You really have to wonder: Does any organization spend millions of dollars on SAP (or any other software) with the goal of failing?
The scope of a typical ERP project impacts almost every aspect of the organization, and the implementation risks are real. Often, an actual project’s timeline far exceeds the original schedule. The cost of consulting services alone can grow four to five times the cost of the ERP software (with even greater upside risk potential). However, we have all heard the horror stories: expensive ERP initiatives that never go live, or worse yet, those that do and hamper the business for years after cutover. Despite all the “proven implementation methodologies,” an alarming number of ERP projects have unhappy endings.
While you probably do need the help of consultants, leaving the fate of your ERP project in the hands of consultants often only creates a false sense of security. Regardless of what we may like to believe, software consultants are not all knowing, they benefit from cost overruns, and they ultimately have limited control of the key factors that enable ERP success.
Software consultants certainly want the client to succeed, but in the world of ERP consulting, the game is billable hours. When it comes to ERP software vendors, I can say only one thing. Regardless of what the salespeople claim the software can do, they will be long gone when the time comes to implement. Therefore, more internal project responsibility, ownership, and vendor management is key to developing better business solutions, mitigating project risk, and significantly reducing implementation cost.
In many cases, consulting firms or software vendors take the heat for ERP disasters, when in fact the organization was to blame.
When the client becomes disengaged and the project falls hopelessly behind schedule, consultants are left with no choice but to do the project on their own, decreasing efficiency. This not only supports the business’s theory that they are overpaying their consultants, but also leaves management wondering why their ERP software (used successfully by many in the same industry) failed to meet their own business needs.
Yes, many clients like to blame software vendors and consultants for their ERP failures; and in many cases, it may be true. However, guess who bought the software and selected the consultants? On the other hand, why would any consulting firm not want the client organization to be knowledgeable, accountable, and fully engaged? Sure, consultants make a lot of money on uninformed or disengaged clients, but no consulting firm wants a black mark on their resume.
The reality is consultants and software vendors have no direct authority to force management or anyone else in the organization into action.
Consultants can provide expertise, perform tasks, and make suggestions, but at the end of the day, only the organization can do the following:
– Ensure executives are educated, on board, and understanding of their roles;
– Own the business case and drivers for the change;
– Clearly define, own, and communicate project objectives;
– Implement internal measurements systems to support the desired changes;
– Approve and contain the project scope;
– Require the cooperation of employees at all levels of the organization;
– Assign the right internal employees to the project team;
– Free up the required time for those assigned to participate;
– Expect the internal team and IT support to eventually become software experts;
– Hire internal employees with the right skills and knowledge when necessary (you will need them longer than you think);
– Use outside project management, application consultants, technical consultants, and programmers correctly;
– Hold functional (middle) managers, the project manager, the project team, and IT staff accountable;
– Make necessary changes in business policies, practices, and procedures to take advantage of the software;
– Limit software modifications through business justification or changing business processes;
– Remove any people barriers and naysayers;
– Tackle project business issues and decisions in a timely fashion; and
– Take end-user training seriously, requiring employees to attend.
No matter how great your consultants or ERP software, organization-related responsibilities are out of their control. However, these factors have the biggest impact on project success. They are just a few more reasons why consultants and software vendors cannot save the day (or own your project even if they want to).
An important question to ask is the following: Why would any management team spend hundreds of thousands or perhaps millions of dollars on ERP with the goal of failing? Here is another question: Do people rise to senior management levels within most organizations because they are totally incompetent? Generally the answer is no. So, what gives? One answer is organizations do not plan to fail; rather, they fail to plan. However, it actually goes much deeper than that.
Implementing an ERP system is not something most organizations do every day. Unlike more frequently occurring internal projects such as new product development or pure technology projects, not everyone knows the ERP implementation drill, subtle pitfalls, and consequences of certain decisions. Significant ERP changes come along about every ten years, so the opportunity for learning through repetition simply does not exist. Also, those involved with the previous ERP project have probably left the company or want to stay as far away from this project as possible.
The good news is that ERP project management deals primarily with management issues that decent managers can understand and do something about. The old saying “you don’t know what you don’t know” certainly applies. However, successful ERP does not require a PHD in computer science, but rather a management team with practical insight, some common sense, and willingness to expect something from internal folks. The team will need some outside coaching from consultants, but this is very different from a consultant-driven project.
Believe it or not, management can understand what must be done, the important questions to ask, the key decisions to be made, and the potential implications of those decisions. Furthermore, they can accomplish these tasks without spending a boatload of money on outside consultants. In addition, companies can develop and/or acquire the internal software expertise to be successful. Organizations have been doing this for years, and ERP is really no exception. Contrary to popular belief, the need for the right internal skills and software knowledge does not end when the system is initially implemented. (That is, unless you want to spend a fortune in consulting fees for many years after go live for the support typical of any ERP system.)
In many ways, controlling your ERP destiny is about gaining practical knowledge on how to implement the system. This enables the organization to engage their project, leverage internal resources, manage vendors, and make informed decisions that yield predictable results.
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The author runs a blog called “Street Smart ERP” from the perspective of an ERP practitioner with over 25 years of IT and ERP experience. For more information please see
http://it.toolbox.com/blogs/street-smart-erp
