP onto the new precision engineered strategic taxonomies and then build the data warehouse reports, models, dashboards, and so on, on top of the strategically transformed data.

This should take place in a new data warehouse instance and the existing data warehouse should remain in operation until such time as the new data warehouse is able to fully replace the old warehouse.

This will deliver the 20% of the strategic information that will deliver 80% of the value of the strategic investment for a fraction of the cost of a full ERP re-implementation, Robertson estimates probably about 20% of the cost of a full implementation.

Once this is in place and a comprehensive suite of strategic reports, models and dashboards are in place, users can trickle the new taxonomies down into the operational ERP on an incremental basis over a number of years until the operational ERP is configured to the new standards, again on an 80:20 basis – make the 20% of the configuration changes that will provide 80% of the investment value.

While this will take longer than a full blown ERP re-implementation it will cost much less, the business disruption will be greatly reduced and the risk to the business will also be dramatically reduced.

Robertson is convinced this is the highest value, lowest risk opportunity facing virtually all corporations of any size that are currently operating a brand name ERP and are dissatisfied with the decision support outputs at an executive level.