I’m a big fan of ’80s rock. I am also guilty of quoting more than my share of classic rock songs in my blog.
So when I heard “Canary in a Coal Mine” by The Police on the radio the other day, I instantly thought about ERP projects. The song title refers to the phrase stemming from the fact that coal miners would rely on canaries to warn them of dangerous gas leaks that they may not otherwise detect in time to get out alive. The canary was singing when all was well. When it stopped singing, it was usually because it was dead, warning them to get out of the mine before the fumes killed the miners as well.
ERP projects have a similar potentially unnoticeable dynamic. We’ve all heard about massive ERP failures over the years, but those failures didn’t just happen overnight. Instead, a number of toxic “leaks” built up over time until the projects were doomed.
So what are the warnings that you may have a dead canary or two on your hands? Here are a few signs that your ERP project may be in trouble:
- You’re not reviewing the project with your executive team on at least a bi-monthly basis. This will spell trouble, because you need involvement from your management team to ensure the project is aligned with their expectations, key decisions are being made in a timely fashion, and resources are being directed appropriately. This problem area is also likely to become a root cause for many of the other warning signs listed below.
- There is no dedicated project team. It is very difficult for your employees to do their day-to-day jobs and also participate effectively in a project as important as this. Many of our clients hire us to ease workloads off their staff, but there needs to be a small internal core that is dedicated to the project.
- There is no training scheduled until less than 90 days before go-live. Training is an iterative process and should begin well before go-live. The core team needs to be trained early in the project; superusers should be trained prior to and during conference room pilots and end-users should be trained in multiple ways prior to go-live.
- Your organizational change management plan only consists of end-user training. Training is important, but it is only one small portion of organizational change management. Organizational design, employee communications, process and organizational gap analysis, and organizational readiness are just some of the key activities too often overlooked during ERP implementations.
- You have no contingency budget. You don’t know what you don’t know when you budget for the project and things never go exactly as planned. You will find that one part of the software that doesn’t fit your business and needs customized. You will find that one business process that takes a while to get right and causes delays. It is also much easier to ask your Board for money up front rather than after you’ve blown through your budget. Depending on risk and complexity, we often budget up to 15 to 20% of a total budget be set aside for contingency.
- You don’t have at least three iterations of conference room pilots or integration testing. Most ERP software is flexible and robust out-of-the-box, so defining your business processes and workflows can be challenging. Just as you would’t introduce a new product or manufacturing process without extensive testing, you don’t want to introduce an entirely new business software into your organization without testing and refining.
- Your budget assumes that software license costs are a majority of your total implementation costs. Software is the relatively easy and low-cost portion of your budget. Even with an accelerated implementation, you have configuration, hardware, internal and external resources, integration, and a number of other budgetary line items that you don’t want to be surprised by later on.
- You don’t have a strong program management team with at least several dozen implementations collectively under their belt. Every organization has a few people that either implemented software in their previous lives or “have a friend” that did so. However, there is no substitute for a team of experts that have done it a million times.
- The software techies are running the project. If the business isn’t driving the project, then you’re in trouble. This will lead to software that doesn’t fit the business, employees that resist the software, cost overruns, or all of the above. Hands-on functional and technical expertise is important, but these resources shouldn’t be running the project.
- You don’t have a business case, performance metrics, or a benefits realization plan. Hopefully you’re not implementing ERP just for the fun of it. Assuming you’re not, then you should have metrics to define how you expect the new system to improve your business, along with a plan of how you are going to measure actual results. It doesn’t stop here, either – since you won’t achieve business benefits on day one, you’ll need a plan to introduce continuous improvements.
- Your definition of success is: “Just get the damn thing up and running.” It’s easy to fall into this trap after the project has been dragging on for months or years. However, this is a slippery slope. Once you start cutting corners, costs, and time just to get the project done, you are driving up long-term costs and risks.
- You have very little margin for error to miss customer shipments at go-live. You don’t want to assume that you are going to have problems at go-live, but according to Panorama’s independent research, over 50% of manufacturing software implementations create operational disruptions. If you don’t have much slack in your inventory or lead times, then this can magnify the risks of the project.
- You will not customize the software, under any circumstances. Unless you are a start-up with absolutely no existing business processes, this is a bigger risk than many will admit. While the line in the sand may be drawn for good reasons, it is not realistic – less than one in four companies implement with little or no customization. In addition, adopting business processes baked into the ERP software can create misfits with your business needs and/or magnify organizational change management challenges. These aren’t necessarily things that can’t be worked through, but most organizations are not prepared to deal with the consequences.
These are a few signs that your project may be in trouble. Just as the canary that stops singing in the coal mine served as an important warning, each warning sign that you head off at the pass will ensure that you have a successful ERP implementation.
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