Value
"Was this even worth doing?"
If you hear this, it means that someone thinks the answer is ‘no.’ They might be right. A Gartner study estimates that by 2027, over 70% of ERP projects will fail to meet their business objectives. (i)
If the project does not deliver value, it will be perceived as a failure. Even if the project starts a strong business case, there is a multitude of ways that value can be lost, and value needs to be the lighthouse to steer by.
Getting the right things right
Value is built, not bought.
The Value Pillar connects investment to outcomes, starting with the business case that becomes your project’s lighthouse.
Every decision—scope, customization, staffing—should be governed by its impact on a shared understanding of business value goals. ERP projects are more than IT projects where the iron triangle rules. ERP projects are business transformations, and value is the primary goal.
Navigating Value
Unlock Predictable ERP Value
High Stakes / High Risk / High Return
- High Stakes: ERP implementations are expensive and time consuming
- High Risk: More than 70% fail to meet business case goals
- High Return: ROI as high as 600% over five years (i).
Imperative: don’t gamble. Reduce risk and increase return with clearly defined benefits and clear vision on how they will be achieved.
Types of Value
There are tangible and intangible value outcomes. The line between the two can get blurry as intangible value creates tangible value.
Tangible Value
Reduced Costs
Such as lower inventory carrying cost, reduced labor cost, or optimized procurement.
Increased Revenue
Such as faster quote-to-cash cycles, improved product availability, and data-driven cross-sell/upsell opportunities.
Process Efficiency
Higher output without increased labor costs.
Operational Efficiency
Improved productivity and throughput
Improved Supply Chain Management
Optimizing flow of materials, production, and delivery.
Direct IT Cost Savings
Reduced technology ownership costs
Intangible Value
Better Decisions
Integrated data creating a single source of truth, combined with the access and visualization needed can eliminate guesswork and enable better decisions.
Agiliity and Scalability
Create a flexible foundation that allows the business to adapt to market changes, launch new products, or expand into new regions more quickly than with disparate, legacy systems
Customer Relationships
Having a unified view of customer data—from sales history to service requests—allows for more consistent, personalized, and efficient customer service, which builds relationships.
Improved Morale
Replacing soul-destroying systems with a modern, efficient ERP reduces employee frustration, simplifies daily tasks, and empowers users with the information they need to do their jobs well.
Reduced Risk:
An ERP centralizes financial and operational data, making it easier to enforce internal controls, automate regulatory reporting, and improve data security.
Value has a taxonomy, and the benefits in the dropdown are at a very high level. We want to be more specific about value to get to an actionable level. For example, in the category of reduced expenses, a subcategory is “reduced inventory carrying cost.”
The next section breaks that down further, to get to a level where we can understand how value is created.
Value Drivers
Value outcomes are the reason for the investment but leaving it there is stuff of the sales brochures. Understanding how value is created is the critical next step.
Value Driver Example - Reduced Inventory Carrying Costs
Reduced inventory costs are a category of reduced costs. We want to get to a level below that to better understand how value driver maps to value.
Mapping Value Drivers to Value Goals
Theoretically every aspect of the system could be considered a value driver. To make it manageable, you want to identify the major drivers for the goal and use the 80/20 rule. As a heuristic, this can typically be accomplished by identifying between four and eight value drivers that will have the most impact.
Using Value as a Lighthouse - Value Governance
Defining value and value drivers (explained above), is a first step. Ensuring that value is delivered requires proactive governance through the implementation and beyond.
Optimism
The idea that you define the value expected at the start of the project and have it appear after go live is possible, but subject to risk during the implementation.
Ungoverned Reality
Many choices will be made in the course of the project. If these decisions are not managed, they can drag value down.
Governed Reality
Any number of ‘value traps’ can cause value to drift. Value needs governance to course correct or realize new opportunies.
Elements of the Value Governance Structue
Framework
Defines categories and drivers of value
Ownership
Assigns accountability to business leaders for each driver
Traceability
Links requirements, design elements, and test cases to value drivers
Realization Plan
Documents targets, metrics, baselines, and timing
Tracking
Dashboards and governance forums to measure actual vs. expected
Change Control
Ensures scope changes are evaluated against value impact
Continous Improvement
Regular review of value metrics and new opportunities.
Eight Value Traps that Sink Value
These common value traps are are symptoms of a systemic failure to manage the critical Value and the Drivers of Value.
Trap
Symptom
Cause
Cure
Business Case Gap
The project lacks a formal business case that links the investment to corporate strategy and quantifies the benefits. Its purpose is vague.
A failure in the Strategic Process Alignment driver – specifically neglecting a Clear Business Plan and Vision Definition.
Treat the business case as the projects living constitution. Every major decision must be tested against this document..
Aspiration Gap
A high-level vision exists – but no tactical plan connects goals to specific system and process changes. The vision lives in a presentation – not the project plan.
A failure to bridge strategy and execution because a Benefits Realization Planning & Management process is missing.
Develop a comprehensive Benefits Realization Plan (BRP) before the build begins. The BRP maps each benefit to the specific actions required to unlock it.
Accountability Gap
No one in the business is formally responsible for delivering the promised value. Value ownership has been delegated to IT or the PMO.
A failure of the Leadership and Governance driver. Top management commitment has not translated into a formal governance structure.
Assign ownership for each major benefit to a specific business leader. Tie their performance metrics to the realization of that value.
Measurement Gap
The project lacks clear – specific – and verifiable success metrics (KPIs). There is no objective way to prove value has been delivered.
The absence of a formal Performance Monitoring and Measurement process
Baseline the current performance of every KPI targeted for improvement. After go-live – conduct formal value audits to compare performance against the baseline.
Assumption Trap
The project team operates on unverified assumptions – such as the new system will be easier to use or reporting will be simpler. These are often false.
Failures in People and Change Management and a lack of User Involvement and Participation and rigorous System and Data Testing.
Adopt a trust – but verify mindset. Document every major assumption and design specific tests or user feedback sessions to validate each one.
Functionality Rabbit Hole
The project becomes consumed with replicating legacy functionality or accommodating every unique user request – leading to scope creep and complexity.
The project lacks a strong – value-based governance process to filter scope. Decisions are based on user preference – not a disciplined strategic alignment.
Establish a strong bias toward using the ERP system as it was designed. The business case must be the sole gatekeeper for any customization.
Imperative Project is Enough Assumption
The business case is simply we have to. The project is a defensive move – lacking a positive vision for value creation.
The organization has a catalyst for the project but no direction. It has stopped short of a Clear Business Plan and Vision Definition.
Acknowledge the imperative – then immediately build a proactive business value realization plan. Reframe the project from a necessary evil into a strategic opportunity.
Lump-Sum Fallacy
The organization views ERP value as a one-time payment delivered at go-live. There is no plan for post-launch continuous improvement.
There is no long-term Organizational Enabler for sustained value. The project-based mindset has not transitioned to a program-based one.
Treat ERP value as an annuity – not a lump-sum payment. The value journey begins at go-live. Formalize a commitment to continuous improvement – often through a Center of Excellence (CoE).
The Dip: What to Expect and What to Look For
Value governance doesn’t end at go-live. Go-live, as Churchill said, was “the end of the beginning”.
The Productivity Dip
Most people have a basic understanding of the learning curve. It’s the hump you need to get over when something is new and unfamiliar. Fewer people understand that the learning curve never truly ends. A famous study documented that workers rolling cigars continued to increase their speed even after three years.(i) And we’re not just rolling cigars.
How Long?
Overcoming the productivity gap is a test of organizational patience, as adoption and benefits typically unfold over months and years, not weeks. Results vary greatly, but here are some adoption phases and timeframes.
6 to 9 months
Shakedown and Stabilization
fixes, data remediation, usage normalization
6 to 24 months
Organizational Learning and Adoption
increased usage depth and productivity
2 to 3 years
Recognizable Benefits
measurable enterprise benefits (operations/financials)
3 to 5 years
Evolution
Enhancements, optimization, upgrades
Tool Long?
There is a lot variance in the heuristics above. I find them shockingly long, but considering ERP failure rates, perhaps they should not surprise me. Surely there are things you can prior to go-live that will bring these durations down, and there are, starting with the way value is defined and managed.
Normal, or Warning Sign?
With benefits realization unfolding on a multi-year timetable, how do you know if the implementation was a success? This table is a guide to knowing when a productivity gaps are normal, or a sign of something more serious.
Dimension
Normal Dip
Warning Sign
User Adoption
Slow, but steadily increasing.
Flat or declining; widespread workarounds.
Business Ops
May be slower – but processes are completed.
Inability to perform critical functions.
Morale
Stressed but focused on learning.
“Blame culture,” loss of confidence.
The Taxonomy of Value Success
Getting Value right requires getting a hierarchy of things right. Explore the taxonomy of Value critical success factors below. Click the grey + to reveal more detail.
Value- Strategic Foundation & Value Definition
- Business Case & Financial Justification
- Business Case & ROI
- Linking Drivers to Value
- Aligning with Strategy & Goalss
- Vision & Alignment
- Clarifying the Vision & Rationale ("The Why")
- Leadership and Stakeholder Alignment
- Value Planning & Governance
- Value Planning & Scoping
- Value Realization Plan
- Planning of Benefits
- Scope Prioritization & Management
- Governance Structures
- Accountability
- Value-Focused Governance Frameworks
- Link Value Realization to Executive Goals
- Value Tracking
- Metrics Definition
- KPIs & Success Metrics
- Specifying Value Drivers
- Baseline KPI's
- Monitoring & Management
- Progress Against Value Plan
- Performance Against KPIs
- Course Correction
Post Implementation- Establishing the Process
- Creating a Center of Excellence
- Assessment of New Opportunities
Value and the Project Lifecycle
An overview of activities for Value success, by phase, from the beginning of the project. Click any of the phase buttons below for a summary.
