Recently I was reviewing another of many papers I often read on various business and IT topics. A paper from a graduate student recently caught my attention and while it lacked some of the insight from personal experience, it made up for it in the substance of the material.
After a short look at the peer-reviewed academic literature, Anil Bhagwani, did a brief case-study on 10 failed SAP implementations and 10 successful SAP implementations. From these he continued to distill SAP critical success factors.
For more vendor selection background, before or after reading this post, please refer to another study that was reviewed on the topic of vendor seleciton–, SAP Implementation Partner or Company Selection Criteria.
Common SAP Critical Success Factors (CSF’s) identified for successful ERP implementations
The study author’s perspective and summary of the key success criteria from the Executive Summary, pg. 5, is reproduced here (altered and reformatted for easy reading):
- Sustained executive management support and their ownership of the implementation.
- Project team composition.
- Good project management (especially pertaining to process design).
- System testing.
- Training of the end users.
These are the most important factors contributing to the success of SAP implementations in most organizations. The lack of sustained management support / contribution and user involvement / training and testing seems to be the most important factors contributing to the failure of SAP implementations in most organizations. [FN1]
These conclusions are consistent with my experience and tend to be mostly in line with the academic literature.
Why do so many SAP projects come in over budget and over time?
One important feature of this paper is the notation about project management and its relationship to project failure.
“30% of projects were perceived to have failed because of a lack of effective project planning, while 10% were perceived to have failed because of technology-driven causes” [FN1]
This, in my opinion, can be laid at the feet of the implementation vendor and the project management they provide. More often than not it is the implementation vendor who is tasked with providing the experienced consultants and project management team. And in the SAP world nearly every SAP system integrator pitches the SAP ASAP implementation methodology but few of them bother to actually follow it after the sale.
Companies pay dearly for “experienced” resources who claim to follow a proven methodology to steer a customer correctly through their SAP business software system implementation. But in most cases a good system integrator, with seasoned project management is critical to your implementation success.
Although the literature suggests that 10% of the ERP project failures were related to technology, with SAP in particular I would challenge that as masking the real underlying cause. Let’s put the claim of SAP technology limitations into perspective. As of October 6, 2010,
- SAP has over 100,000 customers in more than 120 countries [FN3],
- nearly 50,000 employees [FN2] (with approximately 15,000 of those employees being developers [FN3]),
- about 15% of total revenue dedicated to R&D. [FN2],
- and more than 24 global industry segments. [FN3]
Plainly the SAP solution has been proven in nearly every environment imaginable. In spite of some of the headlines about failed projects, the application itself is so widely used, adopted, supported, and developed it can not be the problem. In my opinion the blame for failed implementations, blown budgets, and blown project timelines is frequently the fault of the guidance many companies receive from their hired help. That does not mean that customers do not contribute to this in many cases, only that the system integrators are the ones that should “know better.” When an ERP implementation project is headed toward the rocks the system integrator should have enough experience and integrity to raise the risk issues and help to avoid disaster. After all, during all of the sales pitches they are the ones that tout how much experience they have and you hire them based on that supposed experience to help ensure you do not crash on the rocks.
This does not mean that SAP does not have its technology limitations. After participating in SAP projects since 1994 I have rarely encountered SAP software limitations where the standard application was not able to deliver 90 – 95% of the business requirement without any custom coding. Where that 5 – 10% of custom coding was required SAP has provided both user exits (prior to version 5.0) and enhancement points (versions ≥ 5.0) to modify the data processing within the transaction stream. And unlike other consultants, my experience has taught me that there is a standard solution there somewhere so I will look for the standard functionality before trying to undertake custom “software engineering” efforts.
As a result I would attribute that 10% “technology-driven” failure rate to other ERP applications, or more likely improper requirements, poor project management, or bad consulting. Although I have not had the direct application exposure to SAP’s competitive products, I would guess they are fairly well developed in their focus areas as well. And over the years I have had a LOT of SAP client counterparts wanting what I call mutually exclusive requirements. Or, as an analogy, they wanted to have their cake undisturbed while still eating it too.
Defining SAP Success Criteria (Lacking these can cause ERP Project Failure)
The academic study’s author offers an ERP success definition which notes projects are “done within budget and time with meeting all the preset implementation goals as measured by ROI, etc.” [FN1, pg. 8]. The author then notes a 2007 Gartner study showed only 60% of the projects achieve this success definition.
In my next post I have reproduced the list of critical success factors (CSFs) and added a responsibility matrix. Those critical success factors come from a combination of this study, done in 2009, combined with a prior peer-reviewed study I wrote on previously ( The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors ) and my own personal experience.
The responsibility matrix I developed defines major project success criteria and who is (or at least should be) responsible for ensuring the successful delivery of those key components.
More of this is explained in my next post which looks at some of the key areas for project success, who should manage those success factors, and how so many consulting firms avoid responsibility. After that we will review details on steps and strategies to ensure ERP system integrator accountability for managing those success factors to ensure you don’t get robbed in your SAP business software system project.
Tune in over the next few weeks for more details and insight on this topic. I’ll be exploring why so many SAP system integrators and ERP vendors are able to avoid accountability for these SAP critical success factors and how you can work to ensure your ERP system vendor covers these factors.
[FN1] Bhagwani, A. (2009). Critical Success Factors In Implementing SAP ERP Software, University of Kansas Graduate School. http://www.r3now.com/literature/2009-Bhagwani-SAP-Project-Success.pdf
[FN2] SAP Inventor Relations, Business in Brief, http://www.sap.com/about/investor/inbrief/index.epx (retrieved 5/10/2010)
[FN3] Deutsche Bank European TMT Conference 2010, London, September 10, 2010 (retrieved 10/04/2010 http://www.sap.com/about/investor/presentations/pdf/WB_DB_London_8Sep2010.pdf
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