Realizing the value Capital Project Management & ERP
Project-centric organizations today face the challenges of improving the effectiveness of their capital programs by wishing they had a Project and Program Management System (PPMS) to manage their projects and facilities activities. However, often their efforts are overlooked or ignored by IT initiatives and implementation of Enterprise Resources Planning (ERP) systems. Therefore, the result becomes a clash of systems and priorities without truly reviewing the differences and benefits of each system. ERP usually wins out, because IT drives the decision. ERP systems are perceived as having the project and asset management functionality that will satisfy all organizational requirements. CIO’s and IT managers proclaim ERP to be mandatory and essential, providing everything needed to manage any departments’ requirements.
But the question functional groups have been trying to answer is does ERP really provide a solution for managing projects in a real-time project environment? Does it provide the functional workforce with the right tools and process automation solution? Can the ERP system take into account the project processes of managing cost, scope, schedule, as well as the entire project ecosystem? IT and ERP truly believe they can make the features in the ERP system work. Many ERP vendors have claimed for years that ERP’s project functionality will satisfy all functional end user requirements for capital and portfolio management. But history in the high-tech world tells us that project modules in ERP fall well short of delivering the value of a true PPM systems. Leveraging the strength of both systems might offer the best strategy for firms that want to truly deploy the right solutions for the right audience. However, for this article, we will focus on why Project Management Systems (PPMS) might be the better option.
PPMS provides immediate benefits to functional departments that lack visibility and effectiveness in managing project and programs. Current tools and manual processes do not deliver the value that is needed to improve the way work is executed. PPM Systems should deliver on the promise that the project stakeholder’s efficiency comes first, and the necessary project-related information is captured, accessible, shared, and acted upon in real time to improve results. ERP delivers enterprise-wide financial, budget, and asset management, human resources, supply chain, CRM and procurement. The ERP is mandated as the system of record for the entire organization and provides the true operational and financial backbone of most organizations. This is ERP’s value proposition.
However, ERP project functionality presents a challenge for the user as it requires custom programming, which is costly to develop and maintain. Usability, access from the cloud and complicated interfaces also becomes a major issue. The perception of an ERP being a business management machine which can serve as the answer for any kind of project and facility activity will negatively impact the organization’s project execution overall. Functional departments require project best practices, workflow, productivity tools, resource, schedule management and cost controls as the project is going through its complete Plan, Build, Operate, and Maintain phases. ERP Systems are not designed to manage essential processes that project and facility stakeholders perform daily.
ERP systems are very effective in managing data and information as a post-execution information repository. However, project focused departments need tools to plan and manage resources in real-time to be effective. PPM systems on the other hand provide a set of industry leading project and process functions and methods that are configurable to how an organization can improve the project execution. PPM systems address the resource planning for the entire ecosystem and manage scope, budget, cost, schedule and risk. Most importantly, PPM systems can provide preconfigured project and portfolio views and metrics which give a real-time image of the projects overall health. To realize a similar view from an ERP means a massive program configuration effort of hundreds of hours and a very expensive price tag.
As a project and facility management consulting firm, our clients have found that there are PPM systems with out-of-the-box functionality modifiable to an organizations’ business process. Some of the benefits our client’s will realize include:
- Accurate forecasting of cost, schedule and resources to completion
- Enterprise-wide project transparency
- On-time, on-budget project delivery
- Streamlined data entry to save time and reduce errors
- Optimized resource utilization
- Improved collaboration with internal and external groups
- Reliable reporting of project parameters across applications
- Reduction in an organization’s total cost of ownership
Contact us with any questions you may have. Our next blog post will be looking at the “Business Case for Integration of PPM and ERP”.