In late June, the Royal Bank of Scotland experienced one of the biggest enterprise software failures in recent memory. As a result of their botched upgrade implementation, customers were unable to make or receive payments for several days, which resulted in significant customer service issues, to say the least. While most ERP software failures are more moderate in nature – either because they take longer than expected, cost more than expected, or fail to deliver expected business benefits – RBS demonstrates the extreme consequences of a troubled ERP implementation.
According to our 2012 ERP Report, most ERP projects have issues related to implementation cost, duration and/or actual business benefits realized. Regardless of whether an organization is implementing SAP, Oracle E-Business Suite, JD Edwards, or solutions from one of the leading Tier II ERP vendors, our research and experience shows that all ERP implementations are just as likely to hit rough patches, regardless of the specific software. These factors alone can certainly cost the job of the responsible CIO, CFO or ERP project manager, while a failure as significant as that of RBS is even more likely to do so. So what is a CIO or CFO to do to ensure that they don’t lose their jobs at the end of their grueling ERP implementation? Here are four tips to ensure that your ERP software project succeeds and your CIO, CFO or project manager aren’t fired at the end of the implementation:
1. Follow a proven ERP implementation methodology. In the case of RBS, it appears as if the implementation project team did not adequately test the system within its business processes. The most successfully implementation projects follow critical best practices that help mitigate risks such as the ones experienced by RBS. For example, our implementation projects typically involve two to three iterations of data testing and conference room pilots to avoid the pitfalls that seemed to impact RBS.
2. Business processes should rule your entire ERP implementation. In addition to testing, business processes should be the foundation of several implementation activities. For instance, organizational change management, training and benefits realization all are dependent on effective business process management, so it is important that organizations don’t simply fall into the “we’ll let the software tell us how we’re going to run our business” trap.
3. Don’t forget to address ERP implementation risk mitigation. Our research shows that 54-percent of organizations have some type of operational disruption at the time of their ERP go-live, such as an inability to ship product or service customers. Any implementing organization should have a “Plan B” in case the implementation doesn’t go as planned. For example, manufacturing companies often will ensure they have plenty of raw materials in the days and weeks leading up to the go-live in the event that they experience an operational disruption.
4. Remember that organizational change management is the #1 factor that will determine whether or not your implementation is successful. The physical ERP software is obviously important to the success of an implementation, but not nearly as successful as organizational change management. Without the right levels of buy-in, support, and understanding from key employees, even the best software in the world won’t protect organizations from the level of difficulty experienced by RBS.
ERP implementations are challenging and every so often, they lead to the disastrous results experienced by RBS, often costing someone their job(s). However, with the right methodology, focus on business processes, risk management processes, and effective organizational change management, CIOs and ERP project managers will increase their likelihoods of saving their implementations – and their jobs. Read more about preventing ERP failure in our e-book, An Expert’s Guide to ERP Success.