When a new system implementation fails, it can be devastating to the bottom line. It takes a lot of time, cost, and effort to start and complete a project. Yet still, we hear about ERP implementation failures more often than we’d like.
Joshua Greenbaum, principal at Enterprise Applications Consulting, knows a thing or two about ERP implementations. He has more than 30 years of experience in the industry and works as an analyst and consultant specializing in enterprise software projects.
ASUG News interviewed him to gain some insight on why these failures happen and what organizations can do to avoid them. In the first of this two-part feature, Greenbaum shared examples of projects he’s been involved with and his thoughts on common misconceptions. This topic is especially important, considering that many companies are currently evaluating a move to SAP S/4HANA.
Sharon: What are the top three reasons an ERP implementation fails? In your opinion, how can organizations avoid these?
Josh: The first is that the complexity of change management wasn’t well understood, well communicated, or dealt with. It’s simple to say, but not simple to do. That can be solved by involving all the stakeholders from the start. Making sure that they are informing the implementation with what really happens in the day-to-day, but also looking at the solution and saying, “Yeah, actually that’s right. That’s the way it should be.”
The second reason is because a company hasn’t picked the right partner. You can avoid this by simply making sure the partnership is solid and fluid enough.
The third reason an implementation fails is because a company believes it is done at the go-live date. You’re not. The go-live date is the beginning. Sprinting toward go-live and pretending that’s the finish line is another big problem that companies run into. You need to think about things like ongoing training or new-hire training.
Sharon: Can you share a few examples of ERP implementation projects that have gone wrong? What could those clients/system integrators have done differently to avoid these failures?
Josh: There are tons, but I’ll share three with you.
I was involved in a project where the organization was essentially sold a bill of goods. The business wanted to break down its silos, and was told, “We have an integrated software product that will ex post facto integrate your company.” There were two complicit parties in the situation. One was the account executive who made a statement like that, and the other was the executive sponsor who bought into it.
It’s just not true. No one should ever accept what they see in marketing literature or hear from an account executive as gospel. A promise that integrated software creates integrated businesses is something everybody should be skeptical of.
I believe a salesperson or account executive should not be fully compensated for a sale until the client reaches some milestone that defines success. To be able to walk away from a sale and have no sense of responsibility for whether it was successful or not is a big problem.
Who’s Got Your Back?
Another good example is a project that had already fallen off the rails and gone through tons of different iterations of trying to restart. It was put on hiatus for a while and eventually brought back to life.
The customer brought on someone with zero experience in IT projects as their project manager. That lack of experience really added a fatal element. If you don’t have the right people, then it’s time to bring on a consultant who can play that role. You need someone who can make sure you’ve got the right stakeholders and the right knowledge. Without that, you are at the mercy of whatever the partner and the vendor can bring to the table. You must keep your eye on the ball continually to avoid getting stuck.
The Scope Creep
There are thousands of these scenarios behind the third, which is the common example of, “We didn’t really understand what we were doing.” You need to have the right stakeholders in the room. You need to make those hard business decisions before you look to implement the software.
The chief danger for any of these types of projects is when a business executive says, “I actually want the software to work just the way the old software worked.” If you do that, you’re doomed.
If you do the hard work upfront, those types of statements come up early enough for someone to shoot them down. Otherwise, you’ll end up with things that keep getting added on until you get this giant hairball that can’t be implemented, can’t be updated, and can’t be used. The ability to really nail down what you’re looking for before you start looking for it is essential.
Sharon: What do you think are the biggest misconceptions about an ERP implementation?
Josh: That ERP projects are not about people, or that somehow an ERP implementation is like building a building. I know of a company that hired the person who built its factory and put him in charge of its ERP project because the executives thought it was the same kind of thing. An ERP implementation is not the same as building a building. We’re building something that involves people. Technology is merely the mediator.
I think another misconception is that for a company to be successful, it must implement the latest and greatest, shiniest object out there. Business owners think they must succumb to the market hype about blockchain and machine learning, and multitenant cloud, whether that’s relevant to their business or not. Sometimes you don’t. Sometimes, in fact, the thing you need to do is update your business processes without the latest technology. You can often do that by rethinking how you’re doing business and working to make things more efficient.
If you work diligently to clean up the quality of your data in your supply chain, it can have a huge impact. That’s basic blocking and tackling. You don’t necessarily need new software systems. You may need some tools to do it, but there’s a lot you can do to improve your business without radical technological change.
One more misconception is that an ERP implementation is going to be easy. It’s not. Be ready for turmoil. Be prepared for the problems. Don’t pretend they won’t be there. Acknowledge them and have the systems in place to deal with them.
Sharon: What are three common factors that lead to a successful ERP implementation?
Josh: Transparency and accountability together. That’s one. The second is having people-centric processes in place. The third is choosing partners carefully. That’s for the software vendor and the implementer.
Read part two of our interview with Josh Greenbaum, where we cover what steps you should take before an implementation and how to choose the right system integrator and implementation partners. We even have some tips for setting checks and balances before you start a project.
Are you asking some of these questions as you plan for your SAP S/4HANA implementation? Attend one of our road shows in a city near you.