SAP & ERP Consulting from the Customer Point of View

SAP implementation ROI, SAP architecture, & SAP business solutions

ERP Education: Losing Our Religion

January 17th, 2011
Planning, coordinating, training

synchronizing success

Most ERP software packages are designed around industry accepted business practices, operating philosophies and techniques that have evolved over many years. Today the issue is not whether there is a body of knowledge with supporting software tools, the question is… are clients educated enough to see the value or understand the proper use of the tools. The short answer is no.


Education versus ERP software training

First, many have lost site of the fact there is a difference between education and software training. End user software training is very important but it is mainly about how to do transactions in the software and how these transactions related to your business processes. However, this can be very different from understanding the original design intent and industry application of the tools.

For example, the issue of education vs. software training is analogous to training someone to fly a 767 but not educating them on the concepts of jet propulsion or flight; or how to start-up a chainsaw but not the best way to cut down the big tree. Both of these are scary propositions, but in terms of ERP projects it is about failure to achieve the business benefits. At the root of the problem is senior managers and end-users never changed their behaviors to take advantage of the tools; and a big part of this is lack of education.

Independent Sources of ERP education

Keep in mind, education is more than just a seminar of “best practices” put on by a software vendor (with a hidden agenda) in room full of 300 other clients. It is about getting some real independent education, not focused on any specific package. In addition to understanding key concepts, one must also delve into the mechanics in order to implement.

Baked into the ERP implementation methodology

There once was a time when management and user education were part of the standard implementation methodologies. Interesting enough the project success rates was much higher.

For example, it is worth noting the great Joseph Orlicky wrote the first groundbreaking book on the topic of MRP (forerunner to ERP) back in 1975 (updated and still a good read). It focused on concepts and techniques on how to plan and control materials in a manufacturing plant. However, the most interesting thing is Mr. Orlicky (an employee of IBM) never glorified the role of the computer. He believed if one did not understand the underlying principles of MRP, the computer was not much help anyway.

However, the late Ollie Wight (the godfather of MRPII) said it best “MRPII is not a computer system, it is a people system made possible by the computer”. Orlickly and Wight went on to build and grow the “religion” called APICS (The American Production and Inventory Control Society). The best thing that ever happened to manufacturing practitioners.

Back to ERP Basics

Today there is a disconnect between industry best practices and what clients attempt to do with their systems. It might be time to get back to the basics of blocking and tackling or at least try to understand the intent of the package you just purchased.

Instead, we focus on the gee-whiz aspects of software, technology, implementation tools, and turnkey solutions (which usually exist only in the marketing literature). Cheaper, faster and the slam-dunk mentality is the name of the game, even when we do not accomplish anything worth the effort. We naively assume the mere existence of better tools automatically results in a change in employee behavior (if we build it, they will come). We fail to educate senior management and then wonder why they are not committed to the project. We set higher expectations of our employees, yet as leaders, we fail to provide them with the knowledge they need to succeed. When our projects go down the tube, we blame software vendors, consultants, the entire senior management staff, all employees, our spouse, and everyone else except ourselves.

No, education is not glamorous so proposing it will not make you a hero. Nevertheless, it is the stuff successful IT projects are made of. If Ollie knew what was going on today he would roll over in his grave.

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Contributed by Steve Phillips of the Street Smart ERP Blog – Visit his site for more great project insight.

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SAP ERP Project Failure Lessons Learned and Mini Case Studies 1

December 13th, 2010

ERP Project Failure 1

The following SAP project failures are the first three of nine or ten we will review over the next few weeks.  The SAP project failures we will review were high profile examples with significant lessons to be learned.  In nearly every case where the SAP implementation actually occurred, within 1 to 2 years after the troubled go-live the SAP software itself was reasonably well-received and the business was generally satisfied.

I apologize for the timing of these posts so close to the Christmas and New Years seasons but considering that a number of new SAP or other ERP projects are starting in the first quarter of next year I didn’t want to wait.

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One interesting feature of the SAP project failure research is that none of them I could find can be attributed to the actual SAP software itself.  Although a few customers claimed it was the software when doing more thorough research I have only found structural problems with the project itself and not directly attributed to the software. After all, as of this post, SAP software has been installed or implemented over 100,000 times.  Careful research shows that none of the high profile SAP project failures were related to technical failures of the standard software, SAP architecture, application depth, or the breadth of the application.

Problems with SAP projects from the published literature usually involves:

  • poor project management and control,
  • little or no change management,
  • poor training,
  • significant custom coding, or
  • poor consultants from the SAP system implementation partners or vendors.

This sampling of project failure issues will start from the most recent to some of the older ones.

SAP ERP Project Implementation Failure Overviews

Marin County California – SAP ERP project failure overview (2009)

Financial, HR, and Payroll systems were implemented by Deloitte.  This project led to a lawsuit filed by Marin County (the customer) in 2010 alleging fraud.  For example, from the introduction to the Marin County legal complaint Marin notes:

Deloitte [claimed to have] assembled a team of its ”best resources” who had “deep SAP and [business] knowledge.”  These representations were fraudulent. Indeed, at the time Deloitte made them, it knew that it did not have the ability or intention to provide the skilled resources necessary to deliver a successful SAP implementation… Deloitte also knew that because the County did not have any prior ERP implementation experience in general, or SAP experience in particular, it  would be depending on Deloitte to oversee, guide and manage the project.  Notwithstanding such knowledge, Deloitte made these false representations in order to obtain the contract for the County’s lucrative SAP project.  [R]ather than providing the County with SAP and public sector expertise, Deloitte used the County’s SAP project as a trial-and-error training ground to teach its consultants – many of them neophytes — about SAP… software, all at the County’s expense.

A number of significant problems were caused throughout the project and Marin County is in the process of abandoning its SAP software implementation.

  • Fake Consultants / Trainees / unqualified consulting resources on the project
  • Pay rates, payroll, and wage information were incorrect.
  • Huge amounts of custom coding to replace standard SAP functionality (which Marin County claims would have been sufficient).
  • Inability to easily make adjustments and resolve compensation issues (much of this because of custom ABAP programming).
  • Insufficient training and change management.
  • Lawsuit claims improper relationships and ethical problems with the Deloitte and Marin County employees involved in the project.
  • Has since announced they are abandoning the SAP project after working for a couple of years to resolve the underlying problems.
  • Lawsuit is still ongoing and proceeding slowly in Marin County, CA.

Lessons Learned: Throughout the legal complaint by Marin County against Deloitte Consulting there were allegations of fraud with the consultants they provided.  Taking the Marin County complaint at face value they knowingly provided inexperienced and incompetent consultants for the government project.  Worse still, at least according to the complaint, this was done knowingly and deliberately.

For more information on the required skills, as well as how to screen and interview good SAP consultants please see these posts:

Screening and Interview Methods to Find the Right SAP Consultant
Screening and Interview Methods to Find the Right Consultant – Part 2

Shane Company – SAP ERP project failure overview (2008)

  • Shane Company had 23 stores in 14 states and filed for bankruptcy in January of 2009.
  • Shane initially blamed their company bankruptcy on SAP as a software application suggesting that their bankruptcy was partly due to SAP project cost overruns and SAP project delays.
  • The initial project cost was budgeted or planned for $10 million but ended up costing approximately $36 million and was planned for 1 year but ended up taking approximately 3 years [FN1, pg. 26]
  • After initially blaming SAP, Shane later admitted that their (“low cost”) SAP system implementation vendor, Ciber Novasoft, was more responsible for the SAP project failure than the SAP ERP software.

To summarize Shane’s SAP ERP failure “Enterprise Matters” offers succinct insight:

[L]arge enterprise systems, that have been installed in thousands of companies, don’t cause customers to lose money due to implementation failure (This is true for SAP, Oracle, and everyone else). It takes the customer’s managers, usually aided and abetted by a company like Ciber, to get it really wrong. [FN2]

Lessons Learned from the Shane Company SAP ERP project failure [FN3]:

  • Poor SAP ERP management, both on the project management side and the Shane Company senior management.
  • An improper budget and implementation plan.
  • Scope and cost were not properly managed.
  • Poor or undefined processes along with poor or untested system functionality.

For more information on proper scope, management, and project oversight see the following posts:

Aligning SAP Scope to Meaningful Business Requirements
Effectively Scope Your SAP Project
SAP System Vendor Project Success Criteria & Factors 2

Select Comfort – SAP ERP project failure overview (2008)

Select Comfort is included as a recent example of an SAP project that was abandoned rather than actually failed.  As a brief summary: the entire project was improperly conceived from the beginning because there was no pressing business need to change systems; a new CIO initiated the project; the scope was massive (ERP, CRM, SCM, APO, etc.); and the project was performed only by internal employees.

I’m sure there are other factors but it is obvious this project was destined to fail from the beginning.

Lessons Learned: Enterprise applications should be implemented one at a time (or at least very limited), scope must be carefully managed, and there should be a proper justification or business case for enterprise applications.

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[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] Shane’s Blame Game: Management, Not SAP Retail, Sinks Jewelry Company
http://ematters.wordpress.com/2009/01/14/shanes-blame-game/

[FN3] Some of these were derived from: Shane Company: Lessons Learned From an ERP Implementation Failure
http://www.erpko.com/articles/erp-articles/shane-company-lessons-learned-from-an-erp-implementation-failure/

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SAP System Vendor Project Success Criteria 1

November 1st, 2010
SAP Project Success

SAP Project Success

Using the success criteria table laid out in SAP Success Factors for Vender Selection Responsibility Matrix 2 as a starting point for shared SAP project success we will look at some strategies, tactics, techniques, and ideas for managing these shared responsibilities.  By more aggressively managing these shared SAP critical success areas we can set the correct tone and expectation for the SAP project. [FN1]

This series will look at the types of things you should expect from your SAP system vendor, and how to ensure your SAP vendor is focusing on the critical issues for project success.

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Because of the importance of each of these SAP Critical Success Factors a set of posts covering the shared responsibilities will be evaluated.  Because of the shared responsibilities for each of these success criteria they are often some of the most common problem areas.  When one party (either the vendor or the customer) falls short of success it is a common (and maybe natural) practice to try to deflect the blame by pointing at the other party.

Both customers and vendors must aggressively address the areas of success where they have the primary responsibility.  Several of these success criteria have been extensively written about on this site and rather than re-phrase some of those high points the links to posts with more detail are included.  For SAP project success it is critical for customers to manage the SAP partner relationship by regularly verifying these critical success criteria items are being properly addressed.

Do not allow the overall control of your project to be taken over by the consulting project manager

No.SAP or ERP Critical Success FactorCompanyIntegrator
5Experienced SAP consultantsA
7SAP implementation strategyzA
8SAP project managementAz
9SAP tools, templates, and resourcesA
10SAP scope developmentzA
11SAP scope managementAz
12Strong SAP project and business communication (inward and outward)Az
13SAP change managementAz
15Sufficient SAP training (user and project team training)AA
16SAP system vendor and customer trustA
17SAP system design decisionszA
18Amount of custom ABAP or other SAP codingzA
19Appropriate SAP software configuration (system settings)zA
20SAP system change control processA
21SAP data analysis and conversionAz
22SAP test planningAz
23SAP test developmentzA

Legend

A = Primary Responsibility for the success factor
z = Shared but secondary responsibility for success

Your approach to any or all of thse SAP success criteria items may be different.  In the end it is important to understand that failing to address any of these success items creates risks that should must be mitigated.  Your responsibility as a customer is to do whatever it takes to manage the SAP partner relationship rather than allowing the SAP partner to manage you.

5.  Experienced SAP Consultants

You entrust your entire business to “seasoned” SAP consultants that your SAP system integrator provides.  However too often these same system integrators, anxious to keep high margins and remain “competitive” often bring in consultants with less experience than you need to be very successful.  This topic has been explored in detail on this site with what you need in a “good” consultant, the consequences of bad consulting, and the steps to take in finding a good consultant.

To ensure the best possible results it is important for you to verify and validate the skills and experience of EVERY consultant your SAP system integrator provides.  Failing to do so may cause areas of your project to fail to see any business benefit.

How well the project is managed and delivered is up to you as a customer

After all of the time, effort, and trouble through the entire selection process that last part of due diligence, in verifying EVERY vendor consultant, is critical for success.  Here are some key resources to consider when it comes to selecting consultants.

The SAP implementation vendor is almost exclusively responsible providing high quality resources for your business project’s success.  However, because of their margin requirements you don’t always get good resources from them.  Therefore you will have to do some of the important due diligence to ensure you do not get taken.

7.  SAP Implementation Strategy

There are three key factors to consider for your SAP implementation strategy.  These are the implementation methodology, vendor type, and the project implementation approach.  Each of these components of your overall implementation strategy are important for achieving SAP and ERP project success.  To gain greater understanding and insight on these key SAP implementation strategy factors the following post provides details to consider:

8.  SAP Project Management

The key parts your SAP project management efforts usually involve budget, scope, timeline, resources, and deliverables. The various types of flavors of monitoring and managing tools are as different and as diverse as the companies or project managers performing the function.  The SAP ASAP methodology provides deliverables lists and templates with full explanations for the entire project lifecycle.

Properly structured deliverables will help to monitor execution progress.

Here are some key resources from this site related to project management:

The primary responsibility for successful project management falls to you as the customer.  This means that you must not allow the overall control of your project to be taken over by the consulting project manager.  That does not mean they should not have input, and it is almost exclusively the SAP partner’s responsibility to provide an initial project plan, but at the end of the day how well the project is managed and delivered is up to you as a customer.

The SAP ASAP methodology provides deliverables lists and templates with full explanations for the entire project lifecycle.

For SAP project managers from consulting firms one important “skill-set” is the ability to set, manage, and deliver expectations.  Part of that also involves social skills that might be more political in nature, including the ability to deflect criticism of their project management.  As a result when reviewing a potential SAP project manager it is critical to dig past a possible “glowing reference” to actual results. Part of the successful SAP project manager’s job (from the consulting firms) is to help set and manage your expectations.  Some of this is necessary but some of it can be abused as well.  Do not allow yourself to give up control of your project to a consulting project manager.

At the end of the day, the most effective project manager will personally “own” the success of the project.  What I mean by that is they will avoid laying blame because the success of every project team member (both of the consultants and of your own staff) is a direct reflection on their success.  A project manager who finds “fault” with a resource but does not take clear corrective actions before it becomes a crisis is not much of a project manager.

A good SAP project manager from the consulting world has enough experience with using properly defined and designed deliverables to be able to track and monitor project progress.  If they have enough skill and experience at managing those deliverables as well as the tracking and monitoring tools then they can do the necessary resource adjustments and resource leveling that are necessary for success.

A good SAP project manager must take clear corrective actions before an issue becomes a crisis. In any reference check make sure you drill down to the details of the actual project delivery, not just personality issues.

Some of the steps, techniques, tactics, or strategies for finding a good SAP project manager are:

A.  Look for an experienced SAP project manager who has actually done SAP configuration before being a project manager in either a supply chain area (SD, MM, PP) or in finance (FI or CO).

B.  When checking references it is CRITICAL to ask results-oriented questions that go beyond the personality of a particular project manager.  In any reference check be sure to drill down to the details of the actual project delivery.

a.  Was the project delivered on-time or on budget?  If not it may (or may not) reflect poor management or poor scope development, in either case it is a warning flag.
b.  Did the project manager provide the necessary tools and templates ahead of time for success?

i.      Project plan – BEWARE project or program managers who do not provide a project plan or seem to have a hard time working with very basic project tools such as MS Project.
ii.      Deliverables list.  Properly structured deliverables will help to monitor execution progress and roll up to higher level project plan items to prevent micromanagement of project activities.
iii.      Training, Change Management, Knowledge transfer plan
iv.      Progress monitoring and tracking resources down to the delivery level.  Many PMs will monitor budget and not the actual execution level of project delivery.  If they do manage the execution it is usually at a micromanagement level of the project plan which can kill productivity.

C.  When checking project manager references remember, the project manager is responsible for overall results of completion of deliverables related to project success.  So it is important to ask prior clients about:

a.  Testing, was this purely “success testing” to get signoffs or was “challenge testing” allowed to discover defects outside of the scope of testing documentation?
b. Were there significant data problems after go-live?
c. Was the project delayed several times because the scope and timing were so tight that the go-live was excessively risky?
d. Were the consulting company resources underestimated or scope changes so significant that many more consultants needed to be added?
e. What about additional software or technology, were those things missing from the original scope, quotes and estimates?

9. SAP Tools, Templates and Resources

Assuming you are using the ASAP methodology, many of the templates, tools, and resources are clearly defined and initial examples are provided, see SAP Project Implementation Strategies and Approaches.

Where these may need to be supplemented with vendor specific examples is for training, change management, security / system authorizations, and the deliverables tracking tools.  The deliverables themselves should be defined right from the beginning of the project and the SAP ASAP Implementation Methodology contains a presentation template with a full deliverables list and includes many templates for those deliverables.

Effective SAP deliverables will include a mechanism to monitor progress toward completion.

With this background, during the sales cycle, it is absolutely imperative to insist that every vendor provide ACTUAL example templates that show experience in this area.  Every one of them will claim they have the resources every time.  None of them will admit otherwise so you primary job is to verify their claims.

Vendor sales people are taught how to say “yes” even as they are telling you “no”

The key factor to consider when looking for templates, tools, and resources are do they support proper tracking and monitoring of deliverables progress?  In other words, beyond the project plan itself, are the deliverables designed to integrate progress monitoring?

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[FN1] Please see the following links for more background information on the development of the SAP Project Success Factors with Vendor Selection Responsibility Matrix and some of the source material from The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors .

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