Handling Digital Transformation is an essential ‘core competency’ of businesses today. Yesterday’s businesses, based on analog business models, have failed by not making a successive business transformation. Blockbuster, once the leader in video rental, had an early opportunity to purchase Netflix. They refused. Now Netflix leads in video rentals – without a single store.
Digital Transformation requires ERP agility
Gartner defines digital transformation as “using digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving from a
traditional to a digital business.”
Digitalization is driven by the business needs, but IT is a crucial part of it. Digital transformation puts a major burden on a company’s IT infrastructure. Large companies, with complex IT, really struggle with this. One of the main bottlenecks is their ERP system, whether SAP EHP or Oracle EBS.
This is why organizations need ERP agility.
While agile development has been around for over 15 years, agile techniques have only slowly started being adopted by large organizations and applied to complex ERP systems.
ERP systems are mission critical. As agile development is still newer than the traditional waterfall methodologies, failures are visible. Organizations avoid visible failures, even if those failures are less frequent than older, more established models. Agile still is synonymous with risky in some circles, yet, according to the CHAOS Report, agile development has a higher probability of success. The table below shows why agility is important for ERP: companies that adopt agile practices lower the risk of IT project failure for all types and sizes of projects. Since ERP is a critical component for many large and medium size projects, adopting an agile ERP approach can dramatically increase the probability of project success.
Don’t give in to the ‘agile fear-factor’
There are a few steps that your organization can take to ensure ERP agility. Over the next few months, we will analyze several steps organizational leadership can take to enable business-driven agility.
The first step to take is to minimize technical debt. Technical debt is a term coined to describe the costs of taking a quick and dirty approach – which may be appropriate in some instances – but, just as with financial debt, the cost continues to compound.
One example of technical debt that grows is delaying upgrades. In the short term, delaying upgrades speeds up existing projects, but in the medium and long term, it slows IT velocity and poses a high cost to businesses.
So, to avoid paying interest, the first tip is to stay current. Make sure you have visibility into your ERP system, so that you can understand the impact of changes and make small, frequent, and iterative releases to reduce the risks inherent in what would otherwise be infrequent jumps.
Want to get some practical guidelines on how to enable ERP agility and get out of technical deb?