ERP nightmares and attendant lawsuits have made headlines over the years, giving concrete evidence of Gartner’s analysis that approximately 70 percent of all ERP projects fail.
While the software industry continues to develop improved technology capabilities and customer service, additional findings from Gartner show these enterprise business initiatives are fraught with unmet expectations, budget overruns, missed deadlines and lost opportunities.
What are the root causes of these failures? While every implementation project has its unique differences, the common threads that we see in our ERP rescue projects point to the need for:
- Better preparation and expectation setting PRIOR to engaging with a software vendor. This includes a fully scoped project charter; comprehensive design of the future state business processes; and a business case that includes tangible process efficiencies and performance metrics tied to financial results;
- During the implementation, a constant focus on proactive risk management and change management concerns coupled with independent project management disciplines and well-defined software vendor escalation channels.
The primary mission of the software implementation vendor is to configure the software and reach the go-live status. The challenge for the customer is to successfully navigate through the implementation with confidence of achieving an on-time, within budget project that also realizes the stakeholder expectations of success – let’s be honest, is that realistic for your company given the 70% failure statistic?!.
Engaging the services of an independent consultant, on the other hand, who is focused on mitigating implementation risks, proactively managing change, constructively holding all resources accountable to meet stakeholder expectations is a strategic investment positioned to deliver success to the project that enables the intended and lasting business transformation expectations.
Characteristics of an Independent Consultant You Can Trust
The right independent consultant must have your best interests in mind and must tie their success to your success. They must bring industry expertise, have solid project management skills, have a comprehensive change management methodology, and maintain significant knowledge of software vendor strengths and weaknesses coupled with professional relationships with the vendor’s chain-of-command to drive appropriate escalation and priority for issue resolution. Such consultants consider your culture and look forward within the overall plan of activities to proactively identify potential risks, and mitigate those risks before they become obstacles which disrupt the flow of the project.
The goal is to partner with an independent consulting organization that you can trust to ensure the project is firmly focused on business process transformation and industry best practices that are aligned to deliver the future state expectations. Thus, independent consultants with these key characteristics complement the team by bridging the gap between the software vendor’s goal of an eventual go-live and your company’s goals that include achieving business efficiency, best practice adoption, competitive advantage, and lasting transformation.
From the beginning of the project, an independent consultant makes sure that the desired future state and business transformation goals are built into the solution. The consultant identifies disconnects between generic software and industry best practices and then drives gap-closure activities to satisfy the business expectations. The first signs of “trust” to look for in an independent consultant starts during their sales process before the paid engagement. Look for a clear definition of your business expectations within their methods for delineating how those expectations will be met as part of their statement of work.
It’s key to bridge the gap between the software vendor’s goal of an eventual go-live and your company’s goals that include achieving business efficiency, best practice adoption, competitive advantage, and lasting transformation.
Throughout the project, an independent consultant should constructively hold the software vendor and project team accountable for configuring the software and assuring business processes align with industry best practices which meet or exceed the expectations of the stakeholders. An independent consultant brings those best practices to the table and challenges the software vendor and project team to configure the solution accordingly while avoiding costly customizations. An independent consultant provides viable alternatives for consideration and balances costs and value of closing potential gaps by positioning the team to achieve the ROI expectations within the project scope and budget constraints.
Three Legs of the Stool
To compose a successful project team requires a competent set of dedicated resources made up from: the software vendor – the internal client team – the independent consultant team. Each party brings complementary strengths to the team where each is recognized as essential to the success of the project.
- The vendor brings skills in software configuration and training.
- The client, of course, has the in-depth knowledge and experience of their business.
- An independent consultant brings expertise in industry best practices, change management techniques, proactive risk management and mitigation experience, with constructive objectivity in holding all parties appropriately accountable.
A successful ERP implementation brings all three parties to the table and must be structured to maximize their strengths to deliver the long-term business success expectations of the client.
For All the Wrong Reasons
Project teams will usually name two reasons why they didn’t use an independent consultant during their ERP implementation: (1) too costly, and (2) high confidence in their internal team.
Enterprises often fall into the trap of having a very short-sighted perspective on planning for ERP project costs – they know it’s going to be a lot and they know it is necessary. Let’s face it, an ERP Implementation is expensive and the costs of getting it wrong are astronomical.
Conversely, the value of doing it right, on time, and within a confident budget is also significant. Ensuring there is a realistic and actionable payback to the project provides clarity of purpose and establishes measurable goals for success. Companies that see the costs of an independent ERP consultant as an additional expense miss the mark in many ways. Instead, consider shifting the perspective in terms of what that “expense” delivers: a proactive avoidance of risk with managed mitigation actions, alignment of the software and processes to true business transformation, confidence in realizing the project’s business case with tangible improvement opportunities, not to mention accountability for on-time and on-budget realities.
To the second point, most business leaders believe they have the best team in the business and most often they are right! However, in an ERP implementation, unless those resources have experienced multiple successful ERP implementations in the last few years (and learned from a few failures along the way), the internal team will not have the strategic expertise and knowledge of ERP best practices and will miss many of the other key factors mentioned previously.
Recipe for Implementation Success
Successfully implementing new enterprise technology is more than just dropping in a software package – it requires a comprehensive integration of that technology to transform the business processes and achieve the desired future state business case expectations.
Clearly, achieving lasting results of your ERP Implementation investment is without question. Having confidence of achieving the business case goals and efficiencies of this investment is critical for maintaining the business transformation momentum. Engaging the strength of an independent consulting firm complements the internal team and the services provided by the ERP software vendor thereby securing the investment success of your business transformation journey.
- See how manufacturers can reduce effort, resources, and costs of an ERP selection and implementation project when guided by the right consulting team in Ultra’s white paper, Five Guidelines for Choosing the Right ERP Consultant.
- Learn the key strategies for a successful ERP implementation in Best Practices for an Effective ERP Implementation.