SAP & ERP Consulting from the Customer Point of View

SAP Peter Principle

Most of us working in business for any period of time have heard of the “Peter Principle.”  It was “formulated by Dr. Laurence J. Peter and Raymond Hull in their 1968 book The Peter Principle, a humorous treatise which also introduced the ‘salutary science of Hierarchiology’ …” [FN1]  While the exact quote is a little different, it has come to mean that people tend to rise to their level of incompetence in organizations built on hierarchies.

As an important caveat before getting into this topic, I have known many really hard working folks who have risen through the ranks the “old-fashioned” way –, through hard work and “paying their dues.”

My Experiences with the SAP Consulting Hierarchy

After over 20 years in IT, and over 20 SAP projects, I have seen the Peter Principle again and again.  It’s the nature of how the IT consulting world works.  It is frustrating, and it is enough to drive the competent, diligent, and most talented consultants absolutely crazy.

The “Peter Principle” happens in the consulting world because this is what organizations who implement SAP demand of their implementation vendors.  Sure, that sounds counter-intuitive and crazy, but unfortunately it is a sad reality.

You might be asking yourself right now, IS HE CRAZY?  Maybe a little, but on this point, let me assure you, it is quite true and in a moment you will see exactly how it happens and why.

Enter the Crazy World of Consulting – Why Consulting Incompetence is Rewarded

Once inexperienced, incompetent, or “less than optimal” consultants get onto your SAP, ERP, or other IT project, you are now set up for seeing the “Peter Principle” in effect.  On your implementation or upgrade project an inexperienced or incompetent consultant will ultimately make a mess, however it won’t be seen right away.  There may be signs along the way, but only deep experience will recognize this unless it is blatantly obvious.  There is always some reasonable sounding explanation, or some gibberish, or some babble that is pronounced with confidence but you don’t really understand it. Or, they have become polished and provide entirely rational and reasonable explanations, whether true or not.  After all, they are the “expert” you hired so they must know what they are talking about, right?  Nonsense!

First Sign of the SAP Peter Principle

“Blah, blah, blah”  I have no idea what you just said but just so I don’t look stupid I’m not going to challenge it.

As I’ve written on many occasions, part of the key skills and experience a good consultant or business analyst MUST possess is the ability to take the complex and make it simple.  ANYONE can take something complicated and keep it complicated, or worse still, make it more complicated, or, worst of all, make it a mess.  It takes experience and competence to take the complex and simplify it.  But all that “technical babble” and jargon sounds so convincing, so educated, so, foreign.  It’s a foreign language that you don’t completely understand and these incompetents know it.  Unscrupulous consultants know if they can make something up and sound as though they know what they are talking about you will believe them –, you hired them for their expertise.  They can game you to increase scope, or extending project timelines, or busting your budget and they do this because they are personable and manipulative.

How Can You Identify the SAP Con Artists?

Accountability, Responsibility, and Quality.  The cons avoid accountability or direct responsibility.  On a project where they are discovered they must be nearly forced to have clear accountability for delivery.  They must be pressed into doing what I call “due diligence” around a solution to make sure it will work correctly.

If you catch it early enough you can keep these incompetents from being rewarded for blowing your budget, causing project delays, and creating even MORE complicated and convoluted processes than you had BEFORE you did your SAP implementation.

How Customers Provide Perverse Rewards for Incompetence

The incompetent consultant’s area seems to have users who struggle with problems / issues / bugs that need the most fixing and the most attention.  By this time many companies have invested so much time and effort with the incompetent consultant that they don’t see any other options but to continue with this fraud.  The incompetent consultant is needed badly to support the mess they make for some time after you go live.

One way you can tell you have been manipulated or gamed during the project is by the quality, completeness, and accuracy of the solution the consultant delivers at go-live. 

From a consulting firm’s perspective, the incompetent consultant puts in lots of extra billable hours, helps them get extensions and budget increases, and needs to have lots of extra consulting support.  They are always behind, and no matter how hard “they try”, they always have another excuse for why the problems they cause really aren’t their fault–, it’s always someone else.

These consultants stay on long after go-live to ensure that their questionable solutions are supported by the same person who made the mess to begin with.  This is what customers insist on because by the time go-live happens they are “stuck” with the mess and “stuck” with the “con”sultant who made the mess.

Incompetent consultants tend to be VERY personable most of the time, and ingratiate themselves with the customer / client so that there is no question that they are working SO hard, and doing such a GREAT job.  It could never be their fault.

How SAP Consulting Vendors Reward and Promote the Peter Principle

For the consulting vendor, billing hours go up, staffing and utilization numbers are high, additional “backfill” support is needed and more people are staffed.  From their metrics and possible compensation incentives the incompetent consultant is doing a great job!  On the other hand the highly experienced, competent, and diligent consultants “work themselves out of a job.”  The competent consultants tend to have fewer go-live support issues, they usually have more engaged, involved, and knowledgeable users.  And they are just plain better prepared.  They are not “needed” as you go-live and you, as the customer, get rid of them to cut the blown budget wherever you can.

In a partner oriented firm the incompetent consultant is headed for being a manager, senior manager, managing partner, etc.  The incompetent consultant has great utilization, helps to get more staff on projects, and is always busy.

In the consulting companies incompetence is rewarded and incentivized by the consulting firms.  The most competent and diligent consultants are passed over for career enhancement precisely because of their competence – they may finish projects earlier than their incompetent peers and may be “on the bench” more frequently.

The more skilled the incompetent consultant is at being personable, at presenting a compelling case for why they are doing such a great job but you need more resources, the better positioned they are for higher level promotions.  After all, in consulting firms, senior level positions are focused on getting billable resources out and billing.  The more experienced and capable at this the better positioned you are for partner or senior management.

Stay tuned next week – details on how to spot them and then ferret them out…

Related Posts:

• Reduce SAP, ERP, or Technology Project Stress: Part 2
• Protecting Yourself from SAP Consulting Fraud
• Screening and Interview Methods to Find the Right Consultant – Part 2
• Screening and Interview Methods to Find the Right SAP Consultant
• SAP Offshore Development Project Experience

After you have done all of the hard work, selected the vendor, and started on the blueprint path you have one more “low risk” opportunity to ensure breakthrough project success.  Keep in mind here there is more risk involved in this area of the project than in the previous stages because they were fully under your control.  You could directly mitigate the risk, you could decide against contracting with a particular vendor, and you could simply back away from anything up to the selected vendor beginning the project. 

Now that the vendor is selected you have one more major set of tasks that is still relatively “low risk” to the business to see solid results.  This is the last big opportunity before incurring huge costs to ensure that you are getting what you pay for–, that is in the blueprint phase.

Keep in mind that during or at the end of the blueprint phase of the project there are risks to changing out problem or underperforming consultants, and those risks are compounded by the size of the team covering a particular area (for example, a smaller team covering a single SAP module like SD, MM, PP, FI, CO, etc., carries higher risk than a larger team covering a single module).  If everything goes well up to this point then the reason you may end up replacing a consultant will probably be related more to personality and team dynamics than a lack of skill.  Some of the personality and dynamics you can work through, however a lack of skill is dangerous to your entire project.  As a result if there is a risk to replacing consultants during or at the end of the blueprint phase it may still be your best course over the longer term of the project.

You may wish to define in advance with the selected implementation vendor how they would mitigate the risk of replacing one or more consultants during or at the end of the blueprint phase of the project.  This way you are both setting the expectation in advance and forcing them to consider how they would actually take care of this problem.  By doing this you will help to ensure that the right tone for quality and results are set throughout the project.  This is your last chance to ensure that the vendor resources are the right fit and have the right skill and talent for your company.

1. A proper blueprint must contain the details of the HOW the functionality will be implemented, not WHAT will be implemented.  The WHAT of the blueprint is the scope.  You wouldn’t consider a home plan a blueprint if it only included an exterior elevation and a few artists’ renderings of the interior would you?  If the home plan didn’t have the foundation details, roof details, electrical, framing, HVAC, etc., you wouldn’t consider it a blueprint at all.  If your vendor provided blueprint document doesn’t contain the translation of the business requirements into the “HOW” of the functionality then it is not a blueprint, it is just glorified scope.




2. Be sure the implementation vendor provides a Blueprint Template ON DAY ONE of the blueprint phase.  Ask for examples of prior blueprints (scrubbed of the client name if they wish).  Ask for these as part of the proposal.  If ACTUAL samples are not provided, with significant setup details then disqualify any non-responsive vendor. 




3. Pay close attention during the start of the Blueprint to find out whether the consultant has any idea of what meetings to schedule, what key company individuals (by job / role) need to be in those meetings, or whether they know what to do.  This is a HUGE indicator of the fakes, frauds, cons, and those who do not have experience.  They don’t know where to start; they don’t know what people they need in what meetings or what order the meetings should be done in.




4. Be sure to sit in on the first couple of requirements gathering sessions for EVERY consultant.  If they seem clueless here, they probably are.  You might want to consider an IMMEDIATE change before you invest in a mess.




5. If you are a large enough company that you have more than one consultant assigned to a module you will want to insist that EVERY consultant conducts requirements gathering sessions with you there to observe. 




6. Unless they have been clearly noted as “juniors” or otherwise made clear to you as the paying customer they do not have experience, there is no reason companies should pay outrageous rates for inexperienced but “smart” folks.  And just to ensure that more senior consultants aren’t “flying cover” for them you might want to insist that they lead their own requirements gathering sessions while the more senior consultants are doing other work.




7. Create a blueprint project requirement that at least one entire process string, start to finish, for a simple process area must be completed by every single module.  This should include basic organization structure requirements and should be completed in less than 2 weeks after the first meeting (a really good consultant can do an entire process first pass including all documentation and requirements in a week).  This is another check point where you can evaluate the quality of the consultants that the system integrator has brought to your project.  IF you find that a consultant was unable to accomplish the task, or if their process blueprint documentation is so lacking in the HOW it will be done in SAP (rather than just the “what” the process is) then I would seriously consider asking the integrator to REMOVE this consultant from the project.  Better to do it now and possibly hurt a little of the blueprint timeline.  The alternative is to have this person possibly slow down the whole project, or make a mess out of the system design, setup, and testing, and then possibly blow the budget and timeline.  And even if they don’t blow the budget and timeline, and even if they don’t make a mess out of the project, WHY do you want to pay that integrator such a premium price for some junior resource that will not add any value to your business?  If that is what you want, PROMOTE FROM WITHIN!  It is cheaper and it creates more visible opportunity within your own company.  You don’t need this kind of high paid dead weight on your project.




8. Insist that a prototype of the simple process they defined is performed within 4 – 6 weeks of the blueprint start.  No matter HOW big, or complex, or far flung your company is there is no reason that a basic but CORRECT org structure and basic business process can not be set up and demonstrated within 6 weeks unless you have less than optimal consultants.  This is another chance to evaluate whether or not you should keep this person on your project.  If you want breakthrough business results then you had better have truly talented consultants.  If you settle for less then you will also settle for less than the results you really want from this huge investment.

Obviously there are risks involved in any SAP, ERP, or technology project.  If those risks are identified and addressed early on in your project you will set clear expectations about the quality of the work and what the final result should be.  There are things that need to happen on the company side of the equation as well, but this article addresses your investment in the system integrator.

If you make the hard decisions up front, and if you are diligent with taking steps like what these articles define then key project expectations about success and results will be set.  These approaches help you to see through a lot of the hype, hoopla, and sales garbage that is so prevalent and also sets expectations about the quality of resources you want on your project.  There is no way to anticipate every avenue some unscrupulous or desperate vendor might take, but by setting certain expectations and keeping the “traps” in place early on you are more likely to eliminate those vendors from the process before they can do any damage.  By being diligent early in the process through changing improper resources (and possibly demanding credits) you can help to set a tone and expectation about the quality of results you expect as well.

Four Part Series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

Related Posts:

• ERP, SAP, or IT Project Management and Prototyping for Success
• Competitive Pressures and Value Propositions, Is Lean the Answer?
• Planning For a Smooth Go-Live: Part 4
• SAP as a Change Enabler
• Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP

Too many companies have not considered the potential legal liability to shareholders or other company stakeholders for having “fake” consultants at involved in their company IT projects.  This can be applied personally or coporately for the fake IT “professionals” that vendors and placement firms bring to company projects.  By not conducting sufficient due diligence in screening vendor resources, or for inconsistent labor practices there is a much larger potential for liability than many realize. And that would include both corporate and personal liability for Directors and Executives that fraudulent “consultants” may cause.

There is not only the potential of torts for negligence or gross negligence but there are also potential wrongful termination suits for any regular employee your company might need to terminate. The real shock is that more of this type of legal activity hasn’t already taken place, but it is just a matter of time.  It’s not important to take this author’s word for it, just read this material and then have your corporate counsel and HR departments review it as well and then ask yourself what the consequences to you and your company might be.

For example if an employee submits a false or fake resume or otherwise lies on their application to your company about their skills and you fire them there may be both personal and corporate liability.  This is true if you do not use at least similar diligence, care, and consequences for vendors and their resources.  If a CIO, IT Director, or some other managing official were so brash as to knowingly ignore the fraudulent vendor resources or consultants and then not apply the same standard for regular employees there may be a solid case for wrongful termination of anyone who is fired for false claims. You might as well just remove that clause on your employment applications and employment forms where you claim you can fire an employee for false information.

The most disturbing aspect of all of this is if you dare fire an employee for fraud, embezzlement, theft, or other such infractions but discover that a fraudulent consultant has come to work at your company you may be subject to wrongful termination liability there as well. In other words, if you or your company won’t deal with the frauds, cons, and cheats that come into your corporate environment through contracts and other means then you may be implicitly waiving any legal ability to enforce those standards on your internal employees. 

Your risks and exposure are far greater than you may think.

The first time a lawyer takes one of these cases where you have done an expensive ERP or IT implementation and it is discovered that one of more of the resources was a fake you may be in serious trouble.  Consider this:

First there is the potential for wrongful termination suits as already mentioned above.

Second there may be personal or individual liability if it can be demonstrated that there was not an adequate amount of due diligence in verifying the skills and experience of the vendor resources.  This exists because if you do any kind of prior employment verification on regular employees but do not do at least a similar amount of verification of the skills and qualifications for high paid vendor resources an argument could be made for negligence.  If it is serious enough, it might be gross negligence. 

Third, even if you win a lawsuit employee morale will be damaged.  The negative employee and public perception from the legal discovery process of finding out just how much you paid to that fake consultant will KILL your career and any future you might have at any company.

Fourth, there may also be U.S. Sarbanes-Oxley implications for any financial performance impacts caused by inexperienced consultants.  Couple this with the potential personal liability for negligence or gross negligence that may obtain and you have a serious mess.

Fifth, you may be subject to corporate liability for terminating, suing, or pressing ANY charges for any employee who has pilfered or stolen anything from you.  If you do not do the same thing for any consultant that a vendor brings to your company.

Sixth, you may still have liability for not taking action against a vendor or placement firm if you find a pattern of their use of fraudulent consultants that is not isolated.

Seventh, back to U.S. Sarbanes-Oxley legislation, it may not be enough to hide behind a vendor or consultant’s liability insurance for supposed “protection” if it can be shown you did not have sufficient controls in place to prevent your company from being defrauded by these con artists and cheats. You may discover that certain exceptions to your own corporate insurance policies will not protect you in the case of this type of “negligence”.

You and your company WILL settle every one of these cases that comes across your desk no matter how ridiculous the claims of the lawyer’s client, your former employer, might be.  See point three (3) above to understand why you will settle every wrongful termination case where anyone who is fired can possibly dig up any consultant on one of those expensive IT projects with a falsified resume. 

During discovery any lawyer can get copies of the consultant resumes and the experience presented by the vendor or consultant for the project. From there it is not a difficult issue for them to make the necessary HR calls to the companies that the consultant lists on their resume to verify all of the experience the consultant listed from every company they supposedly worked at.  And most HR departments will track down information even on contractors if you approach them.  And let me assure you, with the MASSIVE AMOUNT OF FRAUD done on a regular basis they WILL find at least one or two resumes from fake consultants.  And if you weren’t careful during the hiring of a few years ago you may be in deadly serious trouble in your own IT or Engineering departments with lots of fakes and frauds in there as well.  You may quickly discover that your technical departments have several fakes, frauds, and cons.  Are you ready for the fallout?

If this happens you may be in serious trouble.  If it goes to litigation and there is more legal discovery over what your company paid for that fraudulent consultant your career as CFO, CIO, IT Director, or other IT professional is over. 

The worst case scenario is if it is discovered that you fired an employee for theft, embezzlement, or fraud and then took any kind of civil action or made a criminal complaint against them.  You might as well hang it up. 

When it comes out how much that FRAUDULENT CONSULTANT and their fake resume cost per month that you didn’t throw off the project, or take civil action against, or file a criminal complaint against for fraud or embezzlement, your head will be on a silver platter.  Shareholders will be hunting for you and both HR and the legal department will have your number on speed dial.

This is all in addition to the messes and dissappointment that so many companies experience from the lack of expected results all of these frauds and fake resumes have created in the marketplace.  Wonder why your IT projects go over time and over budget? I’d almost be willing to wager that some 75 – 90% OR EVEN MORE of those projects were staffed with several fake consultants with fake experience and fake resumes. Wonder why you’re paying so much for that ERP project and not seeing the desired results?  Wonder no more.

Further Reading:

 How to screen for SAP consultants
Avoid fake SAP resumes, fake SAP experience, and get the experience you pay for.

Screening methods to find the right SAP consultant
http://www.r3now.com/screening-methods-to-find-the-right-sap-consultant

Screening Methods to Find the Right Consultant – Part 2
http://www.r3now.com/screening-methods-to-find-the-right-consultant-part-2

Related Posts:

• How the SAP Consulting Peter Principle Works
• Reduce SAP, ERP, or Technology Project Stress: Part 2
• Scams, Shams, ERP System Integrator Tactics
• Screening and Interview Methods to Find the Right Consultant – Part 2
• Screening and Interview Methods to Find the Right SAP Consultant