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Key Sourcing Considerations in New ERP Environments

Many organizations implementing an ERP (e.g., SAP, Oracle, etc.) plan to partner with 3rd party service providers to contain project costs, fill skill and resource gaps, and ensure strong service levels. It is common for such organizations to consider  an outsourced support model to provide ERP application management and support (AMS) starting immediately after go-live.

When planned correctly, this can be a highly effective strategy. It is WGroup’s perspective that additional factors must be evaluated when developing a sourcing approach in new ERP implementations, as opposed to sourcing support for mature or existing ERP environments.

1. Prepare for System Stabilization Issues & Phased Deployment

  • Typically, ERP functionality is rolled out in phases. Each phase of a new ERP implementation usually encounters issues related to data migration, integration with legacy systems, knowledge transfer, etc., – all of which can negatively impact call volumes and increase support requirements. There will be a potential need for additional “SWAT-team” support resources for 3-6 weeks post-go-live (or longer depending on complexity) to deal with such issues.
  • Plan to retain availability with some portion of the “implementation team” to support the SWAT-team and troubleshoot & fix issues.  Such support must be engaged with an adequate level of contractual rigor and governance oversight to accommodate the selected AMS vendor(s), even if the AMS vendor is the same as the ERP implementation vendor.
  • Be prepared for a period of stabilization that could last ~3+ months post go-live, after which SLA measurement & monitoring of the AMS service provider should begin.

2. Evaluate Change Management Opportunities

  • The potential for business impact (to end users) post go-live, as a result of “new” processes and interfaces, and limited hands-on experience with these processes and systems may be significant.
  • Prior to go-live, support calls and ticket volumes are best guess estimates and service level requirements and implications may not be fully known. Additionally, a spike in call volume and support requests – both from end users (e.g., “how-to” questions) and for technical issues (e.g., integration, data flows, data migration errors) is likely to occur in the first few months of any release.
  • The size, structure, and make-up of the “super-user” group(s), if any, being considered as part of the overall planning for AMS, should be evaluated.

3. Be Thorough with Vendor Selection and Transition Planning

  • Resource ramp-up requirements based on the release approach and schedule must be planned and aligned.
  • Adequate knowledge transfer planning should be ensured with respect to solution design between the implementation team or vendor and the AMS support team or vendor – even if implementation and support requirements will be managed by the same service provider.
  • Select an AMS provider that understands your industry and business processes to support ongoing process improvement.

The sourcing process for new ERP environments is different and more challenging than a typical sourcing project, and therefore the strategy and approach must be adapted. It is recommended that organizations considering sourcing for new ERP environments meet with an IT strategy-based sourcing advisor to ensure the development of an optimal approach, selection of the best-value vendor, and success in a long term relationship with the AMS service provider.  Further Reading: WGroup Case Study – SAP Applications Outsourcing.

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Tony Ioele is a Principal Consultant at WGroup. He has over 25 years of executive and consulting experience in enterprise architecture, ITIL process management, COBIT/SOX controls creation and enforcement, technical services delivery, customer services delivery, application delivery, and security management.
 

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