Are you about to procure and implement an ERP system? The choice and implementation can be crucial for the future of your business. But without the right preparation, costs can soar and the system can become difficult to use and manage. Here I describe why you should first conduct a business analysis.

Imagine a company that is growing rapidly and the complexity of its Excel spreadsheets is growing at the same rate. In addition, an IPO is in the pipeline within a year. The board has reluctantly realized that you need to implement an ERP system in the company urgently. You are in management and have been given the responsibility. How will you approach the task?

Start by conducting a business analysis

I recommend that you start by conducting an analysis of your business with the aim of

• Describe your business in the way business systems are structured
• Transforming your own ways of working into standardized processes
• Identify and describe your complex and value-adding processes

But that analysis will allow you to focus on what is important during procurement and implementation. The result can be likened to having a house drawing that is aligned with building codes, focusing on must-have requirements that you don't want to waive.

Why analyze the business before the procurement?

Being prepared and having documented your processes makes it easier to formulate the right requirements for the procurement and select a suitable system. Once the implementer is in place, you can quickly answer their questions during implementation. The implementer understands from the start how the business works and rarely has to wait for your answers during the work. The number of customizations is kept to a minimum because the processes are adapted to the system and not the other way around.

Benefits of pre-procurement analysis

Having a standardized drawing and a list of must-have requirements to order and build to leads to higher quality. The need for customization can be kept down and maintenance becomes easier and more stable. This is because the system does not deviate from standard processes. It will also be easier and cheaper to keep up with the supplier's upgrades in the cloud when customizations are at a minimum. Having documented processes to follow in testing makes it much easier and leads to fewer mistakes. The board will like the approach, as the likelihood of the project finishing on time and on budget is significantly higher.

Common mistakes to avoid

It's tempting to jump straight in and look at systems, but this rarely leads to a successful project. Here are some ways that often lead to problems:

"Michael has just chosen a system that seems great, soon they will be up and running. We'll take it!"

"Might as well use the same system we had at the previous company. I know the supplier."

"We start by looking at a few systems, then we choose the one that looks best."

Why don't these methods work?

The time before the supplier is in place will be short. However, the supplier's consultants will spend a lot of time in the project to sort out the requirements. The time estimated by the supplier is likely to be insufficient as they will have to wait for input from the business. The costs from the supplier start ticking early in the project, long before the business analysis is complete. It's like bringing in the construction workers before the building plans are ready. The costs go up immediately and continue to escalate as new must-have requirements are uncovered. It will probably not be the system that best suits the business, because the system is not chosen based on a clear requirements picture. The requirements will be solved by the supplier as they arise. The system will have many adaptations and will be expensive to manage, test and maintain. A system with many customizations will have lower quality and will be difficult to use. The adaptations mean that the business system is used in a different way than it is intended for.

Here's how we at Anchor perform a business analysis customized for business systems

We always start by conducting a business analysis using our Insight methodology. Together with you, we discuss, re-evaluate and document your business processes so that they fit into a business system. Often, the processes will be both more efficient and easier to understand than before. In addition, most processes will fit into a standard system. We propose appropriate solutions for key processes that do not fit into an ERP system. We create an overall picture that shows how the new solutions will fit in with your existing solutions. Not least important is that everyone can see and understand how the result will be, and who will use the system for what. Now you are ready to start a procurement!

Next steps - selection and procurement

Choosing the right vendors to contact, compare and evaluate is complex. In the next article I will describe how we work with our Search and Select method to choose the right ERP system and implementer. We have helped many companies procure and implement ERP systems successfully by starting with a business analysis.
Contact us to hear how we can help you!

Read my previous article on business analysis as a basis for decision-making:
Why do your management team need to understand how your business works?

And my colleague Claes Östman's article on the importance of preparing your business to implement an ERP system:

Everything a C-level needs to know about ERP - Tips and strategies