Complex projects or how to sell an automation project to management

Author of the article: Sergey Kamensky

ERP project manager at the Selidar group of companies – polymetallic holding

From time to time, when working on the customer side (in‑house), you encounter projects that are “difficult” to launch, which you, as an executor (analyst, architect, IT director), cannot sell to management or, being on the integrator side, you are faced with suspension or cancellation of a promising customer project. Just a few years ago, companies in Russia launched projects based on “best global practices” and sought to keep up with their neighbors, which became unattainable in 2024 due to the “deglobalization” of most Russian companies.

What could stopping a project for an indefinite period of time lead to for you and your team? You yourself or your employees will begin to burn out, it will be difficult to hire new employees to support and develop old solutions – the situation at first glance looks hopeless, since you, as an “IT specialist,” are only responsible for the implementation of projects and most often do not have the opportunity to influence the top ‑management directly.

Let's try to analyze the case and ways out of similar situations offered by experienced colleagues.

Before moving on to the case, let’s define the terms “complex” and “simple” for launching an information system implementation project.

The project will be classified as simpleif the conditions are met:

• Without a new system, the customer's business will be at risk of stopping.

• Eat examples of successful launches on a new platform in the industry (for example, on the 1C ERP UX, Galaktika ERP configuration).

• There are tosoftware solution + several teamswho implemented this boxed solution.

• Customer highlighted And agreed upon sufficient budget OR it ready to reduce the scope of the project and adapt to off-the-shelf processes (in some cases, like SAP or non-configurable solutions – even the allocated budget may not be enough at one point). On the customer's side key stakeholders are correctly identified (primarily the owner of the future product with the authority to resolve conflicts, the project curator and the project manager on the customer’s side).

And we will consider the project complex, If:

• Everything works for the customer, somewhat stably, on the basis of “old” systems (1C 7.7, 1C UPP, SAP, Oracle, etc.) – at first glance, the system does not limit business growth.

• There are no examples of successful integrated launches in the industry (no one to take an example from).

• There are no boxed solutions or they raw + there are very few teams or there are 1-2 companies that have made similar solutions.

• The customer cannot allocate a budget sufficient even for an MVP.

• There are errors in identifying stakeholders (the wrong employees are assigned, the assigned performers do not have authority, the assigned employees do not have time for the project, or some project roles are completely absent, for example, a curator).

For example, if you make the CIO the curator of a project for a business that is not an IT project, you can get complete ignorance from the business or a system that is accepted by the “curator” but not accepted by users.

Let's start by stating a problem that you may encounter in your practice.

You are the head of the project office at a mining enterprise specializing in the extraction and beneficiation of copper, consisting of several legal entities. To develop IT capabilities (integration with BI, mobile applications, implementation of MES, etc.), you need to replace key software that has been developed for more than 10 years with a new one, taking into account import substitution.

Software architecture:

Currently the company is in the following situation:

• Oracle Business Suite with customization, 1C ZUP KORP 3.1, 1C Document Management and other industry software have been implemented, more than 1 thousand workstations and the company is in development. All legal entities work in the same system. Software scaling is carried out in-house with minimal consulting. Regulated reporting is submitted from Oracle, but after 2 years it will have to be done entirely manually.

• There are no examples of successful integrated launch on domestic ERP in the industry – there is no one to visit as a reference model.

• Existing boxed solutions for mining enterprises (based on 1C) do not take into account the presence of some features of the metallurgical industry processes – whether specialized processes are adapted for coal or not (planning of blasting operations).

• According to consulting estimates, the project price is hundreds of millions of rubles. and the customer cannot allocate such a budget for a full-fledged project if it does not provide a quick economic effect – which makes it difficult to pay off.

• The functional customer is also a sponsor of the project, but is not the main production link and does not lobby for the project, despite the launch of individual activities by competitors.

You have been entrusted with the task of determining a roadmap for the launch and development of the project, choosing the implementation option with the best economic effect.

You have prepared a draft target architecture based on 1C solutions that already have positive implementation experience, and presented to the customer:

You were asked questions:

Where is the money in your architecture? How will I get my investment back?

Since most projects and the results from their launch are under NDA, the 1C vendor suggests turning to general metrics/statistics, a directory of implemented solutions, a description of projects of the year, and open company reporting:

Other solutions:

• Team experience – conduct your own assessment if there is a resource

• Contact a consulting company that may have experience in preparing a feasibility study.

Examples of financial and quality effects during ERP transformations:

To obtain the current values ​​of the above metrics, it is necessary to conduct a full pre-project survey, which, with an integrated approach, is quite expensive. And the best metrics values ​​are obtained when the project is fully launched with a synergistic effect of different subsystems (for example: automation of logistics blocks, repair planning and warehousing – gives a reduction in material inventories and other effects).

For the situation under consideration, an integrated approach (with the involvement of external experts) is not supported by management, and there are no internal resources for a detailed analysis of the benefits of the project – we decide to start with blocks that will give the best economic effect and are easier to calculate. At the same time, we adhere to the strategy of remaining within the framework of the systems defined in the target architecture.

ERP subsystems, the prospects of launching for our case and the effect:

During the express inspection, the customer confirmed that the warehouse is currently not automated in the old system and there is no possibility of such automation within the old system. The WMS system is redundant for the customer, which makes it possible to use a standard 1C Trade Management or ERP system. Taking into account our strategy of phased launch of effective blocks, we will choose the target ERP platform on which we will build address storage with the minimum necessary automation.

When automating warehouse management, we get the following economic effect:

• Optimization of the use of warehouse space – not confirmed, all warehouses are owned.

• The reduction in losses of inventory items due to expiration dates has not been confirmed; write-offs due to delays are minimal, within the margin of error.

• Increasing the speed of receiving and issuing inventory items according to requests – delays have not been confirmed, the time of warehouse operations is now not recorded anywhere.

• Acceleration of inventory operations – confirmed to last for up to several months.

Of all the metrics, we get a direct effect on reducing inventory costs. We calculate the costs of payroll of employees and the average cost of attracting equipment per month for loading and unloading operations necessary for some types of inventory items:

For simplicity, we will do the calculation in abbreviated form:

• Number of warehouses – 30, average inventory time 1 month – per year 30 * 1000 * 12 = 36 million rubles, acceleration by 80% = 36 – 28.8 = 7.2 million rubles, savings 29 million.

• The cost of the project is 50 million rubles, operating costs for support are 6 million per year (materials, equipment replacement, payroll for a new consultant)

• According to calculations, the project should pay for itself in 4–6 years.

As we can see, to start a project, you need at least an express examination of the customer’s current situation, a search for a pain zone and calculations of effects. Which requires the IT team to understand the results of changes in the customer’s specific business.

In fact, based on all the described project classification factors, we selected a project that is “easy” to launch, which fills the customer’s need that is unsatisfied by current systems, and we will be able to start the project on the target platform. The effects of launching projects on a new platform will allow you to get real economic results (and indirect effects) and move on to other promising blocks: production planning, procurement.

An approximate order of transition to the target architecture and when launching ERP blocks separately:

What other approaches to replacing systems can be cited – you can read from colleagues in the industry: How not to switch from 1C:UPP? Acceptable scenarios for preserving the historical system.

Complex questions remain – what to do with the “costly” blocks – accounting, tax accounting? To answer these questions, an assessment of other risks (tax, data processing errors) is required – and without the cooperation of the IT and business teams, it will be difficult to justify their modernization.

What you can do in your project:

• Try to imagine yourself in the shoes of an architect from a customer and an integrator. How could you help start a similar complex project?

• Take several enterprises in your industry, find successful experiences and cases of implemented solutions/projects of the year and calculate the economic effect and payback.

In conclusion, I recommend attending the open lesson “Building the architecture of a 1C product on C4”, which will be held on October 16. At it, participants will consider why it is necessary to visualize the architecture of a 1C 2 product, what C4 is, as well as setting up and working with PlanUML when building an architecture in C4 notation.

If the topic is relevant, sign up for a lesson on the 1C Architect course page.