Years ago, as a new sales associate, I watched Olie Wight’s MRP videotapes sitting in the library of IBM’s Harrisburg office. Little did I realize that I was viewing the recorded birth of an approach that soon would generate billions of dollars of revenue for my company and thousands of other hardware, software and consulting organizations. The opportunities promised by ERP systems seemed limitless: increased productivity, quality, sales and customer satisfaction and reduced headcount, inventory, cycle times and stock outs.
Of course the path to nirvana was not always smooth. In time, enthusiasm for ERP turned to fear as stories of projects gone wrong made headlines. In many cases the real villains were not the ones whose reputations were tarnished by the spectacular headlines that the trade journals published. There was plenty of blame to go around. Today, most companies who are considering installing new ERP systems and processes approach the project with cautious optimism. The past headlines have helped to temper much of the irrational enthusiasm of ERP. Today, only the most “out of touch” and hands-off executive would approach an ERP implementation without a significant amount of due diligence, planning, advisory services and resources.
The Four Macro-Ingredients of a Successful ERP Implementation
I have had the opportunity to sell, purchase, consult and implement supply chain solutions for over 30 years. I’ve been responsible for leading and supporting ERP projects for almost 20 years. While this article is not intended to list all of the activities and practices necessary for managing a project, I’d like to share what I feel are the four key macro-ingredients of a successful ERP project:
1. Organizations must ensure they have the right skills applied throughout the full project lifecycle. Despite my years of experience, even I do not possess all the skills necessary to execute a successful ERP project. Many different skills are required at different times throughout the project.
2. Organizations must select the appropriate ERP software package to support their unique business requirements. There are over a dozen factors to consider when selecting an ERP software package and a competent consultancy to help implement.
3. Organizations must develop and execute a well-designed project plan. Effective project management requires a clearly defined and communicated methodology and plan, as well as the desire by the extended project team to execute both.
4. Organizations must have an unwavering executive commitment to the project. Senior management needs to be hands-on in decision-making, commit to the companion ingredients necessary for success, and provide the required resources to secure these ingredients.
So can an ERP project be successful without all of these four major ingredients? Yes. Software can be quite inadequate but gaps can be filled with custom code. One can get lucky and pick a package that is a good fit by simply knowing what similar companies have successfully implemented. “Hands-off” executives can turn the project over to a competent consultant who will be paid handsomely to manage the project, configure the system and train the users. Stubbornness, brute force and a “fix as we go” mentality can drive to a scheduled “go-live,” never turning back, even when plagued with software bugs, data issues and process flaws.
I experienced this last “exception” when I was asked to consult on an ERP project for a previous employer, a large consumer goods company. I was asked to provide on-site IT leadership for a $300 million division that planned to implement a niche ERP system. They were actively recruiting a full-time IT director. A brand new project manager was assigned from the corporate shared services group. For approximately one month before a new director was hired the project team analyzed the “as is” processes, began to identify the requirements and documented the software gaps. I attempted to put some structure around the vendor’s project plan while suggesting to the inexperienced corporate project manager some tasks and documentation that would provide additional rigor to the effort. The new director arrived with significant experience with the software and vendor. Her knowledge prompted several customizations to the software which increased the scope of the project. However, her experience was a great asset to the project and the division.
The CFO had experience with a previous implementation at another division. His executive leadership was invaluable in driving decisions. Countless detailed decisions including master data definitions and codes were facilitated by him in group meetings. I had not previously seen this kind of hands-on commitment from an executive in a similar position.
The vendor responded promptly to requests for customizations. The vendor’s experienced staff was quite competent and provided excellent training across all disciplines. Despite the positive attributes of the extended team I was frustrated with the lack of sound project management practices. My contract ended two weeks before the scheduled go-live. Data and transaction conversions from the existing system were still not validated and testing was incomplete. Though I recommended the go-live be delayed, the project went live as scheduled. There were significant problems, but none serious enough to require the execution of a fallback plan. The project was considered a success.
Today I am still amazed that this ERP project was successfully accomplished in 3 ½ months. The project had strong executive commitment, excellent skills and strong support from the vendor, the business and the new IT director. The niche software was reliable, functional and an excellent fit for the business. But, and despite my efforts, the project management practices were well below average.
So the lesson learned is that if three of the four macro-ingredients for success are superior, that maybe, just maybe, that fourth ingredient can be below average and you can still succeed. But I wouldn’t bet on it!
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