I’m not a big gambler. In fact, as much as I enjoy a nice trip to Las Vegas, I’m not a fan of throwing away hard earned cash. However, based on the way many CEOs, CIOs, and IT Directors handle their ERP implementations, I may be somewhat alone in my distaste for gambling.
Consider this: given the fact that less than one in four ERP implementations succeed, your odds of winning a hand of blackjack in Vegas are nearly twice as high as that of ERP success. In blackjack, you have a slightly less than 50% chance of winning any given hand, which seems pretty good compared to ERP failure statistics and odds. So rather than putting 7% of your company’s annual revenue down on a single ERP implementation (the total cost of ownership for the average ERP system), you may get a better ROI from playing a few hands of blackjack with that money instead.
If blackjack isn’t your cup of tea, you could also put money on the Pittsburgh Steelers, Baltimore Ravens, Indianapolis Colts, New England Patriots, New York Giants, or New York Jets going to the Super Bowl and still have better odds of success. With 3:1 odds, putting money on the Steelers or Giants going to the Super Bowl seems like a relative sure thing compared to ERP success.
The good news is that your odds of winning in an ERP initiative are greater than the odds of the Denver Broncos or Buffalo Bills going to the Super Bowl. The even better news is that it doesn’t have to be this way. Regardless of your interest level in gambling, your ERP project doesn’t need to be such a high risk proposition. Unlike playing in Vegas, you don’t have to stake your job and company’s viability on a losing proposition when there are, in fact, several things you can do to tilt the odds to your advantage.
Three Things That Will Dramatically Increase the Odds of Your ERP Implementation Success
1. Develop a Business Blueprint. It never ceases to amaze me how many companies jump into their ERP implementations without first defining their business blueprint. By business blueprint, we don’t mean the system design that your software vendor or VAR will perform – we mean defining your business process and organizational design that the ERP system will support. How will you structure your business operations and roles and responsibilities going forward? How will you maintain and extend your competitive advantage in the market using your new ERP software? An effective business blueprint allows your business to drive the software rather than the other way around.
2. Develop a realistic ERP implementation plan. I would argue that the #1 cause of ERP implementations going over budget and taking longer than expected is unrealistic expectations. When developed by an uninformed or inexperienced internal project manager, most project plans fail to consider key non-vendor and non-software activities, which are the real drivers of cost and time. For example, organizational change management, integration to third party systems, data migration, and business process design are some of the activities that we see many organizations fail to account for.
3. Invest in organizational change management. We can make a pretty strong argument that this is the most important of the three. Transactional-based ERP system training is important, but it’s a relatively small aspect of the people side of the equation. Most inexperienced or technically-focused project managers neglect one or more of the six key organizational change management workstreams, such as employee communications, organizational change impact analysis, and organizational design.
If you are going to focus on just a handful of ways to increase your odds of success, focus on these three. Although there are a number of other things you should do as well – for example, choosing the right software that fits your business, avoiding customization, hiring an effective and experienced project manager, and building an “A-team” of project resources – the above three items will have the most dramatic impact on your ERP implementation. They may be enough to make your odds higher than winning a hand of blackjack.