Over the past year, I’ve had the opportunity to speak with several CIO’s who have lost their jobs over a failed ERP implementation. Initially, I thought it was unfortunate that these individuals were blamed for a project that went awry, but later I realized these individuals had the responsibility and power to deliver a robust business system and failed to meet the challenge.
We’ve all seen or heard of ERP projects that were not delivered on schedule or budget, so it’s obvious these types of projects are not easy to deliver. Curiosity eventually got the best of me, and I set out to find the answers as to why ERP implementations have so many trials and tribulations.
To prepare for this article, I posted two questions on LinkedIn asking members to give their opinions regarding why they believe most ERP implementations fail. Responses were received from around the world, and the information was extremely informative. To my astonishment, half of the responses were from business people, and the rest were from IT folks. Several of those that responded mentioned that when budget write-offs occurred they were typically in the tens of millions of dollars and that the overage was related to the loss of their job.
What I found fascinating is that all of the respondents had similar views on the problems faced, and it became clear that many companies have been bitten by the ERP hornet. I then divided the responses into high level categories to get a better view of the issues at hand. These categories are shown below in the order from the highest to lowest number of responses:
- A misconception of business expectations.
- The lack of top level leadership involvement in the project.
- Business processes were not correctly redefined and continued to be inefficient.
- The impact of the organizational change was not addressed properly and caused a major upheaval in the company.
- The vendor wasn’t managed correctly and over-promised, then under delivered.
- Project management was weak and over-customizations lead to increased scope and time.
- The integration of diverse applications was harder than anyone expected.
As the data came in and the research unfolded, it was amazing to see that all of the respondents indicated that the No.1 reason for not delivering ERP applications had to do with missed business expectations. A close runner up was missing key individuals in the group of stakeholders. Participants went on to say that someone needed to be accountable for each application that would be involved in the integration effort and that misstepping in this area equated to not having a total commitment for the initiative.
Another theme was the impact of organizational change; specifically underestimating the effort it takes to redefine business processes and the programming time it took to develop these new processes into an ERP framework. The business folks indicated the level of involvement needed from them came as a total surprise.
Yet, another overlooked theme was the business and IT stakeholders needed to understand that they had to be present at steering and governance meetings and that their presence showed solidarity to the effort. Ongoing steering committees help to communicate the project’s highs and lows, as well as having the stakeholders present to help make critical decisions.
And last, but not at all least, project management of the effort cannot be taken lightly. During the research, I had the pleasure of speaking with a company that spent 1.5 years on user requirements, business process redefinition and data gathering. The end result was that the ERP effort had actually gone reasonable well—a little delayed, but overall, the business was happy with the final delivery of the application and efforts by the entire team. I’ve always been a firm believer that if an effort is planned correctly, the end result is usually attainable.
In performing this research, the lessons that I’ve learned are that when starting a large initiative such as an ERP implementation, it is best to spend ample time on the beginning stages of the project’s lifecycle, ensuring that the business is entrenched in the requirements gathering and in setting expectations across the organization. These expectations include the involvement of all project participants and the need to have key stakeholders as active members of the group.
No matter if you are in the throes of an ERP implementation or if you’re considering taking on the task, the above information is a small portion of the work effort needed and will hopefully arm you with the details to minimize the potential of having you become another casualty of an ERP implementation.
Sue Bergamo is the former CIO at Aramark’s WearGuard & Galls companies. She can be reached at [email protected].