When ERP projects go wrong
Last year I published The big 5 ERP selection errors a CEO should avoid and when Bob, a colleague in the USA saw it on LinkedIn, he was quick to confirm from his experience the veracity of my observations and in subsequent conversations gave me great material for this article from a recent project which I happily plagiarise here with his permission.
Having selected software to run your company the next challenge is getting it implemented and not surprisingly there is a strong correlation between the issues that cause grief in the selection process and the issues that can derail the implementation.
The big 5 for failed implementation projects are:
- Lack of clarity of the objective
- Lack of ownership
- Lack of proper resourcing
- Scope creep
- Ineffective change management
The latter is so destructive that even if you get the others perfectly executed you could still dismally fail on this point alone. It is an insidious fact that people typically don’t like change and will do whatever they can to avoid it or minimise its impact on them personally. No wonder so many companies report less than satisfactory outcomes from ERP Implementation projects.
1. Lack of clarity of the objective
If you did not have clarity on the objectives during the selection process you are going to be even more conflicted on the goals by the time you start the project. By now you have gone through the educational experience of having two or more ERP Vendors spinning their version of software Nirvana to your team and your framing of what is possible will have been significantly expanded or distorted depending on your perspective. Failure to lock down the objective before you start the project will guarantee that you will fall victim to scope creep.
If your Vendor or Implementation Partner is professional they will want to lock down the scope early. It ensures they know what success looks like and it protects you. It is also the time when you aim to flush out all the assumption that you may have made during the sales process about what would be included. If at all possible try to get the objectives agreed, documented and costed before you sign contracts else scope creep will already have started as I guarantee that your assumed scope will be broader than the Vendor’s.
2. Lack of ownership
Here is where I will draw heavily on Bob’s contribution in response to my article on the selection process.
“In short, after 4 weeks of interest, upper management quickly fell out of the picture despite our best efforts to keep them involved. They then took on the “it’s your project” approach and ultimately left the business direction in my hands. Without direction from the Executive Committee, the Project Team also quickly took the “it’s your project” approach and management was then shocked as to why the project ran over budget by over 100% and ended up taking 9 months longer than anticipated.
Ownership of a project such as this has to occur at all levels of the organizational structure, but needs to be spearheaded both in word and deed by those at the top of the pyramid.
Of the 8+ full implementation projects I have done across many different ERP platforms, this was the first project where ownership of the project at the Executive level fell through and by direct correlation, was the first project in my history where we went over budget and over time. Most companies just do not understand the importance of Executive ownership.”
My thanks to Bob for his contribution, I am personally aware of this project and given the outcome, am now thankful that we did not get this gig even though the loss stung at the time.
3. Lack of proper resourcing
So you have your objective clearly in defined and you have nailed down your project scope. Now what?
Getting the right people on the project and freeing them up from their regular work to dedicate time to the implementation is hard but essential. The harsh reality is that the people you need on the project are the people who you are depending on to run your business now and they are already doing more than a full weeks work.
The right people must be on the ground and involved in the project from the word go.
A discovery session or a process design workshop done without the right people involved is a recipe for disaster and just a waste of time, effort and money.
Dare I say it, if you are not prepared to devote the right people to this project, don’t start the project.
As a final thought on this; if your business is seasonal in nature or at the mercy of repetitive boom/bust cycles consider using a down cycle to keep your key people busy on a business transformation projects. When times are good and the money is coming in you need to be doing all the business you can, so the next down cycle might be the best time to do that ERP project.
4. Scope creep
Does this scenario sound familiar?
“We were having a talk about the way we do customer discounts this morning and we were wondering if the software can handle xxxx yyyyyy zzzzzz?” to which the Implementation Consultants says “sure I can make it do that for you” which gets the reply, “great, how soon can we have a look at it?”
The next thing you know you have an undocumented variation to your project plan that could well add a week and $10,000 to the cost without consideration of how it impacts other stakeholders or the cost. That is how scope creep happens, and it happens 10 times a day every day to varying degrees if it is not actively and aggressively managed. Need I say more?
Scope creep is your enemy!
5. Ineffective change management
People are generally change averse, it is threatening on a multiple levels. There are always winners and losers and no one wants to be a loser so people, even your best people, protect their positons at the expense of the greater good. How you manage that is critical. Interestingly it is not really part of the ERP Implementation in that it has nothing to do with making the software work but it is essential to ensuring the outcome you need. Perhaps an example from an unnamed high-profile project failure will illustrate this point specifically and other points generally.
There is a major Public Sector software implementation that failed ingloriously in part because of an absence of change management in streamlining the work processes prior to attempting to automate them in the new system. A new ERP solution offers an excellent opportunity to challenge current business processes. How many times have you asked the question “why do you do it that way?” to be told something like “that was how I was taught to do it” or “that is how we have always done it” with no real understanding of the reason which may well have no current basis in fact or was the result of the limitation of the system capability in the past.
To fail to effectively manage change in these areas is to set the project up to fail before the ink has dried on the contract.
In summary, to give your ERP implementation the best chance of success you need to ensure:
- You are focused on outcomes so you know what your goals are and what success looks like
- There is a clearly communicated vision from the top
- Scope is actively and aggressively managed
- The impact of change on the people and processes is planned and managed.
Not hard really when you think about it clearly. Keep it simple; if you get the foundation right you can build almost anything on it as your business evolves.
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