With 25+ years in the ERP world, working with Small and Medium-sized businesses I’m happy that the vast majority of the implementation projects I’ve been involved with have been successful.
However, the historical record of the industry overall is not impressive:
Some sources report that 50-75% of all ERP (Enterprise Resource Planning) implementations are categorized as failures. Sadly, despite significant investments of time, resources, talent, and money only 21% of companies fully realize the anticipated benefits. My observations give me a deeper evaluation.
Very few implementations are outright canceled where the ERP software is never deployed. While this number is small when comparing it to the entire landscape, 25% is still a huge number. The vast majority (another cumulative 50%) may be using the software but have serious frustrations and misgivings about the process. Most still believe in the software selection they have made but believe strongly that the consulting firm they selected and if being honest, themselves, are the reason for their low achieving results.
In my experience, about 25% of companies I have been involved with are highly successful, have achieved almost all their goals, and believe the business has improved due to this very challenging endeavor.
What makes the difference? How do you ensure you don’t end up investing only to be unimpressed and unhappy? Let’s look at a few important things to consider.
1. FOCUS ON WHAT MATTERS MOST
Consulting companies love what I refer to as 'The Big Bang' or projects with many, many, many moving parts involved. This is how implementation projects explode into huge whales, with massive budgets, and possibly multiple-year implementation timelines. Along the way, they typically have scores of change orders, and everything is of the highest priority. Too often it is said, “We can’t possibly go live without this.”
Smart companies, those that are truly successful, start small, they focus on what matters most and they are ruthless to not allow good ideas to push budgets and timelines. They stick to their initial plan. All the other ideas are good, but focusing on what matters most delivers a target that can be hit. It’s far easier to add additional functionality, automations, integrations, and more after the base system is up and operational.
2. RECRUIT THE RIGHT TEAM
Selecting the right consulting firm, making certain executive leadership is involved, and selecting internal project leaders are of the utmost importance. This collective is the team that will execute your implementation plan. They make the decisions that ultimately control the budget and the timeline; together they deliver the functionality end-users will benefit from and the business value everyone desires.
Their chemistry is important. Their commitment to one another is important. Their commitment to the project plan is imperative. Their purpose is not to up-sell or request new additions to the project. Together they hold the line, insist on adherence to the basics, and focus on what matters most.
In my experience whenever there has been executive-level participation from a CEO, COO, CFO, President, or Vice President, projects perform better. Elmer Sealy was the CEO of his company. He attended every check-in meeting, and he was highly involved in every issue. I still remember that before the go-live weekend, he traveled to every location and spoke to all his employees about the change they were about to experience. He was committed and he knew they would be successful. He believed in the process, and he invited all of them to go on the journey with him. That was leadership. His company had teamwork from the TOP to the bottom, he made sure of it. Elmer and I are still friends to this day.
3.INSIST ON SUCCESS
My mentor, Forrest Koch had a saying, “I’d rather have no chance for failure than a chance for success.”
Projects that fail, plan to fail. They have a failure plan. Successful projects have a plan to win. A project plan cannot be a list of everything a company’s employees might want to do. It must not be filled with imaginary priorities, or any collection of buttons, bells, and whistles to make work easier. A good plan is a simple plan.
An ERP implementation is like running the rapids of a raging river. Sometimes without warning the currents surprise even the most skilled river-rat guide. Why, because breakdowns just happen. They are just there, when you least expect it, under the water many rocks can’t be seen. Missing the big ones on the surface is relatively easy, you can see them. What you do, how you react, and how prepared you are for adversity; that is where success is born.
4. GO BOLDLY FORWARD
Star Trek the TV show introduced us to the phrase, “To boldly go where no man has gone before.”
What I draw from this phrase is the act of going boldly into the future. I’ve seen success-minded companies do this time and time again. They move forward, not back. They embrace change, not for change's sake, but because they must ultimately survive and thrive in the years ahead. It’s going forward, stepping into a new way of doing things, insisting on change for the better.
Some of the longest projects, and the most expensive projects, have all had something in common. They have tried to make the new system work just like the old one. This is never a good idea.
With confidence, I can say that every business owner who has tried to do this has someplace near the end of the replication endeavor wished they had never done it. I've heard more often that I want to, “We should have just used it out of the box.”
It's important to fully embrace the decision to implement a new ERP. It will be different, processes will have to change, and employees will have to adopt new skills and learn new ways of doing old things.
Encourage the change agents in your organization to help everyone else step into the future and embrace the change. Some people are just built to Boldly Go. The rest of us love the way it was and rely on the routine; it’s comfortable and we will drag our feet if enabled. It’s important that we boldly go forward and not try to turn the new one into the old one.
5. REQUIRE THE HUMAN TOUCH
In his song Human Touch, Bruce Springsteen says, “I just want someone to talk to and a little of that Human Touch.”Keep in mind, that these projects are all about the people. We humans have lots of problems. Most of them are with one another. Projects can fall prey to all sorts of human problems. Let me share with you how to ensure that the project's human touch is a good one. The right human touch on the project will deliver huge benefits.
Put the best people on the job – Too often it’s the supervisor of a department that ends up on the steering committee or the project team. It may seem obvious but it’s more important that the absolute best person in a department with good technical skills in addition to departmental knowledge is needed. That is not always the manager.
Remember Internal Resistors – While most employees will get behind the endeavor, especially with good executive leadership (like my friend Elmer Sealey), you can count on the fact that there will be detractors. My approach has always been to identify who the leader of that group might be. The executive sponsor should personally recruit this individual to a member-at-large position on the project team. They need to be included and well-informed so that they become an opinion leader for the project’s benefit. If not included, they can easily become the one bad apple.
Build a Cross-Functional Team – The biggest challenge for cross-functional teams is breaking down ‘silo’ mentalities. It’s important that members of this team can represent their departments, but they must also see and represent the importance of other departments in the company. Success is about the entire company, not just one department. You want the superstars, but they must be mature enough to support others.
Stay Committed to Budget Lines – Even in highly successful ERP projects there will develop a desire by someone at some time, to save some money, cut some costs, and deprioritize something initially thought as part of the success formula. It might be someone from accounting or finance but that is too obvious. It can be someone from any department who is impacted by knowing how much the overall effort is taking; they are motivated to cut costs. Things such as user training, or consultancy almost always head that list. Cutting end-user training always has negative outcomes. One result of not enough consultancy is missing something that a professional would not miss.
ERP is not a computer system; it’s a people system.
In Summary
There is ample evidence that successful ERP implementations do exist. They are well documented. Your project can also be successful and deliver bucketloads of value to your business, its employees, your customers, and vendors. It can become the foundation upon which you add many, many more integrations and automations for a generation.
Make up your mind to do a few things well and you will achieve success:
- Focus on what matters most.
- Recruit the right team.
- Insist on success.
- Go Boldly forward.
- Require the human touch.