Four tips for starting an ERP project

Cross-posted from SYSPRO SmarterERP blog

There has been a post on the SYSPRO blog on how an ERP system can help a business, and also some suggestions on how to select an ERP solution. But if you have read some of the stories about ERP project problems you might wonder if it is worth the risk. The answer to this is twofold.

  1. The reports on ERP project failure mainly refer to large organizations implementing fairly large projects, and are not representative of projects undertaken by small- and mid-size businesses.
  2. It’s how you approach the implementation that is a significant determinant of success or failure.

So where and how do you start?

The lead up to an ERP project is a good time to consider Eli Goldratt’s Theory of Constraints Thinking Processes, which is a set of tools to help organizations identify what can be done to significantly improve any business system. By the time you start the project you should have dealt with the question “Why change?” Now you need to look at the other questions:

  • What to change?
  • What to change into?
  • How to cause the change?

A number of organizations might think that all they need to change is their business system, when in reality they will probably also change and streamline processes, and realign roles and responsibilities. Therefore I recommend the following steps.

1. Do a business process blueprint.

To answer those “what” questions you need to understand the processes that operate in the business. A process blueprint provides a graphical view of the way processes work, who is responsible for the processes, and the interaction between different roles.  It also helps by creating a view of the business that both IT and business can understand and discuss – a common, visually-based language. From the blueprint you can see more clearly what might need to change (e.g., in terms of streamlining processes), and with a decent blueprint tool you can try out different changes to see what might be most appropriate. The blueprint enables you to identify solution gaps and define integration points between IT solutions.

2. Check that the key project issues are covered

Evidence from many projects shows that there are four main factors that create project problems, and so mitigating them will improve the chances of project success.

Main causes of project problems How to mitigate them
Unclear objectives and poor focus Focus on strategy, involve stakeholders and define project teams responsibilities and accountability
Changes in project scope Ensure project team and all affected staff are aligned to work towards common project goals
Lack of appropriate skills Ensure appropriate skills are available
Unrealistic schedules and poor planning Have a good project manager

3. Plan the project in phases

The implementation project plan describes how the transition from current state to envisaged future state will occur – it addresses “how to cause the change?” Plan the project in phases and implement over time, for several reasons.

  • It’s easier to estimate and manage the budget for a smaller set of tasks than it would be for a ‘big bang’ type of approach
  • It restricts the impact of the change to a smaller number of people, which means disruptions to everyday work can be minimized
  • Showing rolled-out wins will keep people motivated

4. Make sure change management is included
Forrester-change management
The biggest cause of failure in IT projects is not software, it’s ‘wet-ware’ (people). Resistance to change can block even the most perfect plans, so building active consensus and buy-in is crucial. Forrester Research offers the following steps.

Lastly, although you may have undertaken a thorough business process analysis, and done the proper project planning, be prepared for unexpected complications that occur during roll-out. This is especially true for manufacturing businesses with complex processes, and where integration with other manufacturing applications is needed. If, however, you have done the upfront work, you will be in a position to handle these complexities without seriously impacting the project or the business.

What is your experience with starting an ERP project? Have you got any other tips to add?


Project failures as change management failure

Why do we keep re-learning and re-discovering important issues when ti comes to technology innovation?

Over the years, I have seen a number of new technology products introduced into organisations. These were introduced to improve business processes as well as access to information. The projects I have participated in include:

  • starting an Information Centre (IBM’s term in the mid-1980s for …
  • implementing a data warehouse
  • piloting an executive information systems (EIS) solution
  • various ERP and CRM projects

All of these involved a degree of innovation and dispruption to people working in the organisation. Most of them had successes, and all of them encountered problems and areas of failure.

It wasn’t the technology as such that led to the problems and failings – although in the early projects the user interface was a mainframe terminal – but rather the implementation approach and the lack of attention to people factors. In many cases, it wasn’t the technology but the people issues that led to failures.

Recently I saw two articles pointing out that the discipline of change management, so critical to the people aspects of these kinds of projects, may need to be reviewed.

One critic noted that it is management that often fails manage it properly, not taking it seriously enough and handing it over instead to someone else. The other article states that change involves four elements:

  • execution
  • leadership
  • organizational engagement
  • effective governance

Ignoring or down-playing any of these results in sub-optimal (at best) results.

I am now seeing a new wave of technology coming, in the form of enterprise social networking. If it’s seen as only a fad by management, the project will fail. People have got so used to email that getting them to adopt a new platform, like Microsoft’s Yammer, will be very difficult unless the change management elements are managed actively. I work for a technology company that is trialling Yammer, and I’ve already seen comments that indicate people don’t see the need or benefit of changing from something they are used to and happy with. So it’s interesting to see stories of large companies like ABB who are going the Yammer route. I would love to see their change management plan.

If anyone has a case study of an enterprise social network implementation that is implemented, has been adopted readily by users, and is delivering benefits, please let me know.

Implementing ERP more effectively – Part 3

Part 3: Having the right approach and attitude to an ERP implementation

(cross-posted from SYSPRO Smarter ERP blog)

“Change is not made without inconvenience, even from worse to better.” Samuel Johnson

Do you know how complex Microsoft Word and Excel are?

Because Word and Excel look so easy, people under-estimate how complex other standard systems, like an ERP, can be. If business users knew how complex those two Microsoft applications really are, they would be more thoughtful and careful when embarking on a complex software project.

The statistics on ERP project failures are staggering. However you measure it, the figures don’t look good when it comes to software project success. There is a blog dedicated just to software project failures and a recent Harvard Business Review article highlighted the unexpected risks of major IT projects. Ironically ERP project failures keep occurring despite research that started more than 10 years ago on the critical success factors of ERP implementations, and which has been repeated several times since then.

While an ERP implementation is an IT project, it is also much more. Its main drivers and objectives are business-related, and it has a major impact is on people, processes and culture. Some important non-technical aspects of ERP projects were recognized early on:

“…large, complex projects, involving large groups of people and other resources, working together under considerable time pressure and facing many unforeseen developments.”

The way, therefore, to ensure that an ERP project is successful is not just to focus on IT issues but to have the right approach and attitudes. (Having the right people in the right place during the implementation is the topic of another blog series). The following are critical attitudes and approaches for a successful ERP project:

  • Top management support
  • Clear goals and objectives
  • Management of expectations
  • Change management, communication and user education
  • Project/program management

Let’s look at each of these briefly.

Top management support

While top management initiate an ERP project, giving it their blessing to start, the tendency to delegate the project once it is underway should be challenged. Top management needs to remain not only accountable but also responsible for the project. The question of who in the executive team should be the ERP guardian is debated on numerous projects. One commentator has a strong argument that the CEO is the only proper person to be custodian of the ERP system.

Clear goals and objectives

Too many software projects use the metric of ‘on-time, on-budget’ to measure project success, but as a recent ERP project failure showed, if you only use those metrics other important objectives can get omitted, such as customer or user satisfaction. At the outset of the project, before software selection is done, success should be truly and clearly defined. How do we know the stakeholders will be happy? What specific measurable benefits should the system deliver? Put another way – what does DONE look like?

Management of expectations

One reason why a senior executive should be in charge of the project is so that it is ‘owned’ by the business, rather than by the implementation consultants who often develop the project plan. The project’s scope, planned deliverables and schedule have a significant influence on setting expectations.

Deciding on deliverables and schedules without sufficient executive and staff buy-in can produce an environment where legitimate concerns are ignored and distrust is created. When determining the scope, focus only on what is ‘in scope’ (which only implies what is excluded), but also make explicit what is ‘out of scope’ – this aims to avoid those difficult conversations of “but I thought XX was going to be included.”

Change management, communication and user education

There’s a saying in change management:

“Old organization + New technology = Expensive old organization”

An ERP project can succeed or fail through the commitment of the people who use it. Therefore it makes sense to communicate with employees – early, often and in-depth.
I mentioned in a previous blog that one of the aspects of managing an ERP project is how to handle business process changes. A Forrester Research comment on change management was:

Forrester Change Management
source: Forrester Research

“Any business process change is strongly related to personal change — that means your people — and this is often the component that gets shortchanged.”

The change management and training programs should commence in the early stages of the ERP project, not, as is often the case, near Go Live date.

When it comes to training, there are some basic mistakes to avoid.

  • Training should not be considered a secondary, optional aspect of the project
  • Users need to be educated (taught the inner workings and reasons) as well as trained (how to complete a task)
  • Training should be planned for the long term
  • A variety of training methods need to be employed

Project and program management

ERP projects can be complex and long; organizations therefore need to invest in a project management capability. This means they need to understand the principles of project management relating to software projects, and be prepared for the challenges of managing a project.

Projects costs money. Don’t spend the money? Then, as Dr. Phil says, “how’s that work’in for ya?”

Finally, since an ERP project has long-term consequences, businesses need to develop a program mentality when it comes to their ERP application. This is to ensure that the system receives ongoing attention, oversight and support throughout its life cycle.

(Follow Glen Alleman and Michael Krigsman for ideas, evidence and pointers on how projects should be managed.)