Enabling Peak Performance with ERP

By Nicholas Kerastas, The NetHope Center for the Digital Nonprofit

In a world where there are exponentially more humanitarian challenges than resources available to resolve them, every nonprofit must optimize all aspects of their primary and enabling activities (see the NGO Reference Model for descriptions of these) – every nonprofit seeks Peak Performance. An Enterprise Resources Planning (ERP) system provides the data foundation and digital capabilities for organizational peak performance and advances a nonprofit toward a state of information certainty where an organization can confidently make decisions on the information it has. Unfortunately, implementing an ERP is both expensive and risky.

Enterprise Resource Planning (ERP) Implementation Patterns for Nonprofits

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Most NetHope Members spend at least $500,000 USD on ERP implementation and, according to Gartner, 55-75% of ERP implementations fail. Faced with such high investment, to improve ERP implementation success for all nonprofits, NetHope, and our membership of 65+ nonprofits, embarked on a community-based research exercise to understand the implementation patterns around the deployment of ERP and surface current best practices for reducing complexity.

In the pursuit of reducing complexity from ERP implementation here are the top findings from this research study:

• A clearly defined and quantified business case for ERP implementation is essential to focus the organization on delivering the benefits.
• Senior leadership – including the CEO – must actively support the project throughout its lifecycle.
• Deploying an ERP necessitates the organization to assess and evaluate its digital capabilities and skills.
• Data quality and governance need attention from the beginning of the project planning phase, especially for organizations implementing an integrated business applications platform for the first time.
• The reported disruptions during implementation, primarily stemming from user adaptation and training, underscore the need for a thorough change management approach throughout and after the project.
• A benefit tracking mechanism needs to be in place for organizations to objectively assess the status of achieving the objectives of the ERP project as well as additional outcomes from deployment.
• Organizations must not forget operational necessities such as network capability, cyber security, and mobile/offline capabilities.
• The overall low Net Promoter Score (NPS) of -38 from respondents on achieving the business case shows that more needs to be done to ensure nonprofits achieve the desired outcomes from their ERP deployment.

The beginning of an ERP journey, and thus the first steps toward information certainty, tend to focus on core back-office functionality which is often managed through a variety of independent digital applications or a mix of paper-based processes and digital applications. Over time, however, the implementation journey can move from optimizing workflows, to expanding analytics, to enhancing transparency thereby enabling the organization to focus more effectively on the core mission. The deployment of ERP solutions achieves this by integrating disparate workflows in finance, HR, supply chain and other departments into a unified architecture that breaks down information silos. More specifically for nonprofits, ERP solutions can impact the following activities on the NGO Refence Model:

Primary Activities

• Program Design: Supports data-driven assessment, planning and stakeholder engagement.
• Fundraising: Provides visibility into funding needs and actuals, providing a transparent and up to date view which supports retaining donors and building trusted relationships.
• Program Delivery: Integrates workflows, approvals, tracking and reporting across finance, supply chain and HR for providing an up to date and transparent view of program operations, which can support forecasting, work planning and benchmarking.

Enabling Activities

• Finance: Directly integrates budgeting, accounting, payroll, reporting and internal controls via unified data pipelines.
• Supply Chain Management: Connects sourcing, procurement, logistics and inventory tracking to streamline and optimize the acquisition, distribution and management of goods and services.
• Human Resource Management: Centralizes workforce management, compensation, benefits, performance evaluation and learning administration.
• Information Technology: Delivers a core business application underpinning digital transformation as a key building block in the organization’s enterprise architecture.

Program delivery can view ERP as an administrative distraction rather than an accelerator of impact, thus necessitating alignment with leadership priorities and mission outcomes. Additionally, capable project teams, extensive end user involvement, and agile change management are pivotal to ensure ERP implementations resonate and deliver benefits across headquarters and field operations. Without collaboration around change, nonprofits risk investing in ineffective platforms, unengaged Users, and diminished returns on digital investment.

To assist nonprofits on their implementation journey, NetHope offers several ways to build capabilities:

• IDEA Methodology: Framework for envisioning, piloting, and scaling digital transformation projects.
• Digital Nonprofit Assessment: Benchmarking organizational digital transformation readiness.
• Digital Nonprofit Skills Assessment: Evaluates organization digital skills and identifies gaps.
• Leadership Skills for a Digital Age: A course supporting executives and senior leaders with building digital skills.
• vCIO Services: Strategic IT guidance for complex technology initiatives.
• vCISO Services: Expert security guidance for cyber security and data protection.

As principles of localization advance across the social sector, ERP solutions must align both with headquarter efficiency needs and local usability for impact. Prioritizing User adoption can enable program teams to leverage such digital solutions for allowing them to focus on impact generation, rather than viewing it as an administrative burden. With people-centered approaches, ERP solutions can truly enable peak performance and information certainty.

The research and findings of NetHope's Center for the Digital Nonprofit is made possible by Microsoft, Okta, Box, Avanade, and ServiceNow who have joined the initiative to scale impact as founding partners.