Like a lot of organizations – we try to stay quiet on our political choices. Not every person is going to agree with your points of view, so it’s best practice to keep your views to yourself. However, it is hard to stay in the middle with such a polarized political environment. So….who did your ERP project manager vote for? Stay tuned because the answer may shock you. The candidate your project manager (PM) voted for was…project governance.
Not the answer you were expecting, right? So, why? Well, a project governance document addresses key statements and processes that support the objectives of project sponsors, decision-makers and stakeholders. Good governance documents don’t just spring from a specific party or even from a burning bush – they are the results of careful thought and well-reasoned logic. Your project team, led by the PM, invested a lot of time into developing it. It will thrill them to no end if you ask them a few questions about it.
The vital running mate of project governance is a chap we call the project charter. The project charter takes into account information developed during the executive-level strategy sessions and contains:
- A validated project vision
- A validated list of objectives that support the vision
- A list of the expected business benefits that the project will bring
- A clear depiction of what constitutes success for the project
- A high-level scoping statement, timeline and budget
- A high-level list of project variables
- A high-level list of assumptions and anticipated risks
- A responsibilities matrix
- The plan to ensure and maintain alignment between executives, stakeholders and the project team
- A list of standing project meeting schedules, agendas and reports
- Change procedures that address how changes to budget, scope and time are treated
Like most running mates, the project charter should be taken very seriously. Simply put, the project charter’s job is to ensure that the project stays on track and completes within time, scope and budget.
So, who does Panorama endorse? We endorse a well-reasoned, balanced and strong project governance document. The project charter is the perfect running mate for governance and makes up an unbeatable ticket, unless you are not concerned with achievable timelines, reasonable scope and thoughtful and realistic cost estimates.
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Your ERP system runs your day-to-day operations and is the heart of your business. Few would disagree that without technology, your business could screech to a halt. What is your perception of the dependability and flexibility of your systems? Memories of outages and customer complaints are more vivid than “the good times.”
The lean and mean staffing of many companies doesn’t lend itself to deep dive analyses of what went wrong, much less the implementation of preventative measures. Instead, companies depend on subjective feedback.
Could your IT infrastructure be clouding the true picture of your ERP capabilities?
Companies hire IT professionals, first and foremost, to keep systems running. However, IT professionals often neglect to continuously report information that helps management make decisions. Your organization may need to allocate additional resources to ensure your technology stays one step ahead of where sales and product development is heading. Having an overarching enterprise IT strategy in place is key.
- While senior management may support your IT strategy, employees should regularly exchange ideas regarding its improvement.
- The pace of technological change is so fast that external guidance, information and validation is almost always both needed and welcomed.
- When is the last time a new technology of software was declined by management or IT? Saying no to a new technology or software is sometimes as important as saying yes and is a sign of a forward-thinking organization.
As consultants with over ten years of experience under our belts, we’ve seen cases where more technology doesn’t always equate to better; sometimes the purchased technology doesn’t even work.
Like most business challenges, there are indicators to help evaluate your ERP platform.
Show Me the Numbers
- What gets measured is the base of informed decision making. You probably measure growth in orders, but are you projecting your system limitations before you reach them?
- When a system snafu occurs, do you complete a root cause analysis? After the system is up and running do you bullet proof it by investing IT dollars or exploring alternative solutions?
- What are the pain points of the users of your systems? Employees can be clever about working around system issues — some see it as job security. Employees should be surveyed about the systems they use. This will give you a new perspective and set of numbers.
- What’s the added cost of your periodic software upgrades? How does this compare to new technologies/software available and the added features that they may bring?
- When you are shown numbers or costs, is there a risk and reward component as well as a recommendation?
True story: In a past job, I was working to integrate a new contact management system (CRM). I encountered some resistance from coworkers. They were enduring system outages that were sporadic, yet serious enough to keep them from getting their work done on certain days. While the system issues were reported to IT, little changed. It was only when workers began faithfully documenting the outages for a month that upper management became aware of the problem. In this case the new CRM system needed to be put on hold while time and resources resolved core system issues.Budget vs. Investment
- Is your IT department managing to a predetermined corporate dictated budget? Does it realistically align with the IT strategy and company vision?
- When IT expenditures are approved, who is responsible for the timeline and outcome? Are larger initiatives independently verified by an outside entity?*
- What is the cost of not doing an innovative ERP enhancement? An example of this is digital transformation where a significant change in technology is dictated, e.g. deciding to sell product on the web.
- Companies are less likely to negotiate meaningful vendor software discounts because they are not familiar with the changing product, pricing and software landscape.
- The decision to hire additional personnel vs. system expenditures is a complicated dance as it involves, HR, training and organizational change management (OCM)
- Deferred investments in technology may or may not be overcomeable, but always point to added cost and probable loss of competitive advantage.
Do human judgements affect ERP implementations and enhancements?
Bias Comingles with Knowledge
- IT professionals (like most employees) have biases. In the IT world, this can include biases towards or against certain software and vendors. In some instances, experience with a software can sometimes equate to familiarity, which could mask the availability of better or more cost effective solutions.
- Longer term employees have legacy knowledge of older systems and interfaces. Be aware of this as you look for your champions of change.
- Predicting how technology will grow a business requires a variety of thought leaders from inside and outside of the company, as well as your industry. Many IT professional may be experts in transactional processing vs. emerging technologies or the competitive landscape.
- Technological tools and toys may be suggested, defined as the internet of things (IoT). This requires careful evaluation both in terms of cost to benefit, as well as risk. A financial advisor would be taking on significant risk by texting a client investment advice, while an appliance repair person may be able to give better service by ordering a part using a handheld device.
While every company is different, the need for a more structured, “deeper dive” approach to evaluating the ERP and digital transformation systems that can propel your businesses is warranted and needed. Only then will your next IT expenditure be more strategic and if it is done right, it will feel like the investment that it is.
*Independent verification and validation (IV&V) is a service typically offered by an independent source or consultant. It introduces an outside assessment (including metrics) of the proposed ERP system initiatives, greatly enhancing the likelihood of a successful implementation. This can support or make suggestions to supplement your IT department’s recommendations. Independent assessment and associated recommendations provide management and the project team with actionable advice based on industry standards and best practices. A truly independent ERP consultant like, Panorama Consulting Solutions, should not have any financial incentives or ties to software vendors. They also bring the perspective of having managed hundreds of software implementations and maintain a very current knowledge of the software environment. Ideally they would also have knowledge of, “service recovery”; assisting companies to get back on track when after a major ERP implementation failure.
Download “The Importance of Independent Verification and Validation.”
Recently I learned what goes into making a delicious, homemade pie. One of the most important tricks to a good pie is consistency. This ensures that all of the ingredients are accurately added and evenly distributed. Unfortunately, the disproportion of any ingredient can change the overall success of a pie. Coincidentally, what dictates the success of an ERP implementation is not very different. Any one poorly-managed factor could lead to overall project failure.
Unlike a clearly-defined pie recipe, the roadmap to a successful ERP implementation is much more complex. The “ingredients” are all moving pieces that must be actively managed to ensure a cohesive project. A number of these important factors tend to be overlooked due to the time and experience limitations of the project manager and project team. In order to help bridge these gaps, many consulting firms offer independent verification and validation (IV&V) services. Due to their wide range of expertise, consultant teams perform assessments of the project’s health in order to proactively mitigate risks.
Panorama approaches IV&V using a 360-degree methodology, utilizing both quantitative and qualitative ERP best practices to help protect our clients’ interests. A 360-degree approach ensures that all important aspects– or “ingredients”–are equally assessed and managed so that projects do not encounter unpleasant surprises. Through our industry research, implementation experience and expert witness assessments, we have identified several commonly neglected factors project teams typically overlook. Below are the common “ingredients” that lead to ERP failures:
- Project Governance: Project governance and project management are as important to an ERP implementation as the crust is to a pie. Without adequate experience dealing with ERP project implementations, many project teams easily become overwhelmed. Failure to adequately monitor project decisions, changes, timeline, budget and risks often lead to unrealistic ideas of the project’s health. Oftentimes we find that ERP failures cannot be attributed to implementation failure, but is instead due to poor internal oversight and engagement.
- Business Process Management (BPM): Allowing established business processes drive the design of your new system could potentially lead to over-customization, increased project costs and extended timelines while allowing the canned design of the system drive your business processes could potentially lead to dilution of competitive advantages. Successful ERP implementations involve a fine balance between business process improvements, system customization decisions and application of industry best practices.
- Organizational Change and Training: Organizational change management (OCM) is one of the most frequently overlooked activities in ERP projects. Without a proactive approach to change management and training, many projects encounter employee resistance and frustration; resulting in poor engagement. For an ERP system to be properly used by end-users, the software design must be aligned with the people and processes.
- Benefits Realization: Based on Panorama’s 2014 ERP Report, about 55% of organizations reported realizing less than 50% of expected benefits from their ERP implementation. Without creating a robust benefits realization plan from the beginning, many companies fail to set up the appropriate key performance indicators to measure their benefits. Without pinpointing these, benefits realization become difficult to gage.
- System Design and Documentation: In our expert witness assessments of external ERP failures, one common finding is the limited design and decision documentation. Detailed documentation on system design and testing is crucial in order to track the system development effectively.
Overall, in order to ensure a 360-degree approach to ERP success all factors must be assessed and managed simultaneously. Here we have only shared five of the many important factors to an ERP project. Due to the size and complexity of implementations, the critical “ingredients” will vary from project to project.