SMB ERP Centers of Excellence (COEs): The Undiscovered Country

Enterprise Resource Planning / Financial
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The concept of an ERP Center of Excellence (COE) is fairly intuitive. An ERP COE is essentially a quality assurance or quality control mechanism for the entire business, not just IT. While more likely to be found in larger enterprises, some elements can be adopted and re-adapted for SMB organizations. ERP COEs are not simply designed to provide support for a nascent ERP system. In fact, a COE can be implemented for an existing ERP system—however humble. While it is not recommended for SMB companies to dive in and try to implement the myriad of possible components of a COE, there are some functional areas that can be targeted, such as maintenance and support, skill sets, staffing, roles and responsibilities, service-level agreements (SLAs), alignment with business goals and priorities, etc.

It's Summertime and the Living Is Easy

It's mid-July, and in most IT shops, there are likely not many (if any) new projects in process—with the exception of the usual "fires" that need extinguishing—and most work is likely to be maintenance and support of existing and new systems. Moreover, staff is usually either literally or figuratively on vacation. Since budgeting for 2008 is unlikely to begin until fall, this is the optimal time to begin looking at the ERP infrastructure and topology as well as the overall health of the system to determine where quality improvements can be made—not simply for IT, but for the business. Remember, one goal of an ERP COE is better alignment with the business goals and the subsequent elevation of IT from cost center or fire-fighter to (perhaps) a respected and valuable line of business (LOB).

Of course, some may eschew the concept because of the misbegotten belief that an ERP COE is likely to require additional resources either in staff augmentation or new purchases. This is not the case.

Let's Start at the Very Beginning

As the article, "Creating an ERP Center of Excellence," from ITtoolbox (a great source/forum in which "peers share knowledge about information technology") corroborates, you need to implement certain elements, in a certain order, if you are serious about creating an ERP COE:

  • Know your system by documenting its baseline and any customizations, upgrades, applied service packs, etc. The authors of "Creating an ERP Center of Excellence" suggest documenting "business process, test scripts and results, integration points, and configuration settings." This should be done from both the systems programming and the applications programming sides.
  • Have a support strategy in place. This includes wiping the dust off the software licensing and support agreement you have with the ERP vendor, reading it, and engaging with said vendor to update the document so that, when an upgrade is planned or a critical situation arises, you have a go-to support person. If you don't have some sort support agreement, you might want to consider obtaining one. Yes, this can cost money; however, there are many ways to negotiate an agreement, including a time-and-materials contract so that you pay only for what you use. Be shrewd when negotiating with vendors. Remember that they want your business and your money. Ask for perks and other amenities. In exchange, you could be a reference for them—conditionally.
  • Engage with the LOB executives whose business processes you support. As the ITtoolbox article warns, include stakeholders in decisions to "modify" the applications that support their LOBs. Have them sign off on any modifications or upgrades that they request or that are required by the vendor. Come on; you already know the IT CYA drill.
  • While ITtoolbox assumes that IT organizations already have SLAs in place, in my experience, this is not the case. However, one of the goals of the ERP COE could be to initiate an SLA process with one LOB and the organization and provide metrics as to whether IT is meeting its goals—or not.
  • There should be a project manager heading up the COE. Instead of an outside hire, here is the opportunity to promote a qualified staffer, preferably someone with excellent project management skills. This need not be a "full-time" position and can evolve as the COE evolves.
  • Each LOB supported by IT should have a representative in the COE. Again, this is not a full-time position and does not have to be an executive, but having LOB representatives on board creates a collegial and collaborative atmosphere and will likely enable IT to better prioritize and align. Of course, the opposite is also true. Caveat emptor. If having LOB representation is having a negative effect, the IT manager or director should then meet with his/her LOB peers to determine the reason the disconnect and methods to resolve the problems and get the COE back on track.
  • Likewise, IT must also have staff representatives for each LOB application supported. It is likely that medium-sized companies will have multiple staffers. In small organizations, there may be one person who is chief, cook, and bottle-washer for the entire ERP system. However, I know of small companies that have leadership teams. Perhaps, the ERP COE could be a sub-committee of the leadership team.
  • Regarding the above two bullets, the representatives from both the LOBs and IT should not necessarily be managers. It is optimal for these people to be users and IT staff people who are hands-on with the ERP system. However, for an ERP COE to be successful, a higher level LOB (not IT) manager should endorse and enforce the COE.

Goals of an ERP COE

In the movie Ghostbusters, after being fired from his cushy professorial job, Dan Aykroyd uttered the sobering comment to his companions, "You don't know what is like in the real world; they expect results." (I'm not so sure how this applies here, but I love the line). An ERP COE will de facto have to establish goals, measure performance, and demonstrate the value to the organization.

First and foremost, to be successful, the goals of the ERP COE must be aligned with the goals of the business. Therefore, IT must understand what they are. This is different from the sundry, ad hoc, and ad infinitum requests of LOB managers. IT management must seek to understand not only the company's short- and long-term goals, but also its strategies, culture, politics, policies, and values.

If a major executive complaint is that customer service is inefficient—and this can be traced back to the customer service reps being improperly trained or the order-entry system being too complex or having too many screens to scroll through (with the inability to move forward and back easily)—this could become a goal of the ERP COE. The ERP COE, in conjunction with the affected LOB, could perform a root cause analysis, determine a plan to resolve the problem within a certain timeframe, and then report on the results.

As mentioned previously, SMB ERP COEs (are there any more acronyms we could insert here?) cannot and should not become overly ambitious in their goals. It is far more prudent for IT to develop business acumen and work with its brethren LOBs to target some enterprise ERP hotspots and resolve or improve the issues or problems in their logical priority and in a realistic timeframe.

Some potential ERP hotspots that appear on LOB radar can include, but are not limited to, these:

  • A/R and collection problems—These can be due to ERP application malfunctions or a "slow" network.
  • ERP system response time—If it is really slow, users become unproductive and are more likely to waste time than do their jobs.
  • Cost cutting—Today, SMB organizations are seeking to reduce costs by streamlining business (and hence ERP) processes, reduce downtime due to exorbitant ERP support and maintenance, and/or become more competitive in their industry vertical without spending more money on their ERP systems.
  • Prioritization of business or mission-critical applications—We often speak of business- or mission-critical applications. However, business-critical and mission-critical mean two different things. Business-critical can refer to financial applications and can include such applications as payroll. Mission-critical applications are those applications that support the underlying mission of the company; for example, order entry, logistics, etc. Moreover, business- and mission-critical applications are not necessarily the same for every company. It is imperative to know what are the business- and mission-critical applications for your company.
  • Terrorist attacks—Larger enterprises have sophisticated and expensive anti-terrorist strategies to protect their most precious asset: data (of course, employee safety is the most important prerogative, but for the purposes of this bullet we are just dealing with IT). This is daunting to SMBs that operate by the seat of their pants. It may be worthwhile to hire a consultant for a short period of time to advise the ERP COE on realistic strategies in the event of such an attack.

On another related note, summertime is a prime season for IT staffers to let their fancies drift to thoughts of... (well, you know) and to begin thinking of ways in which they can contribute to the health and viability of their companies and their careers. If things are slow, consider negotiating for advanced training or a course in project management. Look for other opportunities in the company where your skills may be better aligned. Assess and reassess your own career goals and make a five-year plan. For pity's sake, update your resumes. Because you never know.

An ERP COE can be mutually beneficial to both IT and its brethren LOBs. If the ERP COE can help to solve problems, be prepared when issues arise, and contribute to the growth and/or betterment of the organization, it will become a valuable tool and IT may come to be held in higher esteem.

Bottom line: Make the summer a productive and hopefully more interesting season. Fall will be here before you know it!

Maria A. DeGiglio is President of, and Principal Analyst for, Maria A. DeGiglio & Associates, an advisory firm that provides clients with accurate and actionable information on business and technology initiatives. You can reach Ms. DeGiglio at This email address is being protected from spambots. You need JavaScript enabled to view it..