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The main promise of the Agile Implementation Methodology is to avoid pitfalls and problems associated with waterfall implementations. Let’s analyze what the main problems with classical implementation process are. According to our research and experience four main reasons for ERP system implementation failure are:

• Failure to manage scope and cost
• Undefined and/or untested business requirements and workflows
• A budget and implementation plan that was not grounded in reality
• Lack of management involvement in the implementation process

Following diagram shows the steps for an Agile System Implementation:

The ERP system implementation is divided into very short (2 week or less) iterations (ending with delivery of finished product) that provide incremental value to the project. First iteration consists of setting up standard system with customer data and “Key User” training. “Key Users” are trained based on the high level processes that have been defined during “Agile System Selection” and its main goal is to define GAP’s in the functionality that will be logged initially into the project WISH list.  At the end of the each iteration the WISH list will be reviewed and a “Critical Task List” will be created. Only “Critical Tasks” with highest priority will be scheduled for the next iteration. The amount of tasks scheduled for next release will be limited by resource requirements to guarantee a short iteration cycle. Only completely defined tasks will be assigned for the next release. Other tasks will be delayed and defined during process analysis workshops that will be scheduled during the next iteration in development. This approach allows us to manage the scope by concentrating  on the critical tasks only while allowing the project team to define processes and functionality that need additional clarification.    

Let’s see how agile methodology addresses problems from waterfall methodology:

Failure to manage scope and cost - efficient scope management is the base of the agile methodology. Each iteration focuses only on the CRITICAL tasks that add maximum value to the project. The short iteration cycle guarantees that, if a mistake is made or changes occurred in the business environment, corrective action can be taken quickly and with minimal losses for the project. The most important concept of the Agile Implementation is CRITICAL task. A task is considered to be critical if the ERP system cannot go live without its completion due to regulations or resource restrictions.  Agile Implementation is based on the assumption that functionality and benefits of the base system that has been selected are justifying the cost of the implementation and the loss of any NON-CRITICAL functions that exist in the current system is acceptable. Any additional functions that lead to time savings or operational improvement are considered as incremental value and will be realized during “Agile Continued Improvement” phase.

 Undefined and/or untested business requirements and workflows – we believe that business requirements cannot be completely and efficiently defined before the ERP Implementation starts. Agile Implementation recognizes and accepts the fact that the project team may not have a complete set of requirements when the implementation project starts. At the same time Agile Methodology recognizes the fact that requirements can change during the project and therefore is focused on continually defining business requirements and focusing only on the CRITICAL tasks that provide maximum value to the project at any point of time. A task will be placed on the Release Schedule at last possible time and only when it is completely defined and the value of the task is clearly understood and defined. The second core concept of the Agile Implementation is TASK VALUE. Task can have “Regulatory” value, i.e. it is required by some external authority (government, customer, creditor), or “Incremental” value, i.e. it allows the company to save some resources as result of implementation of the task. Agile Implementation Methodology focuses first on the tasks with “Regulatory” value only and then on the tasks whose “Incremental” value will allow the company to go-live with the available resources.          
 
A budget and implementation plan that was not grounded in reality – as we mentioned before Agile Methodology is based on the assumption that the base system that has been selected is providing enough value to justify the implementation. With this in mind, Agile Implementation Methodology focuses on minimizing negative cash-flow from the implementation by allowing company to go-live in the shortest possible time and allow the company to realize benefits and savings from operations while continually improving operations during Agile Continued Improvement Phase.  With availability of 0% financing options from Microsoft, Agile ERP Implementation can provide positive cash-flow in the first year of the implementation. 

 
Lack of management involvement in the implementation process – even though Agile Implementation Methodology does not address this problem directly, project management practices used during implementation and the whole concept of the product releases creates base for the company management involvement. At the end of each iteration a new set of critical tasks is identified and scheduled for the next release. The VALUE of the task is clearly defined and easy to understand by company management without reviewing too many details. This makes project review meetings more structured, short and productive with ability for company management to participate and provide their input more efficiently.