V. Example: A Company’s Use of Agile in ERP Transformation

A major European company launched a multiyear overhaul of its core technology systems, aiming to replace its outdated ERP system with modern technologies and introduce new functionalities. However, as the transformation progressed, it faced numerous challenges, including the absence of a clear business case, limited business ownership, and insufficient vendor and program management. The project scope was also overly broad and complex, making it difficult to execute effectively through a traditional, step-by-step waterfall approach.

To realign the program, the company concentrated on three key actions:
a) narrowing the program’s focus to prioritize the most impactful components,
b) creating and applying an agile delivery method specifically for ERP, and
c) setting up a disciplined Project Management Office (PMO) to ensure structured oversight.

To facilitate agile delivery, a new operating model was crafted for 85 full-time employees, aligning a wide range of stakeholders—including internal business and IT clients, the ERP vendor, the system integration partner, as well as onshore and offshore development teams, and infrastructure partners. This team and the program shifted swiftly to an agile delivery approach.

To achieve this, the FTEs were restructured into four functional domains made up of three cross-functional agile teams, each focusing on tasks like product catalog development and integration. Additionally, four cross-functional domains with around five teams were created to handle areas such as data migration and electronic data interchange (EDI). A tailored agile approach was then developed to address the unique aspects of ERP, and the new structure received training and coaching on this methodology. The agile PMO guided the program by supporting agile ceremonies across the project, resolving complex challenges, swiftly removing obstacles, and implementing a new backlog management and tracking tool.

The agile approach applied to this ERP implementation delivered multiple key benefits:

1. Greater Transparency: Project teams utilized a work-flow management tool to map macrofeatures (“epics”) to specific increments or sprints. Each sprint’s progress was tracked by user stories and story points, and overall project advancement was measured by completed epics. This transparency allowed teams to monitor and adjust their progress effectively, using agile retrospectives to steer any necessary course corrections and escalate blockers to management. Leaders also gained clear visibility into delays, their costs, and causes, enabling swift, informed prioritization.
2. Improved Team Coordination: Team alignment was fostered through synchronized planning sessions. Increment planning involved all functional and transversal teams in one room, with dependencies clarified at the start of every sprint. Biweekly huddles kept cross-team communication flowing, while weekly “war rooms” allowed for escalation of issues and review of performance metrics.
3. Focused Troubleshooting: The PMO, acting like a SWAT team, addressed complex challenges quickly. This included impact assessments, rescoping analyses, and planning extensive test cases. Nearly half of the PMO’s work focused on hands-on troubleshooting, reshaping the operating model and creating streamlined test protocols as the project evolved.
4. Agile Team Structure: The agile teams had end-to-end delivery capabilities, with each two-week sprint including development, testing, and user demonstrations. Following each two-sprint increment, rigorous user acceptance testing assured functional quality. By fully adopting scrum ceremonies, the teams saw positive outcomes in just a few weeks.
5. Detailed Agile Playbook: An adaptive agile playbook captured the tailored approach, guiding the translation of ERP requirements into epics and user stories and establishing a robust backlog. This living document detailed project documentation processes suited for agile, including simplified technical specifications and agile-specific terminology like “ready and done.”

The program ultimately exceeded its performance goals. Delivery time was reduced by 23% compared to initial estimates, due in part to minimized rework from iterative updates based on user feedback. Agile practices also improved delay management, reducing timeline disruptions with intermediary deadlines and an incremental approach to scope. Integrated testing and regular user acceptance checks revealed significantly fewer bugs than prior waterfall releases. The agile approach also expanded delivery scope by two to five times compared to similar past releases, as cross-functional alignment improved. User engagement throughout the process led to stronger satisfaction with the final solution, while team morale significantly increased, as noted in retrospectives — adding momentum to the program’s success.

Since the start of the project, more than 40 individuals have been introduced to agile principles and workflows, leading to a revised operating model for the company that highlights the clear advantages of an agile approach — ultimately challenging the notion that agile doesn’t work for ERP systems.