1. Alarm Stage. This is our first response to a stressor. It is the stage in which our “fight-or-flight” instincts kick in because we have encountered a stressful situation and our body is reacting in defense. This isn’t any different from an organization’s typical reaction to an ERP implementation. In order to adhere to an unrealistic budget and timeline, government entities often will appoint a project manager with little to no technical or project management experience. An underqualified project manager may struggle to manage the project scope, budget and timeline, all of which are crucial to ERP success.
Project managers who have little experience in ERP selection will begin the project with a common RFP process. However, the RFP process commonly used for IT initiatives is insufficient. An ERP system is a significant investment and should be carefully selected to meet your organization’s unique requirements. The common RFP process will overlook many of these requirements, and vendors can appear more fitting than they truly are. Typically, the lowest bidder of the RFP will win the contract, only to have the organization unveil all the discrepancies between system functionality and its requirements. This is a major driver of over-budget ERP implementations and a major driver of stress.
2. Resistance Stage. In the resistance stage, the human body will respond to the stressor with maximum resistance. Similarly, ERP implementations commonly meet a high level of resistance from end-users. Public sector ERP implementations tend to be very “top-heavy” projects, meaning most decisions and motivations for the project are driven by upper management. When the C-suite fails to communicate with end-users, end-users will not feel invested and engaged in the project but frustrated and resentful. What most organizations don’t understand is that an ERP implementation is not solely an IT project – it is, most importantly, an organizational change project. Employee resistance can be mitigated through effective organizational change management, allowing organizations to achieve a higher level of employee buy-in and a lower level of resistance.
3. Exhaustion Stage. After a period of resistance, the human body is likely to enter the exhaustion stage. In this stage, we become weak and tired, with limited ability for normal functioning. This stage is highly relatable to the exhaustion experienced during an ERP implementation. In the public sector, employees are at full capacity with their day-to-day responsibilities, and their potential involvement with such a large project is limited. Without the engagement and dedication of subject matter experts (SMEs) in your organization, important ERP project tasks are likely to be delayed or overlooked. By conducting a project feasibility analysis, organizations can adequately plan for resource constraints and reduce employee exhaustion.
Although ERP implementations may be stressful, organizations can choose whether or not to leverage ERP consultants to navigate the stages of ERP stress. Panorama’s ERP consultants understand how to partner with your internal project manager to assist in not only the RFP process, but also the management of your project’s scope, budget and timeline. Your organization does not have to battle stress on its own.
IV&V is considered a “best practice” within the technology industry. The primary value of IV&V in the public sector is in identifying high-risk areas early in the project which allows the organization to either mitigate risks or prepare contingencies. It also provides project managers and IT staff with an objective analysis that helps them deal with system development issues and offers improved visibility into the progress and quality of the development effort.
Despite these benefits, organizations should pay careful attention to the perception and the dynamics of the internal project team and IV&V team. Some project managers feel threatened by the IV&V team, believing they are only there to spy on them, undermine their authority or quite simply point fingers. In reality, the IV&V team should be a welcome presence as it can actually provide more time for the project manager to think more strategically about the project as a whole.
Following are five common areas that an IV&V team can address during an ERP implementation and change initiative:
Correctness – Is each deliverable correct in respect to its methodologies, conclusions and logic? Is each deliverable accurate with respect to facts and computations?
Completeness – Is each deliverable complete in respect to objectives and scope?
Consistency – Is each deliverable internally (within the deliverable) and externally (across related deliverables) consistent?
Compatible – Is each interface/integration aligning with the solution?
Traceability (and Testability) – Can each requirement be independently, repeatedly verified and validated? Are there objective acceptance criteria that the purpose and objectives of the demonstrated results are in the final product?
Independent Verification & Validation is typically brought in for testing efforts. While this is a very critical activity, it should not be the only reason to engage an IV&V team. Our experience and research shows that “cutting corners” to minimize short-term cost actually increases long-term cost. IV&V should provide a 360-degree assessment of the entire implementation.
An ERP implementation should be a partnership between the organization and the IV&V team, where the IV&V team provides tangible measurement and alternatives and helps identify issues which may not be immediately visible. The IV&V team is ineffective if it simply tries to tell the project team what to do – it must engage the project team and help the organization understand that IV&V is essential for systemic change.
All of us have participated in projects that have not gone as smoothly as we had hoped. Most of us will probably experience failed projects again in our lives because failure is part of the learning process both for individuals and organizations. However, not learning from mistakes and repeated patterns will cause projects to fail time and time again. Below are three ways to help ensure success in the future.
1. Have an accurate schedule that is upheld and/or modified as needed, within reason. Project architects should understand all of the moving parts involved in a project, who the key actors are and how long each task should take. Project architects should not be the random person in the office who is “volun-told” to make a schedule for a multi-million dollar project.
Even after a company invests in a project architect who builds a near-perfect schedule, it is up to the project manager to review all of the moving pieces to confirm that it is reasonable and executable at this moment in time. Maybe a key player is going on a three-month sabbatical; maybe there is a major holiday or business event or there may even be an anticipated lay off; all of these should be accounted for in the schedule.
Even after the schedule is “perfect” (at that moment in time), it needs to be followed, reviewed and revised on a regular basis. The project schedule is your blueprint to success.
2. The project triangle (time/scope/money) is a rule. The project triangle of time, scope and money constrains every project. If money is decreased, scope and time are decreased. If scope is increased, money and time increase. The project triangle shifts whenever a change occurs to any one of the three factors. This rule always applies , even to management.
If management wants to spend less money, they must be willing to make sacrifices, and those sacrifices must be articulated to re-calibrate expectations, which will also reset project success measurements. Having effective change management and contingency plans will help assuage these changes to the project triangle, but they will not alleviate all signs of change. Companies must be willing to accept these trade-offs.
3. Don’t be the project hero. Whenever a project is near failure, there is almost always someone who has had very passive participation in a project yet steps in at the eleventh hour to try and save the project.
Behind their backs, these people are called, “Project Heroes.” Project heroes, in effect, serve no purpose other than to annoy everyone who has been working diligently on a project for a very long time. Project heroes get in everyone’s way by demanding updates and asking questions that they would have had answers to had they been meaningfully participating in the project from the start.
Don’t be a project hero. Be the person who always shows up on time, has his homework done, can be relied upon and leads through example. Strong work ethic from management has tremendous flow-down results for employees.
After an organization has selected an ERP system, that’s when the fun begins. By “fun” I mean roughly 14 to 19 months of implementation. This is anything but fun when you’ve been told by your ERP vendor that implementation would be completed in less than ten months. According to our 2015 ERP Report, most ERP implementations – including those in the public sector – run over-schedule by 25-percent or more. While this statistic is interesting, it isn’t something you want to rely on when explaining to your boss why implementation is taking longer than expected. One way to set realistic expectations for your public sector ERP implementation is to hire independent verification and validation (IV&V) experts. An IV&V expert can represent the organization and serve as liaisons between the organization and its implementation partner. If brought in before implementation, the IV&V expert can perform a full range of activities, including:
Monitoring of all project metrics (including budgets, timelines, KPIs, etc.)
Vendor contract adherence
Vendor / contractor oversight
Oversight of specific project components (including business process management and improvement, organizational change management, training and staffing)
Leadership and governance analysis
Data planning, cleansing and migration oversight
Auditing and regulatory compliance monitoring
Go-live preparation, planning and monitoring
Post deployment usage and benefits realization assessment
My favorite activity that IV&V experts perform is what I informally refer to as, “calling shenanigans.” Because IV&V experts’ jobs are to comb through every project plan, budget, timeline, KPI and deliverable, they are adept at spotting areas that are poorly planned, organized or executed. When a problem area is spotted, the IV&V experts report to the organization and develop resolution steps with the implementation partner. Once these steps are taken, the quality of work greatly improves. When dealing with public funds, no one wants to tell to their constituency that an ERP implementation failed and that it could have been prevented simply by adding an extra layer of oversight. IV&V experts are an added layer of security that can ensure your ERP implementation is completed on time and on budget.
From poor project controls to inadequate organizational change management, ERP implementations are full of potential risks. These risks are sometimes so obscure that it takes the discernment of an independent third party to uncover the threats beneath the surface.
The majority of organizations do not conduct risk assessments throughout their ERP implementations. It is best practice to engage an independent third party to provide independent verification and validation (IV&V) services throughout any large-scale project. IV&V is of value to both the private and public sector, and it is extensively used in government ERP projects.
IV&V consultants can identify and address gaps, defects and quality issues as early in your project as possible. Consultants can verify that your implementation strategy adheres to your implementation plan, and they can validate that the ERP system, project deliverables and project results align with your objectives and business requirements. Ideally, these services are performed by an independent entity that is not directly responsible for performing the activities being evaluated.
Following are several benefits of independent verification and validation:
Lower Cost – Compared to a project without IV&V, a project with IV&V will cost less in the long term. When problems are identified early, they can be fixed before they become a financial burden.
Improved Quality – IV&V focuses on assessing the quality and value of deliverables and project activities, and cutting those activities (if any) that are not providing business value.
Higher Benefits Realization – A quantitative and qualitative assessment of a project’s methodology and results ensures that the project is on-track to realize the business benefits an organization expects.
Reduced Management Strain – While independent consultants are busy identifying and solving problems, your organization’s management team is free to focus on strategic issues related to the implementation rather than technical issues.
The best partner for providing IV&V services is an independent consultant with technical and business competencies, a specialization in ERP systems and a team-based approach. An IV&V partner should also have solution-specific, hands-on experience and consistently leverage a proven methodology and toolset.
Most clients we work with are afraid of potential failure related to their ERP implementations. Many have heard the horror stories of high-profile failures and read the data about high failure rates.
Some are afraid of blowing their budgets and scheduled timeframes. Some fear that the project will shut down operations at go-live. Others are afraid of losing their jobs. And still others fear all of the above and then some. Regardless of the source of your potential fear related to your ERP project, there are proven and effective ways to mitigate risk and increase your likelihood of success. Running a project and making decisions based on fear almost never turns out well, so it is important that executives and their project teams feel confident that they are addressing the potential pitfalls of their ERP software initiatives.
Below are five ways to mitigate risk in your ERP implementation:
Treat your ERP implementation as a business transformation initiative rather than a technology project. There is a distinct difference between projects that are treated as business initiatives versus technology projects. Those that are treated as technology projects are much more likely to cut corners on the things most critical to success – such as business process reengineering and organizational change management – which increases the likelihood of failure. Business transformation projects, on the other hand, are much more likely to succeed because they focus on the right things (hint: not the software). The complex nature of ERP systems makes it easy to dwell on the technical aspects of the project, so don’t fall into that trap. And don’t be tempted to simply hire a technical VAR or system integrator and think that your project will succeed, because it won’t.
Enlist the support of proven ERP experts. I’m still amazed at how many people in the industry don’t really understand ERP software, either because it’s not their sole focus and/or because they are myopically focused on the functional and technical aspects of one portion of the software. When choosing ERP consultants to help with your initiative, ensure that they are technology-agnostic, well-versed in the entire cycle from selection through implementation, and have hands-on experience implementing multiple ERP systems. Although there are plenty of consultants out there, too many are a primary cause of failure, so be sure to choose wisely.
Ensure continuity from ERP selection through implementation. Swapping resources midstream in an ERP selection and implementation can be very ineffective and disruptive, so ensure that your team remains intact as much as possible from the selection and planning stage all the way through go-live and post-implementation. This goes for your internal resources, as well as your external consultants; to the extent that you can, you will benefit greatly from having continuity throughout your project. Hiring ERP consultants such as those at Panorama that can manage your selection through implementation will help accomplish this important goal.
Approach organizational change management as an insurance policy to hedge against ERP failure. If you were to pick one thing to do right on your ERP project, it should be to focus on organizational change management. More than even choosing the right software or configuring it well, organizational change management will have the biggest single impact on the success – or failure – of your ERP implementation. In fact, in each and every one of the 25+ ERP expert witness engagements we have been a part of, organizational change management (or lack thereof) was front and center in these high-profile failures. Think of it as an insurance policy that will dramatically increase the odds of implementing on time and on budget, minimize the risk of operational disruption and maximize post-implementation benefits. Panorama offers a comprehensive organizational change management methodology to help mitigate against this risk.
Leverage independent oversight and support. Managing expensive technical resources can be challenging at best, so it important to have someone helping manage various activities and tasks that need to be completed to ensure success. Keep in mind that technical resources, VARs and ERP vendors are typically good at installing and configuring software, but they’re not as good at managing overall projects, your internal resources on the project and all the various tasks and dependencies required for a successful project. Panorama’s extensive independent oversight and project recovery services can be very valuable in helping you keep your project on track or save a struggling project.
There is no way to completely eliminate risk in ERP projects. However, the above five tips will ensure that your organization and project is headed down a path of success rather than one riddled with pitfalls and obstacles.
A successful and on-time ERP project never happens by accident. Behind every successful public sector ERP implementation there is a project manager who has taken the time to define project scope, assess resource commitment and set expectations and priorities.
Although keeping a large-scale ERP project on-schedule is challenging for even the best project manager, we have several strategies for facilitating an on-time delivery:
1. Get Approval of Project Objectives and Scope: During the project charter meeting, the project manager should obtain sign-offs from the executive team on the project objectives and scope. By presenting the objectives and scope from the outset, there will be no surprises once the project schedule is more fully developed. Reaching a consensus at the outset also prevents the executive team from voicing concerns mid-project and suggesting changes that could cause significant scope creep.
2. Understand Your Team: Before randomly assigning tasks to various team members who seem to have the right title for the job, the project manager should assess each member’s strengths and weaknesses. We’ve all worked with the brilliant engineer who has never met a deadline; the intern who seems to have enough energy to do the work of three people; or the marketing rep who always seems to be taking personal phone calls. Assessing team members doesn’t have to take place in one-on-one meetings – most managers should know their team members well enough to be able to give the project manager recommendations on who should fill certain positions and what types of contingency plans should be made for workers who are needed but not necessarily reliable.
3. Assign Critical Path Items to the Most Trusted Team Members: The most trusted team members should be assigned the critical path items that will make or break a project. They do not necessarily need seniority, but they do need to have earned respect from their team and be able to work well with many different types of people. Very few people have the time to perform very large tasks on their own, so having a team is crucial for delivering critical path items.
4. Set Upfront Expectations for Deliverables: People have different standards for what is an acceptable work product. Some think a rough draft scribbled on a napkin is acceptable whereas others are uncomfortable submitting anything that has not been professionally printed and bound. By setting expectations at the outset, the team will know what is an acceptable deliverable. Without setting expectations, scope creep can easily occur when assignments are rejected because of incompleteness or lack of professionalism.
5. Prioritize Tasks and Develop a Hierarchy:It is not unusual for a small group of people to be assigned to tasks in several different categories. By prioritizing tasks and developing a hierarchy, everyone will know what their key priorities should be and bottlenecks will be less likely to occur. When people are allowed to pick and choose their tasks, the low-hanging fruit is usually completed first and other tasks are placed on the backburner. Prioritization may require that the more difficult tasks be completed upfront because several subsequent groups rely on the information. By setting these priorities, there is no guesswork in the order of operation.
An ERP project manager who follows the tips above will lead their team to ERP success. Only an on-time and carefully planned ERP project will provide the innovation necessary to effectively serve citizens. But if you need a little help, check out An Expert’s Guide to ERP Successor contact us to ensure you have a successful implementation.
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.
A number of government organizations are considering the idea of merging internal IT departments and infrastructure by sharing service arrangements. There are financial savings and potential operational advantages to this approach. Relying on one, centralized IT organization ensures improved performance, better security measures and synergistic resilience.
Due to budget pressures, changing work habits and citizens’ expectations, public sector organizations are being pressured to be more mobile, adaptable and capable. “Cheeks in seats” is no longer the only option for public sector organizations and their workforce. There are many cloud, SaaS and hybrid approaches available that can give the public sector workforce the mobility and flexibility required to remain relevant in the 21st century.
There have been numerous IT success stories in the private sector where organizations took advantage of centralization facilitated by cloud solutions. The public sector, on the other hand, is not as agile and bottom-line driven as the private sector – and for very good reasons. Rather than saving money, some public sector IT initiatives actually have a negative ROI – and a negative return on citizenship (ROC). Failure to manage organizational change and a tendency to adhere to old and inefficient processes are the two of the main culprits.
Public sector organizations need third party guidance in order to achieve an optimal mix of technology upgrades and organizational change management. An independent third-party can walk a municipal, city, state or federal agency through the tall cotton and capture, validate and join long-term strategic goals with short-term functional, IT and user requirements. An independent organizational change management consultant can facilitate frequent horizontal and vertical communications and ensure that long-term employees do not feel threatened by new technology or the concept of shared and centralized services.
While the cloud provides several possibilities, a complete move to the cloud is not always practical, particularly for large agencies or organizations. Specific departments or agencies within a larger organization should migrate distinct offices or operations to the cloud in a three-step process:
Define clear IT policies. The organization should implement a central IT infrastructure with clear and distinct policies that are standardized for crucial capabilities and applications. There needs to be a storefront for applications and a single IT throat to choke for management and control.
Acquire private cloud infrastructure. By acquiring a private cloud infrastructure, the organization can highlight the automation and provision behind a single point of management and control.
Evaluate who is using the services. Total cost of ownership can be calculated by determining which applications and capabilities are required and who is using each service. The CIO should evaluate the return on investment and decide which services can be efficiently used in the cloud and which ones need to be provisioned internally. Public sector organizations can also offer cloud services to smaller agencies and bill those customers based on their usage.
Organizational transformation and innovation cannot happen without the right technology and strategic organizational change management. You will not only save money in the long-run, but you will maximize your agency’s quality of service and its ability to achieve a high return on citizenship.
There are many facets of an ERP implementation that can affect timeline, which is why it has become an important factor in any ERP project. According to our 2014 ERP Report, over 73% of companies had duration overages during their ERP projects. Did your company complete its ERP implementation within its original timeline? Take a moment to vote in our poll and then check back to review the overall results.
If you would like to see how Panorama can help make your next ERP implementation a success, check out our ERP Implementation page.
Independent Verification and Validation (IV&V) is the key to reduce the risk of ending up on the news as another failed public sector implementation costing tax payers millions of dollars.
With increased public scrutiny and the number of failed public sector implementations on the rise, it is more and more important to have a fail-safe plan. Join Eric Kimberling, Managing Partner of Panorama Consulting Solutions, for a 60-minute, interactive webinar discussing the necessity of independent verification and validation (IV&V) in any ERP implementation.
True independent and well-executed IV&V programs give agencies the opportunity to bring projects in on time, on budget and to specs – but only if they know how to construct a plan that will hold the vendor and key stakeholders accountable.
Topics of discussion include:
-The role of IV&V in the ERP software implementation lifecycle -The difference between verification & validation AND quality assurance and project oversight -The need for innovation in IV&V methodology for public sector -Common challenges with IV&V and project management -Question and answer session
This video is a clip of a recorded, 60-minute webinar. The full recording can be viewed on our on-demand webinar page.
At Panorama, we believe that any ERP project should be a business initiative, not a technology initiative. Thus, it is vital to have engagement and communication among multiple levels of your organization. How engaged are the employees of your organization? Take a moment to vote in our poll and then check back to review the overall results.
A successful ERP implementation relies on the engagement of many stakeholders, but the involvement of executive-level leadership is especially critical. Considering the vast number of variables that affect an ERP implementation, effective governance from the very top of an organization is an absolute must. A tried and true method for organizing and deploying executive involvement in an ERP implementation is organization an executive steering committee. This group, which is generally comprised of executive-level individuals from ERP stakeholder functional areas, provides several key functions that are integral to ERP implementation success. So what exactly is the role of an executive steering committee? There are several answers to this question all of which are correct:
Role #1: To provide direction and alignment. Perhaps the most critical role of the executive steering committee is overall leadership. Effective ERP implementations are aligned with organizational trajectory and culture. The executive steering committee ensures that a project stays on course and achieves the desired benefits through championing the project within the organization. The committee helps secure buy-in at all levels of the organization and helps drive project branding. In this way, the ERP project becomes an extension of the enterprise itself, rather than a time-consuming obligation that gets in the way of regular operations.
Role # 2: To approve project changes and decisions. In a perfect world, ERP implementations would proceed as planned without ever needing course adjustments. Unfortunately, it is exceedingly rare that an implementation as large as an ERP project proceeds without hiccups. While proper planning and expectation setting can mitigate the need for extensive changes, the scope, budget and schedule changes that invariably occur require executive-level approval in order to be executed. This is also true of forward path decisions that have an effect on the entirety of the project. When an important decision needs to be made, it is escalated to the executive steering committee to ensure the best course of action for the organization.
Role # 3: To provide leverage for execution of strategies. Related to role #2 is the leverage that the steering committee provides as executives in the organization. When changes or strategies are proposed by a project team, the leverage of the steering committee can be a powerful force in efficient execution. A common example of this is securing resources such as subject matter experts (SMEs) for each functional area. Securing project time during a busy work day can sometimes be opposed by a given SME’s department manager. The executive steering committee has the clout to ensure that the right people devote part of their work day to the ERP project when necessary.
Although there are a multitude of other functions that an executive steering committee can provide, the above roles are the most common and arguably the most critical functions of the steering committee. Identifying, organizing and deploying the executive steering committee is a crucial component of a successful ERP implementation, and those organizations that pay necessary attention to this step will be rewarded for their effort. Learn more by watching our on-demand webinar, Lessons Learned From Best-in-Class ERP Implementations.
Written by Ian Doubleday, ERP Consultant at Panorama Consulting Solutions.
This 60-minute interactive webinar will explore the ways that organizations can be more effective in addressing the people and organizational aspects of their ERP implementations. The webinar will be hosted by Eric Kimberling, managing partner of Panorama Consulting Solutions, an independent ERP consulting firm.
The webinar will cover the following: •Overview of common people and organizational challenges of average ERP projects •Best practices in ERP organizational change •Things to consider in your ERP organizational change management plan •Common challenges for global and multi-site ERP implementations •Question and answer session
This session is ideal for those that are either in the process of or are about to implement an ERP, CRM, or enterprise solution.
Not too long ago, I read the book Great by Choice by Jim Collins, which outlines the stages of business failure, along with the various strategies that successful organizations use to navigate uncertainty and chaos. While reading the book, I could not help but relate these concepts to ERP failures and the various challenges that every ERP implementation inevitably faces.
Like running a company, managing an ERP implementation is fraught with risk, uncertainty and challenge. There are many things outside a project manager’s control, such as organizational resistance, misaligned business processes and a host of other issues that cannot always be predicted – no matter how talented the implementation team may be. What makes successful ERP implementations different from those that are failures are the various strategies that teams use to navigate these challenges.
Since Panorama was founded in 2005, we have helped over 200 organizations with their ERP implementations and have assisted a number of organizations in recovering their projects from failure. We have also served as expert witnesses in the highest profile ERP lawsuits in the industry. Based on this extensive experience, we have found that ERP failures don’t happen overnight. Instead, they happen over time.
Here are the three primary stages of ERP failure that we have witnessed over the years:
Stage one: The ill-advised implementation plan. I cannot tell you how many times we have seen ERP implementation plans that are completely unrealistic. Too often, ERP vendors and sales reps use these plans as selling tools rather than planning mechanisms, which leads to unrealistic expectations and, ultimately, disappointment. Unfortunately, poorly defined implementation plans entail more than just mere disappointment; they also ultimately lead to corners being cut and resources being diverted from the critical success factors most important to ERP success. For example, when a project team underestimates the time and budget required to successfully implement – a trap that most project teams fall into – they ultimately end up cutting critical activities such as organizational change management once they realize they don’t have the resources to complete the project in the timeframe and budget outlined in the plan. Think of a poor implementation plan as the first domino to fall in an ERP failure.
Stage Two: Uncontained organizational resistance. Most executive teams we work with do not realize how difficult organizational change management will be until they are in the midst of their implementations. Early on, they optimistically assume that employees will happily embrace the change and not actively resist the project. However, most organizational resistance is very subtle, non-intentional and rooted in non-malicious causes that can and do undermine ERP success. Common symptoms of heavy organizational resistance include the propensity to over-customize the software, failure to engage in meaningful business processes reengineering and inefficient post go-live processes, among other things. Only a comprehensive organizational change management plan can effectively mitigate these and other challenges related to organizational resistance.
Stage Three: Technical and software myopia. One of the biggest problems with the ERP software industry is that consultants are generally too focused on software functionality instead of holistic business processes, organizational change management and the non-technical areas of focus that ultimately enable success. While most ERP consultants are trained to be experts only in their specific ERP software, our research shows that software functionality and other technical issues are one of the least important criteria that will ultimately define success or failure. In other words, how well the software is configured has very little to do with the ultimate level of success of your project. The good news is that just because most consultants do not have the complete skill set required to make a project successful that does not mean they do not exist or that they cannot be augmented with other team members.
These three stages of ERP failure do not necessarily happen in this exact sequence each time but they do represent the most significant causes of failure that most project teams experience along the way. By successfully navigating these three stages of failure, your team will be better equipped to navigate the various challenges that they will inevitably experience during their ERP implementation.
Almost all project management disasters have a common pathology. Even if the participants are well-intentioned, the same issues surface in the after-action reviews of failed projects. Poor project management is composed of seven common sins that organizations should review before and during a project to avoid ERP failure.
Envy. The first deadly sin is a weak software evaluation and selection process. Organizations often select ERP software based on price, professional/personal relationships or envy (e.g., “That’s what our competition uses.” Weak software selection usually stems from poor requirements definition, a misunderstanding of software functionality or poor role definition between client and vendor. While most failed ERP implementations have other more severe issues than those related to software, poor software selection is often a contributing cause.
Pride. The second deadly sin is having unrealistic implementation expectations. ERP implementations always seem to take more time and money than initially planned. If the implementation is complicated by multi-site or multi-organizational requirements, reigning-in expectations is vital. Clients and vendors often lie to themselves and say, “Our ERP solution will be 100% ‘out-of-the-box’ with minimal training and no software configuration or customization.” While this is a way to slice time and budget off the project, a sober and stern assessment is critical to shaping expectations.
Avarice. The third sin on the road to perdition is unclear business requirements and greedily defining requirements by site rather than across the organization. Disastrous projects usually follow a predictable path so heed the warning signs before it is too late. Business processes need to be consistent, locked-down and agreed upon across the organization in the early stages of the project, for it is the foundation of the hard work to follow.
Sloth. The fourth sin is a lack of executive sponsorship. If the executive team is taking a hands-off approach and pushing responsibility down without authority, the project is destined for failure. Without executive participation, decisions are slow or nonexistent. An ERP implementation without strong leadership tends to have infighting and internal misalignment.
Gluttony. Too much customization is a bad sign. A good rule of the thumb is that your organization should not have more than 10-15% of its requirements as customizations. You want to implement ERP, not create your own custom software.
Lust. Poor risk management takes the number six spot and never is absent from a failed ERP implementation. Struggling project teams tend to have overly optimistic (lustful) goals and nonexistent mitigation plans or risk management because there is no room for these items in their scope, milestones or go-live dates. When the go-live approaches, the team is left with an untested system, inadequately trained end-users and a preoccupation with going live despite assumed risks. An ERP project team should expect things to go wrong and take longer than originally planned. Although your project budget and timelines may move to the right, it is a much more palatable position to have the time and money to deal with issues rather than having zero project safety margins.
Wrath. The ugliest stepsister of the seven deadly sins is poor or nonexistent organizational change management – resulting in end-user wrath. Hardnosed executives may dislike organizational change management and dismiss it as “touchy-feely” or “paying for hugs,” but this could not be further from the truth. Change management is the foundation and scaffolding that supports leadership, both vertically and horizontally. It prepares the users for the inevitable change and helps answer the question, “What’s in it for me?” A lack of change management not only breeds friction or outright resistance, but often leads to excess customization and a poor understanding of project goals. Of all the tools in the ERP Devil’s toolbox, poor change management is the nastiest knife in the kit and inflicts the most damage.
While it is tempting to heap all the blame on the project manager, a failed ERP implementation has plenty of blame to go around. With indifferent executive sponsors, disinterested or disenfranchised project team members and overzealous budget cutters, it is not uncommon for a project to fail.
A failed project is not a complete waste of time. Often the lessons listed above are burned deeply into the psyche of team members and are not repeated on future projects. As a wise man once said, “Most people learn from bad experiences, but wise people learn from other’s bad experiences.” Avoid the seven deadly sins of poor project management and you will save your project from failure.
What happens when project managers with high job security are put in charge of an ERP implementation with an inherently high chance of failure? In light of the recent Obamacare IT failure, this is a question that seems to have been answered.
However, I think the question that was answered was more along the lines of, “What happens when project managers with limited knowledge of best practices are put in charge of an ERP implementation? “
For government agencies implementing ERP software, the latter question is the question that they should ponder. The first question fails to get at the real issue. While a low threat of job loss and low motivation don’t help matters, it’s certainly not the only problem that derails implementations.
There are many other factors that contribute to poor project management and thus ERP failure. While I can’t say whether or not the Obamacare IT failure was a result of low motivation, it’s safe to assume that it was largely a result of limited project management experience and expertise. We can blame high job security all we want but accountability is only part of the equation for success – in-depth knowledge and “in-the-trenches” experience is the other part.
1. Project managers shouldn’t be afraid to point out problems even if it slows the implementation. It’s better to fix problems and mitigate risks sooner rather than later.
2. Project managers should clearly communicate expectations to the ERP project team. Throughout implementation, they should regularly asses milestones and measure results.
3. Test, test, test! Project managers should thoroughly test ERP software before going live. Conference room pilots are a project manager’s best friend.
4. Project managers should develop an ERP implementation plan that addresses project timeline, scope and resources.
5. Project managers should not go it alone. Even if your internal project manager has years of experience and “enough time” to devote to the ERP implementation, hiring an outside resource can ensure that “enough time to do the job” translates into “enough time to do the job right.”
While there are a number of factors that can contribute to ERP failure, government agencies should focus on the factors most within their control. Organizations that hire outside resources, such as Panorama, to manage their implementation will benefit from the knowledge and best practices that lead to ERP success.