It’s high time that CIOs and CFOs start thinking about some of the “softer” aspects of successful ERP implementations. After years or even decades of under-investing in the people, processes and organizational components of their enterprise software initiatives, executives are rightfully coming to the conclusion that they need to give careful consideration to organizational change management and other critical, non-technical activities that most software vendors, system integrators and ERP consultants fail to provide. For example, a handful of our current clients hired us to get their projects back on track because they found that their initial implementations were far too focused on the technical aspects of the project and didn’t have nearly enough time and resources dedicated to the other, more important facets of a successful deployment. Personally, I sometimes like ERP project recoveries even more than a clean slate implementation because, by that point, clients fully understand the value of what we do as a company. But the fact remains that implementing an ERP system twice is much more expensive than simply getting it right the first time.
Look at another startling fact: ERP implementations suffer from the 50/50 rule. As we outlined in our 2012 ERP Report, just 50-percent of ERP projects analyzed achieved 50-percent or more of their expected business benefits. This is hardly a compelling reason for a CFO to invest millions of dollars in a new ERP system, and executives are starting to catch on. They are starting to realize that ERP failures and lack of business benefits doesn’t have much, if anything, to do with the software. After all, software vendors have cracked the code on making software the easy part of an ERP implementation. SAP offers customers ASAP (Accelerated SAP) and RDS (Rapid Deployment Solutions) methodologies, Oracle has a business accelerator toolset, and even the Tier II ERP vendors have developed methodologies and toolsets designed to make the ERP implementation process go smoother.
Despite these best intentions, however, most ERP projects still fail. In addition to the longer-term ramifications of the 50/50 rules on the business benefits side, our research also shows that most ERP implementations take longer and cost more than expected. In fact, the average implementation cost overrun is over 20-percent, and these metrics haven’t improved much at all since we began conducting the annual study in 2006. Even if we isolate the data related to SaaS and cloud ERP solutions, these alleged “slam-dunk projects” take longer and cost more than expected. Since SaaS ERP vendors all promise fast deployments and even quicker business benefits, surely it can’t be the software’s fault, can it?
Again, these issues have very little to do with the software. Most modern ERP software “works” and is relatively easy to deploy from a technical perspective, but none of that matters if employees and end-users don’t use and embrace the system to perform their jobs and conduct business processes. As we’ve found in our ERP implementation experience, as well as our research of enterprise software deployments across the globe, user resistance and lack of understanding is one of the root causes of most ERP failures. And one of the key factors that contribute to user resistance is the “usability” of the software.
Clients often ask us about the usability of ERP systems because it’s a vague term. When we think of usability, we generally think of user-friendliness. Pandora makes it easy to create a custom radio station, Netflix makes it easy to watch streaming video, and Twitter makes it easy to post tweets – all examples of user-friendly types of software. Similarly, when most executives think of the usability of their ERP software, they look at the surface of how easy it will be for employees to navigate the system via the user interface.
However, usability means much more than the ease of use of a GUI. Usability also relates to how well the software fits your business operations and vice versa. In other words, are your business processes easily executed in the system? Can employees perform their basic job functions without the software getting in the way of their day-to-day responsibilities? Does the software allow the company to seamlessly, efficiently and effectively run its operations? If so, then the ERP system has a high usability factor.
The problem then becomes more of a misalignment between the software and the business operations. As outlined in the graphic below, companies change over time via merger and acquisition activities, growth, international expansion, new regulations and a host of internal and external drivers of change. Unfortunately, however, most ERP systems fail to keep up with these changes, creating a misalignment over time. So after 10 to 15 years of an organization’s business operations evolving and changing over time while the ERP system remains stagnant, the organization and its employees reach a breaking point where they can’t take it anymore – the ERP system is terrible, employees hate it, and it’s time for a new system. We hear it all the time and are amazed at how often misaligned ERP systems are attributed to the software itself rather than the failure to allow the technology to keep up with the business. This misalignment ends up creating problems with the usability of the system.
So how can an organization avoid the pitfalls of poor usability? Here are three tips to proactively stay ahead of this particular challenge:
1. Ensure initial ERP system usability. When you are first evaluating potential ERP systems, you must make sure that you have clearly defined what employees will need to do with the system. In other words, how specifically will the business processes need to look and how will the software support the business? It may sound elementary, but we see far too many organizations gloss over this important step to achieving ERP usability.
2. Train the system to be usable. That is not a typo – the system needs to be trained to be usable. Once business processes are clearly defined, the system needs to be designed and configured to run the business. Far too many companies assume that they’ll just flip the switch and the software’s “best practices” and “industry pre-configurations” will magically get the job done. Make no mistake that unless you are a start-up or a very simple organization, this approach is a recipe for disaster so you’ll want to ensure that your processes define how the software will be used. Today’s enterprise solutions are far too flexible to rely solely on best practices to get the job done.
3. Assess ERP software usability along the way. Employees not only need to be trained on your organization’s specific business processes and shown how the system will support those processes, but both your staff and your processes need to be assessed prior to and periodically after go-live in order to identify and address misalignments over time. As the business changes, the software needs to change as well, and ongoing organizational assessments to evaluate the usability of the system is the only way to allow the software to keep up.
Focusing on employee and operational usability is a key to ERP success. In addition, it is a key to ensuring that the software and the business stay in sync as the company evolves over time. Not only does this focus exponentially increase the potential business benefits of the enterprise solution – effectively allowing your organization to dodge the 50/50 bullet – but it also allows you to get a much longer lifespan from your ERP system. Most of our clients replace their ERP systems after 10 to 12 years, but they don’t necessarily need to and wouldn’t have to if they maintained this level of operational and technical alignment over time. So in other words, ERP usability is a multi-million dollar proposition for most organizations.
Learn more by downloading one or more of our white papers on ERP implementation, benefits realization and user acceptance or watching our recorded ERP webinars on organizational change management and ERP failures.