Halloween is one of my favorite times of the year. I’m a big fan of horror movies, haunted houses, Stephen King novels and spooky costumes, so it’s the one time of year where it’s relatively easy to get a good dose of anything ghoulish and macabre.
Despite the innocent fun of Halloween, this and any other time of the year is when most CIOs and executive team members want to make sure that scary ERP implementation stories aren’t being told about their organizations. Because several of our clients are working with us to plan their implementations for 2013 during this last quarter of the year, many of our consultant teams are focused on planning for how to navigate some of the many pitfalls inherent in any ERP software implementation.
Although there are countless scary and spooky aspects of an ERP implementation – many of which lead to ERP failure or lawsuits – some are more alarming than others. When we think of ERP failures, we often think about blowing through budgets halfway through implementation, people not learning the new system or operations being shut down for an extended period after go-live. While these are bone-chilling indeed, there are a number of frightening situations that typically precede and lead to those doomsday scenarios.
Below are three of the scariest things you can hear before or during an ERP implementation:
- “The executive team isn’t on board with this project.” One of the biggest failure points of ERP implementations is a lack of executive buy-in, alignment and support. While most executive teams have to be on board to some degree to approve the budget and resources for an ERP implementation, this is a minimal price of entry. In addition to budget and resource approval, executives have to take an active role in making operational decisions on how the software will be used to transform the business, providing oversight to the project and clearly communicating the vision and expected business benefits of the new ERP system to the rest of the organization. Many decisions and oversight functions simply can’t be delegated to lower-level project resources so without this active level of executive support and involvement, your ERP project is doomed to fail.
- “We have a small organizational change management budget.” Although our research and experience shows that organizational change management has a direct or indirect impact on six of the top nine top reasons for ERP failures, organizations still have a puzzling propensity to want to cut their organizational change management budget. Because you can see, touch and deliver a physical ERP system, it’s unlikely that a CIO or CFO would be tempted to cut budgets or resources for system design, configuration and testing. However, organizational change management is much more abstract, so it is very tempting to cut budgets in this area when resources get tight. Ironically, given the fact that organizational change is more critical to a software implementation than the design, configuration and testing of the software itself, this is one of the biggest and costliest mistakes that an organization can make. As a general rule of thumb, you should dedicate at least 15- to 20-percent of the total implementation budget to organizational change management and end-user training to position the organization for ERP success.
- “Our business processes aren’t mapped because the software will dictate how we run the business.” One of the most common misperceptions in the ERP industry relates to the role of “as-is” and “to-be” business processes in implementation. In order to downplay the risk, cost and effort associated with their products, ERP vendors and their system integrators will commonly sell their prospective customers on the misguided notion that their solution has best practices baked into their software, thus minimizing the need to define business processes. However, most ERP software is so flexible that even the simplest business processes can be defined in a multitude of ways using basic configuration. Therefore, you have two choices: 1) let a software consultant that doesn’t know your business tell you how the software is going to run your business, or 2) define your business processes at least at a high- or mid-level before you start implementing. Doing so helps speed up, lower the cost and mitigate the risks of ERP implementations while allowing your technical consultants focus on what they’re good at, which is designing and configuring the system to meet your business processes and requirements.
These are just three of the primary root causes of most ERP failures. Proactively addressing these items early in your implementation and planning process will ensure that your ERP project ends as a success story rather than a bad horror movie sequel.