Post by: Ron Mondor, President & CEO
While I was having lunch the other day with the CEO of a mid-size manufacturing firm (we’ll call him Joe), one of our discussion topics was his firm’s history of failed enterprise resource planning (ERP) software implementations. Over the years, his company spent several hundred thousand dollar (yes – that’s multiple $100,000) on implementation projects that either failed or only partially succeeded. Being in the IT and software industry for more than 20 years, I’ve seen a lot of successful and not-so-successful ERP implementations. It’s become a life-long passion of mine to improve the outcomes. Eager to learn what I could from Joe's experiences, I pressed him for details.
What Joe first told me came as no surprise. He and his management team were wooed a couple of times by overzealous salespeople who oversold their products in very convincing demonstrations, along with assurances that all their needs would be met. As is all too common, once the deal is done, the commissioned salesperson moves to the next deal and the implementation consultant rolls in. The customer typically starts to suspect that their expectations were set too high as the detailed analysis and design work gets underway. Soon the implementation consultant is documenting the design, detailing what’s possible and where there are gaps. The customer's expectations at this point are typically adjusted and, depending on how close expectations are to reality, the project may go onto a successful completion or, in the worst-case scenario, be suspended pending litigation.
Having experience on both sides of the fence, as an ERP software customer and as an ERP vendor, I have empathy for both parties in this situation. The customer often has critical business issues that need to be addressed in a timely manner and is eager to get new software in place. As a result, they will often circumvent a proper ERP selection process and make a hasty decision based on their perception of the salesperson and the demonstration. The commissioned salesperson has quota to meet and takes pride in his work – failure is not an option. Plus salespeople are often pressured, due to urgency expressed by the customer, to make a big impression. Having inquired about the competitors, the salesperson knows who he is up against and that they are likely to oversell the virtue of their solutions. Believing in his solution and wanting to ensure the potential customer makes the best possible choice, even the most honest salespeople may set the expectations too high. The lesson here, as a customer it is imperative that you go through a proper ERP selection process and make an informed decision. The cost and risk to the company is just too great to fast-track this decision.
The second thing Joe told me was very interesting and showed that he and his staff arrived at a level of enlightenment that few achieve. He shared that one of the main reasons that previous projects failed is that the company underestimated the effort and didn’t commit the required internal resources. To steal a line from George Costanza on Friends, “It’s not you, it’s me.” In essence, he shifted some of the blame away from the vendor to themselves.
Along with a significant dollar commitment, implementing ERP software must involve engagement of internal resources. In my opinion, if a company is not looking at reengineering internal process and procedures as part of the project, there are not going to realize the full potential of their investment in ERP. Reengineering processes requires complete commitment and lots of work. Expecting a few key staff to take on this responsibility in addition to all of their existing day-to-day activities is unrealistic. Ultimately, it leads to burnout of the staff involved, delays and less-than-satisfactory results. Despite our recommendations, we see this scenario play out far too often. Often when a project drags on, we must take on more responsibility, doing work originally earmarked for the customer and spending more time on project management and administration. This leads to additional fees for the client and less ownership of the project.
The good news is that following a few best practices can dramatically streamline the project, eliminate cost overruns, and improve the outcome. The most important piece of advice I provide is to re-allocate some of the day-to-day tasks performed by the people who will play a key role in the project, even if it means hiring temporary help. If that’s not feasible, engage an experienced project manager and empower him/her with authority and responsibility for managing the project from beginning to end. Ideally you want a project manager that is intimately familiar with your industry, or better, your business. The downside of this option is that the project manager will walk out the door at the end of the project, along with all the valuable knowhow.
Ultimately, I would like to say to all my customers, "It's not you, it's me – and here is what I am going to do to make it right.”