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This is an online forum to share experiences, lessons and learning about the selection, implementation and return on investment for Enterprise Resource Planning (ERP) Systems. We also like to discuss Customer Relationship Management software (CRM) systems, Social CRM (SCRM) & social media, Manufacturing Systems, Supply Chain Management (SCM) systems and Payroll & HR Applications.




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The Most Common Mistakes Incurred in ERP Software Implementations

ERP Failures Provide Valuable Lessons Learned For Others

Enterprise Resource Planning (ERP) software systems are fraught with risk. Planning, deploying or fine-tuning these complex business software systems for your company is such a large undertaking, according to many experts, that these information technology (IT) projects fail more than 50% to 70% of the time. Those are not encouraging statistics.

Just ask government staff at Marin County, California, who filed a $30 million lawsuit against Deloitte Consulting in connection with a four year SAP ERP project that hasn't worked out as planned. Marin County, just outside San Francisco, hired Deloitte to refresh its financial, payroll and HR systems. But instead of solving its IT problems the project allegedly raised a slew of new ones related to the SAP deployment, the lawsuit says.

So what can your business learn from Marin County's experience? Plenty, said ERP consultant Dave Andrews of Cheshire, CN-based Andrews Consulting Group. Andrews, whose firm specializes in ERP deployments from Oracle Corp.'s JD Edwards and PeopleSoft brands, said that the Marin County debacle and lawsuit is not an aberration. Many corporate ERP projects across the nation and around the world have ended up in litigation, splashy headlines and out of court settlements, he said.

"I've been watching it happen for 40 years," said Andrews, who in 2002 wrote the book "Revolutionizing IT", in part explaining how these failed IT projects unfold in businesses. "The same dynamics occur over and over again."

The reasons for the high ERP project failure rate are myriad, he explained, from design flaws in ERP software to complex installation and configuration schemes that allow projects to bog down by involving a virtual and unmanageable maze of feature settings for users. By permitting so many configuration and tools choices, the deployments can become a minefield of conflicting features that never seem to get finished, explains Andrews.

One of the biggest problems, though, is the human element. "My philosophy is that there is a set of organizational dynamics that kick in and push IT projects toward failure, which is particularly strong when a government entity is involved," he commented.

According to Andrews, if a consulting company uses a 'classic' or 'waterfall' ERP implementation approach - which includes a marathon sequence of activities such as identifying the problems to be solved, coordinating people, reaching consensus solutions, selecting software, implementing software, adapting the software to the defined user needs, and getting it to work - it can grow and grow until it almost never ends successfully.

"The underlying problem with the waterfall implementation approach is it's based on a set of assumptions that sound reasonable but aren't true," Andrews said. First, if you ask users what they want, it presumes they'll actually know, and when they don't know, they will become frustrated that they haven't lived up to their responsibilities. "So if you assume this, you're in trouble from the beginning, and most waterfalls do assume this, so whatever you create will be imperfect."

The second serious problem that contributes to organizational ERP project failure, he said, is that few participants realize that their needs dynamically change as conditions change and time passes for the project, but they won't readjust where they are heading. The participants are so focused on reaching a prescribed milestone or getting it perfect, that they fail to see that things are heading over a cliff, he said.

"First, you have to start with different or competing sets of expectations. You can't assume that what you create will be perfect." One method to do this is to better control the scope of the ERP project. "Deployments get caught up in a process," he said. "The end users don't know what they want, but they keep thinking up things so they give their input and don't look foolish afterward. They don't want to make a mistake. Then the consultants are not inclined to discourage them because the longer process means the higher the fees."

"That's the downward cycle that tends to kill most ERP projects," he said. "The problem with Marin County was likely a never-ending chain of changing specifications."

To break this cycle and help your ERP implementation succeed, companies and their consultants need to instead consciously understand that these forces are occurring behind the scenes and then break the massive and complicated projects into much smaller pieces so they can be performed more efficiently.

To do that, though, the executive sponsor or management team has to take a different view, such as implementing a control mechanism to contain the project scope growth which can turn things into a huge mess over time. "You need to set firm time frames. Rather than letting the scope of the project determine how long it's going to take, we let the time frame determine the scope."

A classic comparable and successful model of this is the U.S. space program in the 1960s, Andrews argued. President John F. Kennedy launched the effort in May 1961 by pledging to safely land men on the moon by the end of the decade. Then over time, in progressive steps and through other manned missions leading up to it, the first moon landing was successfully accomplished on July 20, 1969, within that time frame. People work best under tight conditions such as those, he said. That's human nature.

"In an emergency, things have to happen quickly, and they do" he said. "You can't give up accountability for your ERP project to an outside organization. You have to maintain project accountability within your organization." Instead of planning the ERP software project as one massive effort to fix the many problems that ale, a company needs to view it in small increments of never-ending steps toward continuous improvement, Andrews said. "That way of viewing things works much better than the 'one giant leap forward' approach."

"As wonderful as it is conceptually, the SAP ERP product often tends to lend itself to failures because of its sheer size and complexity," he said. "When you combine SAP with an outside organization that is generating it's own consulting revenues and a government agency that is disinclined to appear to have made a mistake ... that's a combination that tends to lead to an ERP implementation failure."

Important lessons, but while these kinds of ERP deployment failures, and lawsuits, are too common, they don't have to happen. To avoid them, though, you have to be proactive.

You have to ask lots of questions of your consultants and vendors, rein in the growth of the project's scope and complete phases in measurable small steps so it has an improved opportunity of being accomplished as planned.

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