Simplifying ERP with Agile: Is it really possible?

Whether your company a small or medium-sized enterprise (SME), or a big organization, implementing an ERP system (Enterprise Resource Planning) is a major strategic decision, often the key to managing a successful business. But putting such a system in place – revolutionizing the way your company operates - takes a lot of work. It can be a very complex process that takes resources, commitment and changes throughout the organization. And the results aren’t always what you were hoping for; it might take more time and money than expected, or turn out to be less effective, or fail to achieve your company’s goals. To capture the positive aspects of using ERP software, management and the organization as a whole all have to be ready to accept and embrace the huge change that implementation will bring to the company and its daily activities.

In recent years, business management models have had to adapt to new production conditions, forged by intense competition and demands for higher, faster, better productivity. This “new normal” has transformed the very nature of the projects a company manages, to the point where the principles of traditional project management no longer cut it. So to help the organization and its project managers handle complex projects, evolved methodologies and techniques have come into play.

Agile is one such approach, based on interacting constantly with stakeholders and tackling projects in iterations, which are called sprints in the Scrum language, the most popular framework in Agile. It’s all about iterative software development with an accent on communication and human feedback, adapting to changes and producing tangible results. But is it possible to effectively apply Agile to implement ERP? If so, what’s the value added?

Overall, is the Agile approach really better than traditional ones?

To find the answers to these questions, we developed a study using qualitative analysis centering on 4 ERP specialists who’ve used Agile. Our aim is to collect specific, non-generic information on the topic through semi-structured interviews. Then to get a broader perspective and to enhance the generalizability of our findings, we converged our qualitative data with quantitative evidence from 44 valid responses to a questionnaire. Our respondents work in 14 different companies: 80% in consulting firms, and the rest in organizations in various sectors that have put ERP projects into practice.

Our initial findings show that yes, it is absolutely possible to adopt an Agile approach in ERP projects. (To verify that the interviewees have actually done so, we asked them which Agile values, principles, or practices they’d applied.)

But can it be done in a really effective way? How? The answers are one of the most illuminating discoveries of our study. But we need to emphasize that our interviewees weren’t unanimous here. Each one gave a detailed personal opinion, describing the conditions that make Agile work – as well as its limitations - in ERP projects.

Based on our study, we can say that it is possible to apply Agile effectively in certain project stages or activities, especially when it comes to iterations. But to be clear, some elements of the waterfall approach are still needed to allow organizations to handle the high-level integration that typifies ERP systems.

As for the strengths of the Agile approach, here the interviewees agreed: the biggest plus is flexibility. Also trust, which is both a strength and a requirement, because trust enables the company to create a work environment that’s less formal, more streamlined and less bureaucratic. This in turn simplifies relationships and managing activities. On the flipside, a lack of trust can throw a wrench in the works and even cause the project to fail. Another Agile value added is timing: sprints set the tempo that the team has to keep, which might be more stressful for some, but it also makes for better results. And last but not least, Agile reduces risk, in particular the risk of getting all the way to the final stages of a project with features that the customers didn’t sign off on.

Now let’s take a look at the weaknesses that came to light. First and foremost, the challenge of change. Agile calls for “change in change”, and for any organization that means problems. Then there’s the question of applicability. In fact, the Agile approach can’t be used straight across the board in any given scenario, and applying it where it doesn’t belong can cause major issues. The risk component comes up again here as another one of the weaknesses of the methodology. But in this case the risk is potential selfish or irrational behavior by the user, who tends to tack on additional requirements that can lead to one or more sprints spinning out, along with all the related activities.

Pulling all these threads together, from our research we didn’t come up with a single definitive answer to the question of whether Agile is better than other more traditional approaches. It depends; under certain conditions. In ERP projects, for instance, the Agile story can’t be told simply with “it either works or it doesn’t.” Out of all the responses we got in our study, this is the one that sums it up best: “When it works, Agile is no doubt an effective approach that guarantees higher performance levels in terms of quality and release time.”

One possible solution that many interviewees speculated on is a hybrid approach that incorporates the best of both worlds: traditional and iterative. But developing, applying and managing this kind of approach is no simple thing – it takes experience to figure out how to utilize it in such a way as to improve project performance.

So this is where new research scenarios open up – to flesh out the idea of a hybrid approach and to make it user-friendly.