David Caruso: ERP is in a league all its own
David Caruso -- Manufacturing Business Technology, 7/1/2007
While doing some research for an executive-level presentation recently, I came across some fairly sobering factoids about ERP implementation failures. I characterize it as my "shock-and-awe" moment.First off, I found one research report stating that 70 percent of ERP implementations fail. Sadly, I also found several others showing that more than half of all IT projects are deemed unsuccessful, or don’t achieve their targeted benefits. Ouch!
What amazes me, however, is that I can always count on someone somewhere to put lipstick on the pig when it comes to a pitiful state of affairs like this. In this case I didn’t have to look far: The pig sat right in my in-box. It was in a news magazine, and took the form of an opinion piece about the very 70-percent failure rate I was lamenting. But wait—this gets better.
This particular pundit looked at the failure problem in baseball terms: If ERP fails 70 percent of the time, then 30 percent of the time it is successful. Mathematically, 30 percent is the same as a Major League Baseball player batting .300. Now for MLB, hitting .300 is pretty good.
Oh come on—what kind of rationalization is that? I think .300 is an appalling result for a major strategic manufacturing investment. I can’t imagine telling a manufacturing exec that his ERP undertaking has basically a 2-to-1 likelihood of failure, and they should feel good about it.
Now I hope at this point that Manufacturing Business Technology readers are on the same side of this argument. Failure is not an option. Coming up short on targeted business benefits just isn’t acceptable. Yes, maybe some attributes of ERP success have a reasonable amount of elasticity—e.g., time—and some shortfalls can be accepted or corrected, but outright failure or a wide miss of benefits is totally unacceptable.
So what do I suggest you do to keep from becoming part of this statistic?
I see three pragmatic things:
· Make business benefits the sole criteria for determining success. Stop looking at ERP implementation as a series of tasks within an IT project. Define the expected results of the organization’s ERP project in terms of the benefits each group will derive and the way each measures success. After the basic software start-up—i.e., technical implementation—take the series of steps that leverage the system and actually make the process changes and performance improvements. These process changes and a focus on productivity are the vehicles that will help you achieve fundamental business benefit.
· Understand the capability and maturity of the organization. Be realistic, compare the people and process to best practices, and assess just how much it will take to motivate people and move the culture. Let people know the clearly set expectations, and use an executive call-to-action to frame and underscore the message.
· Organize for success. Use a Program Management Office (PMO) to focus resources on the goal at hand. Make sure it’s not just getting project status reports, and that measuring and communicating the delivery of business benefits is seen as a natural part of the PMO business process. Your ERP project may be the most important activity for the company—not a second job.
Anyone who thinks that rearranging the ERP deck chairs is okay doesn’t belong on my team. I don’t know about anyone else, but I would never let this be my legacy…
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