E NTERPRISE C HANGE M ANAGEMENT

ERP Application Lifecycle Management (ALM): 10 reasons why ERP change management has outgrown helpdesk .

Advances in ERP applications combined with complex implementations are challenging ERP specialists to manage change faster with fewer errors. As business-driven changes come faster, many ERP managers are struggling to break the ROI barrier for their ERP applications. Helpdesk-centric CM strategies do little to address the needs of complex ERP support and upgrade tasks, and increase the ’s exposure to unmanaged and unauthorized ERP changes. Now, process-based CM/ALM capabilities are providing the ability to bridge an ERP from the implementation project to Level 2 production support with much less risk, while reducing ERP ownership costs (TCO).

Introduction

ERP Applications are driving Enterprise Change Companies using Enterprise Resource Planning (ERP) applications are making large investments in the future. It is said that implementing an ERP application The best Enterprise can be compared to “re-wiring the Enterprise Central Nervous System”. These Software for your Enterprise Applications carry a hefty price tag and require months of preparation company, the best prior to final testing and rollout. Enterprise IT architects plan the enterprise data consulting effort to using key ERP data stores, including Oracle’s Trade Community help configure Architecture (TCA). Next generation ERP apps will introduce new technology-- workflows to match Web services, integrated analytics, business-activity monitoring, portals, data your needs, and a hubs, and repositories--all of which must be mastered to be used effectively. serious investment in the future. Every At the heart of the primary ERP vendors’ redevelopment efforts is the adoption of business has its own service-oriented architectures, Web services standards, and way of dealing with management technology. SOA and BPM, the vendors say, are critical to making change. How you their applications more modular and easier to adapt as needed. respond can mean the critical difference Why do so Many ERP Implementations Fall Short of Expectations? between paying for it Since ERP projects were monitored to evaluate their success rate and resultant - or profiting from it. business impact, the majority of these implementations since 1995 (65%-75%) missed original expectations, coming in late and over the initial budget. Most companies simply underestimate the amount of change associated with deploying and operating Enterprise Applications. Once in operation, there is a constant stream of changes driven by the business, numerous patches from the application vendor, and literally hundreds of minor and maintenance changes each year. The cost for this underestimate can be significant, and can often exceed the cost of the Enterprise/ERP Application software. Change Management (CM) errors cost time and money, result in miscommunication, and erode user confidence.

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Redefining IT Change Management to Application Lifecycle Management (ALM) This article explores CM/ALM (Change Management/Application Lifecycle Management) for Enterprise Applications throughout the Application Lifecycle, highlights common mistakes made, provides an understanding of the magnitude of the challenge, and shares some lessons learned. It is surprising that the complexity of the average applications environment does not compare favorably with the typical level of CM/ALM automation used to manage changes in these environments. Companies invest heavily in Enterprise Applications, employ experts for several months to configure the application, and then typically use inadequate software that is not Sarbanes-Oxley compliant for Change Management. This is often an expensive mistake that can easily be avoided.

Business-oriented Change Management has become the preferred approach for ERP projects to address the widespread business process impact. As such, there has been a certain amount of confusion between Organizational Change Management and that in the IT lexicon, where Change Management is discipline associated Application Software and Configuration Changes (along with software configuration management, issue & defect management, release management, etc.). Rather than approach application change as separate events, these events are in fact part of a series of processes. To address the full scope of IT change management activities and IT Governance, Management vendors are delivering the next wave of process-based solutions for managing change to Enterprise Applications, now referred to as Application Lifecycle Management (or simply ALM).

The ALM Mandate: Application Management & Change infrastructure should mirror processes defined not simply to monitor change, but to facilitate change. ALM solutions target embedded productivity and compliance through change governance for Oracle E-Business Suite (EBS). As such, integrating the Source Version Control with Issue/SCR Management and Release management are key distinguishing characteristics to more traditional CM solutions. These solutions are aimed at easing compliance and change governance challenges, including change auditing and security, and application enhancements. ALM delivers the simple, powerful and persuasive answer for change theorists: foundational controls. That is, enforceable processes that clearly governed how change would be defined, monitored and thus implemented. Top-tier performers are not merely change embracers or early adopters; they identified and enforced “process commandments” that constrained wasteful behaviors while reinforcing productive discipline.

Identifying Core CM/ALM Disciplines One example of a core process discipline in the that consistently outperform when it comes to change is effective integration of the Issue/SCR Management, Version Management and Release Management processes. Maintaining version control for all custom objects in the production database, or implementing version control software is an example of a high-impact control—call them process enforcement controls—that gives IT leaders greater leverage over their process investments. The bottom line is that these process tools make good developers better and faster at doing what they do best. For example, when developers have ready access to earlier versions of custom objects, using intelligent compare utilities to identify changes across revisions, they are much more likely to perform more accurate impact analysis. When you provide these process enforcement tools across development teams, you then create a more fluid transition process that significantly reduces the propagation of errors.

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Understand the Objective of ERP Applications

For a large percentage of ERP customers, an ERP implementation has been the most complicated and costly software project they have undertaken. Companies have made big investments in ERP software, and leading CEO’s now want to see IT contributing more to the bottom line – producing higher value at lower cost. Notwithstanding, patches and new releases create ongoing support and business adaptation challenges that can chip away from the returns on ERP investments. Unmanaged changes to ERP applications have generated some of the most recounted project horror stories. Consequently, ERP Change Management is becoming the focus of attention in many IT organizations.

Enterprise applications are intended to: A key variable in determining the Total • Standardize individual, workgroup, and corporate Cost of Ownership (TCO) Business Processes throughout the enterprise. for your ERP application • Leverage corporate data from “End-to-end”. is to manage and control • Make changes in Business Processes easier and give the the cost of incremental company a “competitive edge”. changes. • Increase employee interaction and reduce duplication of effort Changes are inevitable. Most companies adapt their business processes for their ERP, but initially find it easier to reduce the impact of the organizational change by customizing and extending the ERP functionality to provide legacy system capabilities that are considered to be business critical. The magnitude of these collective changes is more than most companies can effectively manage. Staffing levels required for steady-state support operations quickly become overwhelmed because the roles they have traditionally played must take on significantly more responsibilities, and the roles in the ERP environment are very different from legacy system administration functions.

ERP Application Lifecycle Management: Level 2 vs. Level 1 Support

Until recently, IT Change Management had traditionally fallen within the domain of a helpdesk or service desk-based operation. Largely due to the widespread install base of helpdesk software, it became a de facto standard for Level 2 ERP support specialists. Unfortunately, most helpdesk software does not address the wide variety of issues that are encountered, nor does it facilitate the interaction between the business user and Application support specialists. Experience shows that this issue would pose a critical shortcoming to implementing workflow-based processes with the key decision-makers and subject matter experts in the business community.

Level 2 Support: Processes defined for ERP Application Specialists

ERP specialists, including business analysts, application administrators and technical application specialists manage and perform the various level 2 Functional and Technical ERP support functions. Many of these level 2 support processes, issue and defect tracking, actually begin during the ERP implementation project when the ERP application is being configured, customized, etc., and must be rigorously tested before it can deployed into production. In order to fully understand the difference between the typical Level 1 service desk and Level 2 Application support, it is necessary to understand the functional and technical scope of the various Level 2 ERP Support and Application Management activities.

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There are a number of CM-related challenges that can present obstacles to realizing the full business value of a company’s ERP Application investment. Unless you anticipate and prepare for change, the impact of change and related services issues is often more painful than expected:

• The underlying benefit of the ERP architecture, a common data and application architecture, also presents one of the biggest challenges. Since the various modules are tightly integrated, patches can affect modules which were not the original target of the patch. • Involvement and the level of commitment required of key business personnel during all aspects of business process and application functionality discussions. CM errors will result in miscommunication, delays, and more time required from your key business personnel. • The number of patches, revisions to the ERP applications, and the modifications needed to the basic ERP software to accommodate the newly revised business process. • For hosted ERP users, the responsibility for defining change requirements, authorizing, testing, scheduling, coordinating user notifications and procedural updates for ERP changes, as well as developing detailed installation scripts and cutover/release plans are the responsibility of the ERP user, and their Level 2 support staff. • Sarbanes-Oxley compliance and significant changes in audit methodology. • The impact to the organization and the related stress for company personnel during the high rate of change during the implementation. • Expert consultants are frequently used to perform the discovery of key business processes and to estimate the magnitude of modifications to the ERP applications necessary to implement them. Many of these consultants usually end up staying well beyond their original project end date.

Typical ERP Level 2 Support & Implementation Project Activities

ERP Application specialists are the frontline forces that facilitate enterprise change via ERP Applications. These ERP specialists must continue to simultaneously provide expert support for power users under existing business and ERP apps, while preparing for newly deployed ERP updates. Both Level 2 (L2) support personnel and the power users in the business are crucial to ERP project success, as well as the transition to steady-state support operations .

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ERP Support and Project Activities/Controls: 5. Creating or changing custom code/application extensions. 1. Resolving Complex Application Issues and Defects/bugs that require evidencing of approval 6. Application Configuration Management across & testing. multi-tiered architectures. 2. Software change & enhancement requests. 7. Applying Vendor patches and upgrades. 3. Project Controls for both Issue Management 8. Application Testing Activities. and Project Change Coordination & Approval. 9. Database and Application Performance issues. 4. Changing application setups (Organization, GL 10. Release Management-planning and coordinating Account Codes, Cross Validation rules, etc.). complex changes/ releases.

Reason 1: This is one of the most common functions performed by ERP specialists Resolving and typically requires a very fast response in order to meet service level Complex expectations. The key to success is providing ability to capture adequate Application Issues information about the issue to determine if it needs to be addressed by a and Defects/bugs functional or technical resource, or a combination thereof. Moreover, the that require SOX issue resolution process requires close coordination between the technical evidencing of and functional users that can verify the resolution. In many cases, these Approval and ERP issues require research be done with the Application Vendor. At the Testing. same time, the more you understand about the various application issues, by capturing them in a centralized knowledge base, the easier it becomes to perform root cause analysis.

ERP managers are required to spend a large percentage of their time verifying with developers that pending changes and patches have been tested by the appropriate users, have been approved by both IT and business management, and are included on a planned release schedule. In addition, there is an ongoing need to research the status of individual Change Requests (SCR’s), and report back to the IT management and business representatives, who will then provide the individual update to the requesting stakeholder. For many ERP managers, these activities will consume a large portion of their time and energy. In most organizations, this area proves to be the acid test for how effectively IT and the Business are aligned when it comes to managing their ERP investment.

The process for capturing and tracking software change requests is an Reason 2: Software integral part of managing a support and development team’s workload. Change & Enhancement Software change requests can in fact become mini-projects within a support Requests and development organization, which need to follow a defined development and testing process. They can be managed with the other work backlog and tracked for progress, traceability and subsequent change control/release management purposes.

Without exception the best way to reduce CM Impact & Approval Request Budget to Project cycle times of CM requests and facilitate Assessment Planning Resource Proceed user and approver acceptance is to ensure Assignments that communications are structured, Functional Reduced Cycle Time predictable, and efficient. Simplifying the CM Cross – Functional Request Communication with Compliant Audit challenge further, automated notifications Closed Trail are needed between the IT management and business stakeholders who are key to Approval to the approval process for implementing Source Code Promote Testing application changes. Management to Complete Production

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A common solution to issue management is a combination of email and spreadsheets. On ERP projects, this approach rarely does justice to the magnitude of the coordination problems, and the importance of tracking and managing issues & defects during the pre-production phases.

Unmanaged change and miscommunication can cause the even the best project plans to unravel. The best defense against this project variable is an effective CM strategy.

Common mistakes made in Enterprise CM/ALM • CM functions implemented only around source code promotion processes; • Overloading Spreadsheets & email-based processes; • Not providing/including the ability to manage change across multiple environments; • Building out a CM strategy around “home-grown” utilities (Level 1). • Level 2 application specialists using Level 1 toolkits • Problems associated with release inconsistencies across development, testing and production environments.

Both new implementation and ERP upgrade projects require a high Reason 3: Project Controls level of interaction between the functional experts configuring the for both Issue application, technical users developing extensions and new reports, Management and Project and business testers. Issue management is a critical project control Change Coordination and function, especially in conjunction with testing activities, to ensure Approvals that issues are addressed prior to production releases.

Linking issues directly to related source code revisions (for both fixes and enhancements) is a fundamental capability supporting the release management process.

Managing Project Change during Peak Project Spending Another common misconception about ERP Change Management controls center around when these controls should be introduced in the Application Lifecycle. As you can see from the opposite image, peak spending occurs well before the production release or cutover. Thus, managing change effectively during peak project spending ensures that the right resources are

focused on issues that need to be addressed before releasing an ERP application to the business community. A customized Oracle Financials 11.5.10 upgrade project can expect to encounter in excess of 300 issues that need to be resolved by a combination of the business, and ERP functional & technical specialists. A new Oracle 11i Financials and HRMS implementation can encounter 600-700 issues, or more, of varying complexity. Allowing these issues to go unresolved until after production release may result in a loss, or limited use, of key business functionality.

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An Organizational View of an ERP project in CXO/ Distress. Finance/ Controller As the rate of change accelerates during an ERP Business Area implementation or upgrade, traditional communication Owners channels can quickly break down from the volume demands SME / Super Users and delays on issues that require business involvement. Ad hoc communications invariably Dev DBA Sys Admin result in key stakeholders being left out of the loop.

IT Project IT Ops Miscommunications and Mgrs Mgr inadvertent omissions lead to misunderstandings, missed expectations, and prolonged IT Senior change and issue resolutions. Shifting priorities and scope Mgmt creep become unmanageable when business process owners, functional leads, and super users are not “in-sync” with technical teams and testing groups.

Implement ERP Application Change Governance using Process- based ALM

Understanding the CM/ALM Challenge of ERP/Enterprise Applications

According to the Yankee Group, “75 percent of application downtime is caused by ‘self inflicted’ errors ”. In today's world, IT spending is under the value microscope as never before , 80 percent of IT budgets are used just to maintain the status quo. CEOs and CFOs want to see more return on their ERP investments. In addition to spending wisely on self-funding, higher performance IT investments, IT executives must provide Enterprise application change controls on business critical applications that support , visibility, speed and audit-ability.

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Change and adaptability ERP Applications have established their place as the enterprise cornerstone have become the central for future enterprise architectures (which is also underscored by Oracle’s tenets to surviving in a new new Fusion architecture). What we have learned from countless studies and and unforgiving business hard won experience is that implementing an ERP is highly demanding for landscape. IT strategies both the business and IT. The ERP project statistics have reflected this must mirror these new challenge, and interestingly enough one of the common complaints is adaptive demands on the missed expectations. Controlling change, whether from application setup business or risk becoming activity or custom development, is one of the biggest factors in determining another victim to outsourcing. whether your ERP project will become another statistic. A successful organizational change strategy will not overcome the problems you can As ERP applications reach encounter by missed expectations and Application service issues caused by further out into the inadequate Application Change Management processes. organization and impact the operations across so many departmental boundaries, Increasing the Stakes for Aligning the Business & IT the ability to implement ERP Application change In almost all cases, ERP implementations stretch the organization by efficiently with minimal imposing a greater level of collaboration between the Business community errors has become a key IT and the IT community, beyond the level of business involvement in earlier performance measurement. IT projects. Without exception, the ERP Application Change Management processes that effectively include the business stakeholders and decision makers in the process result in consistently higher levels of satisfaction. An effective Enterprise Application Change Management strategy simplifies and automates the processes that support and development teams use to manage and migrate Application changes.

The ALM Objective: Business-oriented Change Governance As Change Governance becomes an imperative, the ITIL foundation is a significant underlying factor. Managing ERP issues resolution, ensuring Change and Release processes are strictly followed, and fully understanding complete Configuration information and impact prior to approving and implementing changes is key to ensure that critical systems are not negatively impacted. The way to reduce cycle times of CM requests and facilitate user and approver acceptance is to ensure that communications are structured, predictable, and efficient. Simplifying the challenge further, interactive communications between the stakeholders is the key to solving the most common failures of CM.

In many cases, Enterprise Application support organizations rely on inadequate Level 1 helpdesk products, overloaded spreadsheets, or homegrown solutions that result in unstructured communications. At the same time, complex ERP implementations and SOX audit demands require a process-based approach that can enforce mandated approval requirements and engage approvers from the business community.

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ERP Application Setup values control the behavior of the ERP application, and personalize the Application for each business. Business Analysts and System Administrators can take painstaking efforts to correctly configure Reason 4: an ERP for transaction processing via controls such as check formatting Changing ERP and programs, receiving options and cross-validation rules. Setups, initially Application Setups entered during implementation, are modified and maintained during upgrades and on-going maintenance. Changes impact business operations and must be tightly managed and controlled, and meet SOX audit requirements.

An ERP Application technology stack is extremely complex with extensive interdependencies. Any RICE development (Reports, Interfaces, Reason 5: Conversions, and Extensions), patches or upgrade can have far-reaching Creating and impact and must be tightly managed and controlled to ensure there are no changing custom undesirable effects on other ERP modules. Impact Analysis and Source code/application Code Version Control tools provide critical versioning and impact analysis extensions capabilities that can dramatically reduce the time and effort needed to process source code changes.

Reason 4 and Reason 5 highlight specific examples of how ERP applications require a combination of Technical and Business Analyst (or Application Functional) skills to understand that business impact of a given issue or change. This collaboration also means that Application Support Specialists are more likely to focus on ERP changes and enhancements that return value to the business.

Building a Framework CXO/ Finance/ for Aligning the Controller Business & IT Business Area As the earlier image of Owners unstructured/informal change SME / Super Users channels depicts, the process Audit of coordinating ERP changes Compliance Application Change Management Layer across multiple departmental boundaries can quickly break Issue Release Management Process Management down into separate functional Defect Tracking Ma nagement Change Tracking and organizational silos.

Dev DBA Sys Admin By implementing a structured CM/ALM infrastructure, IT IT Project IT Ops applications support Mgrs Mgr specialists have the foundation for implementing SDLC IT Senior Mgmt processes, ITIL, CMMI, as well as internal IT controls.

Managing the ERP Application Change Lifecycle

Inadequate Enterprise Application Change Management poses the greatest risk for errors and miscommunication in an Enterprise Application environment. Each error and miscommunication costs money to resolve. CM/ALM tools provide the centralized infrastructure for stakeholders to communicate and interact during the implementation and steady-state support operations of

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Enterprise Applications. Using a closed-loop workflow approach enables Business and IT to collaborate in a meaningful to solve problems, and provide a SOX-compliant audit trail for each change processed.

Making changes to the applications that are the business’ lifeblood has Reason 6: always been a high stakes game, but never more than now, when those Application changes have to comply with regulations such as Sarbanes-Oxley and Basel Configuration II. The concept of Configuration Management for ERP applications in Management particular represents the future in systems management, enabling across multi-tiered organizations to baseline configurations, audit user activity, institute architectures. change management processes, institute security controls, and automate validation.

One of the most important and time-consuming Oracle Applications DBA job is applying patches to the E-Business Suite. Patches may be required to Reason 7: Applying resolve problems with the application code, to fix production issues, to Vendor patches install new features, or to upgrade components of the technology stack. and upgrades Patching is not a simple one-step process, but rather requires careful research in order to determine all of the prerequisite steps, patching steps, and post-patching steps required. Many times, testing is required to determine any unintended changes that may be included with larger patches.

Preparing for the changes involved in migrating to Oracle Release 11.5.10, and beyond… For Oracle ERP users, the migration from release Local Application New Release /Version 11.5.8 to 11.5.10 can represent daunting release Customizations management challenge. Close coordination is Test Prod required across the functional, technical and Dev DBA teams. The cutover process must be ERP Upgd* New Vendor planned in painstaking detail to ensure no steps Environments Release Software are missed. New Release / / Patch Updates Patch implementation Even without upgrading database releases, this Apps upgrade requires up to 90,000 processes to * Apps Upgrade Test Environment. execute, and can take 4 days to complete (depending on the size of your ERP database).

Regression Testing can strike fear into the hearts of any seasoned ERP specialists. Testing activities can absorb an excessive amount of time from Reason 8: some of the key business users and subject matter experts (SME’s). Their Application Testing valuable time must be used judiciously. The last thing they want to do is Activities. retest an application function only to encounter problems that have been identified and reported already. Many people do not realize that this is both an area where tremendous savings can be realized (by reducing unnecessary retesting activity), and where the confidence of key business users can be either won or lost.

Application and Database performance have become a key factor in

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measuring overall user satisfaction. A poorly performing ERP application Reason 9: is commonly viewed as a broken application by most application users. Database and ERP customizations and extensions can be prone to performance issues, Application especially when user loads and data volumes/database size increase. More Performance often than not, performance issues are not easy to predict until the system Issues. reaches a threshold load factor. These performance issues require close coordination between the Level 2 technical and DBA staff to analyze performance statistics to determine the root cause.

Reason 10: In general, release management is about controlling the flow of changes Release into a production environment. In order to control, one needs to know what Management- is being controlled and how it is being controlled, so a plan is a requisite planning and part of the release process. ERP Release Management can involve a coordinating complex series of orchestrated activities, both functional and technical, that complex changes/ leaves very little room for error. releases. As depicted in the diagram below, Change Management is fundamentally a sequence of interconnected processes. Release Management represents the final stage of the change cycle. For ERP applications especially, the Release Management discipline through consistent execution release plans minimizes the risk that changes in the system will disrupt a company's business.

Managing the Transition from ERP Implementation to Level 2 Support

If your organization has outsourced your ERP implementation project (or even a significant new release or upgrade), then you probably have encountered the challenge of transitioning ERP support tasks to an in-house support organization. Implementing an ERP support structure poses a key challenge for all new ERP users. Support processes must be well defined to quickly triage issues that need to be routed to functional analysts, technical analysts or referred to Oracle to identify corrective patches that may be required. Overloaded spreadsheets and ad-hoc email communications are the single largest contributor to the inadvertent creation of both functional and organizational silos in an IT organization . Homegrown solutions are quickly overwhelmed by the sheer number of changes in a typical ERP environment. ERP managers must have control, insight and predictability into the Enterprise Lifecycle, and effectively manage the Level 2 Support Processes performed by ERP specialists.

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In order to fully understand the business value of effective CM/ALM practices, you need to consider how your ERP application management and change processes directly impact the TCO (Total Cost of Ownership) for ERP Applications. The general consensus from those that have adopted CM/ALM are tangible improvements in quality, service levels and financial metrics, directly resulting from: • Higher • Improved time to market • Less rework required • Improvements in financial metrics (ROI & TCO) • More predictability and better understanding of Project Status • Better Compliance with IT and SOX controls Companies make serious investments in ERP and infrastructure to run their business, and employ the services of expensive ERP consulting experts to assist with the ERP implementation. The best approach to manage these business critical applications throughout their lifecycle is to use workflow- driven applications to both enforce process controls and manage the many changes, scope expansion requests, and stakeholder approvals.

Summary

IT's accelerated rate has generated an enormous body of change management material for CIO’s. Almost all of it addresses how to turn change management into a reliable, robust and cost-effective process. Change is not an event. Change management—like Application Lifecycle Management—is really process management, and change leadership is really process leadership. That's true for organizations, systems and ERP ERP applications are applications. At the same time, that is where the business can finally being put to the test in realize the promised Return on Investment (ROI) from their ERP the harshest business investment, by reducing CM cycle times, and getting changes driven by climate that most have the business into production faster and more reliably. witnessed in their careers. IT managers Visualize, Orchestrate and Enforce are now looking to ALM to solve change-related Top performers really don’t view these controls as behavioral constraints, problems, and also rather as infrastructure for innovation. Controls aren't shackles; they can prepare for Sarbanes- be change cycle accelerators. By embracing controls, developers have Oxley Compliance . greater flexibility in process management because disciplined and testing has proven more agile, robust and predictable than unauthorized change, with much less risk. Most recognized high-performance organizations are high-controls cultures, where Best Practices are synonymous with best controls. Allan B Hooks InterNext Group, LLC [email protected] 12777 Jones Rd, Ste. 297 832.814.8100 Houston, TX 77070

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