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.
To learn more, watch our on-demand webinar, The Importance of Independent Verification and Validation (IV&V).
Written by Christine Thai, ERP Consultant at Panorama Consulting Solutions.