Since I started in the SAP (ERP) arena in 1994 I’ve heard it often repeated, reiterated, studied, and pronounced that one of the key criteria for IT project success is executive participation. That mandate applies to any large scale project, whether it is ERP, CRM, APO, SOA, BI, or other solutions.
Many implementation companies wrongly believe this is because the executive brings a measure of authority and visibility to the project and that is the key reason for executive participation. The most often overlooked reason has more to do with the senior executive role than any of these other reasons. And although the previously quoted reasons are valid it is because of executive insight into the company’s future that creates the possibility for strong client satisfaction and success.
Most mid to large scale IT projects, whether they are ERP, CRM, Business Intelligence, or other business transformation initiatives last at least 3 months, and most are 6 months to 2 years (or more) depending on the size, scale, and scope of the company and IT effort. Combine this with the senior executive role of setting direction and strategy, as well as mid and long term goals of the organization, and that insight is critical to ensure success.
If you’re a CIO, IT Director, or IT decision maker, extended executive involvement can make a real difference with C-level satisfaction with implementation or upgrade results–, without it you may be headed for rough roads and difficult budget discussions.
A Couple Illustrations of Executive Participation for Project Success
I’ve been on SAP projects where the executives asked some key questions about application readiness for future events. They were not clearly noted as such, but were definitely voiced, and then pushed into the project.
On one very large client, the Senior VP of Operations asked what the requirements were for adding new companies if at some point in the future they decided to acquire another business. A couple weeks later, the client project manager insisted that the company needed full documentation to support the required configuration settings to set up a new company code for financial postings only, not operations. About six months after the go-live event they purchased another company where they left the operations in tact, without altering their existing systems, but interfaced to SAP as the financial system of record.
At another company the CEO frequently attended weekly project team lead meetings and in one of those discussions noted the company needed to be able to source products from a different distribution facility, by customer, on an ad hoc basis and for periods of time that would not be consistent or continuous. This was required at times even if the primary warehouse had stocks to service the customer.
Special development efforts were made to integrate a customized solution allowing for the default customer distribution warehouse to be overridden by customer or product, or a combination thereof for a particular date range. On this particular project about three months after going live the reason was discovered.
The business was consolidating and closing a couple of distribution facilities and this allowed for an orderly withdrawal of inventory and of business without significant transportation or carrying costs. It was transparent to the customer as well. The MRP portion of the system saw the reduced demand on the closing warehouses and therefore planned less replenishment stock until the distribution facilities were mothballed. By the same token, the additional demand on the consolidated warehouses was also picked up and accounted for so that disruption was minimal.
Without this future preparation built into the system at go-live, it would have created significant hardships and difficulties in addressing these business needs. The failure to plan for future business needs in the initial go-live event is also where SAP gets some of the bad press about being “inflexible.” The reality is that if you plan, design, construct, test, and then go-live with it over the years I haven’t seen very many process gaps in the application.
Where Strong Executive Involvement Produced Amazing Results
The previous illustrations are a couple of examples where the future state of the business was designed into SAP solutions. The reason success was achieved was because of the longer term insight the executive participation brought to the project. I’ve seen a few projects where the executive imprint soundly focused the project on the future strategic direction of the business by constantly challenging and refocusing the entire project team’s attention on strategic sales and marketing goals.
At one company a scope change request or newly defined custom development would only be approved if it fit the strategic direction of automating or empowering the sales and marketing groups to profitably increase revenue. This drove the requirement to add special CO management reporting functionality, specialized marketing spend tracking by material, customer, and region of the globe, and a whole host of other significantly customer focused initiatives. Marketing spend and return was captured down to the individual line item on a customer order and then posted against the marketing budget to track the spend.
That company is thriving today, in a down economy, and in a particular market that was, and is still contracting (or growing smaller), even before the economic downturn.
This project was different because senior executive participation was evident throughout the project: it included a monthly round table of every C-level executive; the Senior VP of Finance (who answered directly to the CFO) was one of the two client side project managers, and the twice monthly steering committee meetings were attended by several VPs and senior directors.
This entire project had the future strategic direction embedded throughout the SAP implementation. This project delivered more in terms of automation, efficiency, along with key lagging and leading indicator business goal reporting than I had ever seen on any other project. This was also the most involved and most complex project I had ever seen–, nearly 150 legacy systems were mothballed and close to 200 interfaces were still needed.
This multi-billion dollar, multi-national company, delivered a level of operational efficiency, customer focus, and product innovation that I had never seen before and haven’t seen since. It was done on time, on budget, and with extensive scope. And let me reiterate, it continues to grow in a market that was contracting even before the global economic troubles we see now.
Because of the level of executive participation and visibility the implementation vendor brought in only their “A list” consultants, and over a third of the vendor’s consultants on the project were senior level independent contractors. On this project only the “best” would do and it was reflected throughout the project and after the production environment went live. Full cost-based, cost reducing payback was achieved in less than two years, and as previously mentioned; revenue and profit were pushed to significant growth in an industry and economy where that should not be occurring.
The executive level of involvement and participation helped educate the senior leadership team to wider business issues and IT challenges. This in turn led to more acceptance and adoption of IT solutions for other business challenges. The company ultimately developed a significant IT – business competency center with numerous business representatives directly participating with IT counterparts and the business staff funded from the various business budgets.
They got it, they understood the critical business nature of IT solutions and saw it as a strategic investment in their own areas of responsibility. They also saw this as a prudent method to ensure their organizations and business units were adequately represented in future technology initiatives and future technology funding. This became a huge win-win for everyone involved that has played out in a company that is doing reasonably well when by normal standards it should not be.
Lessons Learned from Executive Participation on IT Projects
Executive participation in an IT project creates visibility within the company that the IT initiative is important. It also demonstrates a measure of authority to break through log jams and make some of the difficult decisions. But the most important reason of all, the one that I have never heard mentioned by other commentators or implementation vendors is the strategic imprint that executive involvement creates.
By the nature of the executive role and responsibility they set direction and strategy for the company. They live and breathe direction and strategy. Senior leadership frequently surveys the marketplace and adjusts course for future goals and plans. Strategic, future-state input in an SAP project is inherent in the nature of the executive whether the IT project is ERP, CRM, SOA, BI, or process work.
As I have seen from past experience this executive involvement causes implementation vendors to bring their best and brightest to these types of projects if they want to stay in business. That is because the visibility to the executive staff of the skills and abilities of the consultants has a strong bearing on whether or not the implementation vendor continues on with the project, or whether there are any follow-on opportunities.
If you are a CIO, IT Director, or other IT decision maker, it’s time to make the case for stronger executive involvement. The executive participation will help to ensure that their expectations are met and will enhance your career possibilities as well.
Properly engaged senior leadership and executive participation puts the business first and turns the technology into a change enabler or change lever. And in the end the business is more likely to achieve the business benefit and results they had hoped for.
Additional Resources for ROI, IT Project Success, Competitive Pressures and Value Propositions:
Why SAP Projects Fail to Deliver ROI (and how to change it)
R3Now.com SAP SDN Blog
Change How You Look at SAP to create ROI
ERP Failure: The Organization is More Than Partially To Blame