ERP Implementations: It’s all about Scope I (Functional Requirements)

Introduction

ERP (Enterprise Resource Planning) Implementations tend to be expensive projects, often the actual costs overrunning the expectations by an important factor. The causes for this are multiple, the most important ones ranging from the completeness and complexity of the requirements and the impact they have on the organization to the availability of internal and external skilled resources, project methodology, project implementation, organization’s maturity in running projects, etc. 

The most important decision in an ERP implementation is deciding what one needs, respectively what will be considered for the implementation, aspects reflected in a set of functional and nonfunctional requirements. 

Functional Requirements 

The functional requirements (FRs) reflect the expected behavior of the system in respect to the inputs and outputs – what the system must do. Typically, they encompass end-users’ requirements in the area of processes, interfaces and data processing, though are not limited to them. 

The FRs are important because they reflect the future behavior of the system as perceived by the business, serving further as basis for identifying project’s scope, the gaps between end-users’ requirements and system’s functionality, respectively for estimating project’s duration and areas of focus. Further they are used as basis for validating system’s behavior and getting the sign-off for the system. Therefore, the FRs need to have the adequate level of detail, be complete, clear, comprehensible and implementable, otherwise any gaps in requirements can impact the project in adverse ways. To achieve this state of art they need to go through several iterations in which the requirements are reevaluated, enhanced, checked for duplication, relevance or any other important aspect. In the process it makes sense to categorize the requirements and provide further metadata needed for their appraisal (e.g. process, procedure, owner, status, priority). 

Once brought close to a final form, the FRs are checked against the functionality available in the targeted system, or systems when more systems are considered for evaluation. Ideally all the requirements can be implemented with the proper parametrization of the systems, though it’s seldom the case as each business has certain specifics. The gaps need to be understood, their impact evaluated and decided whether the gaps need to be implemented. In general, it’s recommended to remain close to the standard functionality, as each further gap requires further changes to the system, gaps that in time can generate further quality-related and maintenance costs. 

It can become a tedious effort, as in the process an impact and cost-benefit analysis need to be performed for each gap. Therefore, gaps’ estimation needs to occur earlier or intermixed with their justification. Once the list of the FRs is finalized and frozen, they will be used for estimating the final costs of the project, identifying the work packages, respectively planning the further work.  Once the FRs frozen, any new requirements or changes to requirements (including taking out a requirement) need to go through the Change Management process and all the consequences deriving from it – additional effort, costs, delays, etc. This can trigger again an impact and cost-benefit analysis. 

The FRs are documented in a specification document (aka functional requirement specification), which is supposed to track all the FRs through their lifetime. When evaluating the FRs against system’s functionality it’s recommended to provide general information on how they will be implemented, respectively which system function(s) will be used for that purpose. Besides the fact that it provides transparence, the information can be used as basic ground for further discussions. 

Seldom all the FRs will be defined upfront or complete. Moreover, some requirements will become obsolete during project’s execution, or gaps will be downgraded as standard and vice-versa. Therefore, it’s important to recollect the unexpected.

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Project Management: Redefining Projects' Success I

A project is typically considered as successful if has met the beforehand defined objectives within the allocated budget, timeframe and expected quality levels. Any negative deviation from any of these equates with a project failure. In other words, the success or failure of a project is judged as black or white with no grays in between, which is utopic, especially for mid to big software projects, typically associated with lot of uncertainty. According to this definition a project which had a delay of a few months, or the budget was overrun by 10%, or the users got only 90% from the planned functionality, or any combination of these negative deviations, can be considered as failed.

If a small project needed 6 instead of 3 months to complete, which is normal for projects with reduced priority, as long the project costs haven’t changed, then the increase in duration can be ignored. In exchange, 3 months of a delay for a 2 years project is normal, especially when the project is complex. Even if additional costs incurred within this timeframe, as long they are a small percentage in comparison with the overall project costs, then the impact can be acceptable for the business. On the other side, when the delays have an exponential growth with further implications, then the problem changes dramatically.

Big projects have typically a strategic importance. It’s the case of ERP implementations, which besides the technology changes have in theory have the potential to transform an organization pushing it to reach further performance levels. Such projects are estimated to take on average one to two years for a medium organization, however the delays can easily reach 50% to 100% from the initial estimation. Independently of what caused the delay, as long the organization achieved the intended goals and can cover project’s costs, one can say that the project made a (positive) difference.

Independently of project’s size, if 90% of the important functionality is available, then more likely the 10% can be covered in a first step with manual work, following in time to further invest into the system as part of a continuous improvement process. It’s maybe not ideal for the users, however the approach incorporates also the learning curve of working with the system and understanding ist possibilities and limitations. Of course, when the percentage of the available functionality decreases below a given limit, system’s acceptance is endangered, which users eventually start looking for alternatives.

There are also projects which opened the door to new possibilities and which require more investments to leverage the full capabilities. Some ERP implementations have this potential, despite overruns. Some of such investments are entitled while others are not. Related to this last category, there are projects which are on time, on budget, and the deliverables satisfy the quality criteria and objectives, however they make no difference for the organization despite the important investments made. Sure, some of the projects from this category are a must (e.g. updates, upgrade, technology changes), however there are also projects which can be considered as self-occupational hazard. In extremis such projects run in the background and cost organizations lot of energy and resources, while their effects are questionable.

At least from these examples the definition of a project's success needs to be changed or maybe standardized to consider not only intrinsic but also extrinsic aspects. In theory, that is the role of a Project Management Office (PMO), however it’s challenging to find an evaluation methodology that fits all needs. Further on, from same considerations, benchmarking projects across organizations and industries can prove to be a foolhardy attempt.

Project Management: Scope Creep (Definitions)

"Adding features and functionality (project scope) without addressing the effects on time, costs, and resources, or without customer approval." (Cynthia Stackpole, "PMP® Certification All-in-One For Dummies®", 2011)

"The tendency for people to sneak extra work and outputs into the project’s list of responsibilities. Can cause a project to fail under the burden of additional work without the corresponding resources." (Mike Clayton, "Brilliant Project Leader", 2012)

"The uncontrolled expansion to product or project scope without adjustments to time, cost, and resources." (For Dummies, "PMP Certification All-in-One For Dummies, 2nd Ed.", 2013)

"Additional activities beyond the defined or expected scope of a project. Scope creep often results in missed deadlines and increased costs." (Darril Gibson, "Effective Help Desk Specialist Skills", 2014)

"When the original plans or goals of a project expand. Common with projects, particularly poorly planned projects." (Weiss, "Auditing IT Infrastructures for Compliance, 2nd Ed", 2015)

"When features, functions, or attributes are added to a product during development that goes beyond the agreed-upon product requirements. When this condition occurs, the product is said to be experiencing scope creep. Scope creep is generally considered to be the number one cause of cost and schedule overruns in development projects. (Alternatively, this is sometimes called feature creep.)" (Steven Haines, "The Product Manager's Desk Reference", 2008)

"Adding features and functionality (project scope) without addressing the effects on time, costs, and resources, or without customer approval." (Jeffrey K Pinto, "Project Management: Achieving Competitive Advantage 5th Ed.", 2018)

"The insidious expansion of the product scope (i.e., expected functionality of the product, service, system, or result) that also expands or increases the project scope (i.e., the amount of work required) without a commensurate adjustment to or trade-off in the schedule, budget, resources, and/or quality, resulting in increased risk for the Performing Organization." (H James Harrington & William S Ruggles, "Project Management for Performance Improvement Teams", 2018)

"Also called requirement creep, this refers to uncontrolled changes in a project’s scope. Scope creep can occur when the scope of a project is not properly defined, documented and controlled. Typically, the scope increase consists of either new products or new features of already approved products. Hence, the project team drifts away from its original purpose. Because of one’s tendency to focus on only one dimension of a project, scope creep can also result in a project team overrunning its original budget and schedule. For example, scope creep can be a result of poor change control, lack of proper identification of what products and features are required to bring about the achievement of project objectives in the first place, or a weak project manager or executive sponsor." (ISTQB) 

Project Management: Project Scope (Definitions)

"The sum of the products and services to be provided as a project." (Timothy J  Kloppenborg et al, "Project Leadership", 2003)

"The set of features, functions, and attributes associated with a given set of product or service requirements. The scope of work is that work that is to be carried out in order to create or update a product." (Steven Haines, "The Product Manager's Desk Reference", 2008)

"The sum of the products, services, and results to be provided as a project." (Cynthia Stackpole, "PMP® Certification All-in-One For Dummies®", 2011)

"The work that must be performed to deliver a product, service, or result with the specified features and functions." (Cynthia Stackpole, "PMP® Certification All-in-One For Dummies®", 2011)

"All that the project must do and create. It can be expressed in terms of activities, articulated by the WBS or in terms of deliverables, articulated by the PBS." (Mike Clayton, "Brilliant Project Leader", 2012)

"The range of features and functions that categorize a performance improvement intervention." (Joan C Dessinger, "Fundamentals of Performance Improvement" 3rd Ed, 2012)

"The work performed to deliver a product, service, or result with the specified features and functions." (For Dummies, "PMP Certification All-in-One For Dummies" 2nd Ed., 2013)

"The boundaries of a project. Projects include a scope definition so that personnel understand the project boundaries. Identifying the scope helps prevent scope creep." (Darril Gibson, "Effective Help Desk Specialist Skills", 2014)

"The resource domain and scope circumscribe the describable properties and the possible purposes that descriptions might serve. (From §5.3, “The Process of Describing Resources”.)" (Robert J Glushko, "The Discipline of Organizing: Professional Edition" 4th Ed, 2016)

"The features and characteristics of a product. Scope creep occurs when additional features are added during development." (Pamela Schure & Brian Lawley, "Product Management For Dummies", 2017)