Demystifying ERP Project Implementations with Agile and Story Points
Business growth is a major theme for midsize companies and businesses are turning to modern ERP software like Microsoft Dynamics 365 Business Central to harness current and future growth. However, modern ERP project implementation methodology is an unknown to many businesses.
So what type of methodology works best for ERP project implementations?
Agile is a popular methodology that is used for software development, engineering projects, and ERP implementations. Common ingredients with those three disciplines are changing requirements during projects, databases, and programming. Agile project management includes comprehensive requirements gathering and design, but also divides implementations into short intervals called sprints. For example, an ERP project implementation could include five, ten, or fifteen sprints.
To create sprints and manage these project intervals, an ERP partner creates user stories. User stories capture end user requirements in plain language and are made up of four parts: the role of the requestor; the goal of the story; the benefit of the goal; and acceptance criteria. For example, a warehouse manager (role) wants to efficiently lay out their warehouse for picking (goal), so that you can pick shipments quicker (benefit) and picking is completed in the first four hours of the day (acceptance criteria). In this phase, your ERP partner will examine functionality needed for finance, operations, human resources, supply chain, manufacturing, and more.
The aim of a business analyst is to capture your requirements and break features into granular stories and manageable sprints.
Agile Story Points and User Stories
Once the user stories are confirmed, the next step is sizing the stories based on complexity, effort, and risk. This is done with Agile Story Points. Agile Story points are used instead of assigning hours since project estimation is challenging due to various factors, including developer experience and project team size, to name a few. Complexity is how difficult a feature is to develop, risk includes project uncertainties and requirement changes, and effort is actual project work.
Sprints are timeboxed, typically one to four weeks, and a grouping of stories are assigned to the sprint. This grouping of story points allows your project manager to begin assessing project velocity. Over the next few sprints, optimally 5 or more, your project manager can begin using the velocity, which is a basic averaging calculation of completed stories, to determine project progression and ensure the correct number of stories and points are being planned per sprint.
For example, if 50 story points were accepted in a 121-story point sprint, your velocity score would be 43.23% (50/121 = 41.23%). Velocity, over time, can balance the correct amount of work for the team in each sprint.
Agile methodology allows your project manager to separate the estimation of effort (project work) from the estimation of duration. Effort and schedule are related but separating these elements allow each to be estimated independently with story points.
Agile metrics are used to ensure the success of ERP project implementations. Earned Value, Variances, and Performance Indicators on Schedule and Cost are also project metrics based on story points.
For example, Earned Value is a metric that measures the dollar value work completed to the estimate. The percentage completed is calculated by dividing the total number of story points in the project by the sum of story points that you have completed:
Percentage completed x Project Budget = Current Earned Value.
To determine if the project is on schedule or behind schedule, the earned value is subtracted from the planned value of the project, which is the expected amount spent on the project. This metric is called Variances.
Lastly, the Performance Indicators on Schedule and Cost determine whether you are efficiently using the budget. For example, if your earned value is $93,000 and the Actual Cost to date is $56,000, the schedule and cost indicator is 1.66 (93,000/56,000). A one indicates the project is on schedule, and anything less than one states that the project is behind schedule. In this example, at 1.66 the project is running ahead of schedule.
Story Points are also used to identify user stories that are too big to complete in one sprint. When there is large sizing on a story, this is an indicator that the story needs to be planned in smaller pieces. So the story is split into different tasks for each sprint.
ERP project implementations involve many team members and can be a lengthy process, but story points and other Agile metrics move your implementation forward. Bottom line, ERP implementations are complex projects with changing requirements and an experienced partner can ensure the right metrics are being measured and keep your ERP project moving forward, assuring you obtain the desired outcome.