Wednesday, 23 March 2011 08:31

Successful ERP Implementations: Fact or Fiction

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I recently published an article in the Project Times about Project Personalities and the impact they have on the outcome of a project.  In the article I used the word failed much to the chagrin of my employer.  He pointed out that the word failed is too harsh and has many far reaching connotations, and that it should always be quantified.  His comment did get me thinking; what is a successful ERP Implementation and how do we measure whether it was successful or not.

I know there are the standard measurements that can be used:  Was the project completed on time, within budget and in scope?  These measurements only measure the hard facts.  I am not referring to meeting project objectives as stated in the Project Charter or even meeting the scope as defined in the Scope Documentation.  These milestones are often met, completely leaving the vendor scratching their heads when the client is not pleased with the outcome.  I am referring to the soft expectations of the client.

 The client may have a very different understanding of success versus the vendor’s idea of success.  How many times have I heard the following sentiments voiced by vendor’s “they are using the software” or “we have met the project objective” to justify that the client is using the new software and therefore the implementation must be a success.  The fact is however that in many cases this is not the client’s perception of success. 

These expectations are established early in the sales cycle.  The account manager is doing what he/she does best --selling the dream.  It is their job to get the client swept up in the big picture -- what the future could look like.   Sometimes they oversell the dream a little too well and the dream doesn’t fit within the budget, resources, time frame or technical ability of the client.  The client however has “seen” the big picture and somewhere the perception is set that the system is going to do everything.  Of course this is true, the system can do almost anything the client can dream of, but reality dictates what is done.  Resources, budget, scope and time determine what is actually able to be implemented and the size of the gap between the dream and reality is dependent on the client’s perception of the dream. 

Systems have become so much more sophisticated now that it seems it has become necessary to revert back to a phased implementation approach.  During my career I have seen projects go from a phased approach, to turnkey with all the bells and whistles in place and back to a phased implementation.  There is so much that can be accomplished with ERP software in this day and age that a line has to be drawn in the sand or the cost, time or scope of the project would become unrealistic and by default the chance of a successful implementation. 

Managing the client’s expectations while maintaining a realistic face on the project is often left up to the project manager.  However a strong account manager is sometimes better suited to the task.  If the account manager can clearly communicate which part of the dream is actually being implemented then the perception of the client can more closely reflect reality.  When this happens you are able to achieve maximum success -- an implementation which is 100% successful. 

 Below are the percentages which I use to measure the soft success of a project. I believe that ERP Implementation can’t afford to be a downright failure.  The client and vendor have both made far too large an investment in time and cost to merely throw in the towel and walk away.  Therefore most ERP Implementations are deemed successful.  What varies is the percentage of success. 

100% Successful

Every project manager lives for these implementations and hopefully we are fortunate to have a large number in our repertoire of completed projects.  These are the projects where everything is synchronistic.   The client’s expectations are managed, which by default stabilizes the scope, and therefore very few, if any, change requests are received.  The budget is not exceeded and the project is completed on time.  The “Go-Live” date comes and goes without major hitches.  The client’s employees are confident, able to continue with their day to day tasks as if nothing has changed.  You are able, after a couple of days of post implementation assistance, leave the client to continue on their own. 

The proof of the success is that the client is pleased! 

The key to the resounding success of the project rests on the fact that the perception of the outcome by clients, project managers and vendors was precisely the same.  The client fully tested the results and ensured that everyone received the correct amount of training.  Above all the client was an active partner taking responsibility for the implementation, and owning the outcome. 

99% to 85% Success

Realistically this is where the majority of ERP Implementations fall.  In most cases the reduced success rate is due to the omission of something small.  They do not have a big impact on the day to day processing.  The client is still able to implement the new software and process the majority of the day to day transactions without encountering major issues.  However at times the omission can be more substantial and the impact more invasive, and drops the percentage of success down to the 85% mark.  I have found that the more customization that is requested, the higher the risk that the success rate will be in the lower percentage range.  Even with the best of intentions and the strictest testing and stress testing protocol there is usually an issue that needs to be addressed and resolved very soon after the implementation date.  Until one month of processing is complete the implementation should not be deemed ready for sign off.  In most cases it is the sheer volume of day to day processing that places a strain on the custom work that may bring issues to the forefront.  The good news is that addressing the issue is usually a simple bug fix.  Even though the client was an active partner during the implementation, there was a slightly larger gap between the perception of the dream and the reality of the project.  The client and the vendor relationship remains mutually beneficial after the project sign off.

The client is generally pleased with the outcome of the project.  Important transactions can be processed and the system is stable and functioning properly to support day to day operations.    

84% to 50%

This project is going to cost additional resources.  The perception of the dream and reality was completely unrealistic and from the outset: the scope, time and budget were therefore out of proportion and even with the best of intentions this project is doomed.  The biggest issues with these implementations are that the scope becomes a moving target.   Every time the vendor project manager thinks they have established requirements, something changes and the client project manager has to produce a new change request.   The client’s perception of the outcome is unrealistic given the constraints of the project.   If the time for the implementation can’t be extended and the budget is fixed then the vendor is assuming the extensive risk. Most vendors and project teams have the client’s best interest at heart and their intention is to provide the client with the best possible solution -- within the constraints of the project.  The problem though is that no one knows exactly what the end result should be.  It is as if the scope of the project has become merely a suggestion, even though everyone agreed to the objective and goal of the project at the kick off meeting, and the scope document was approved.  The closer to the 50% success rating, the more likely the cost of the implementation budget could double.  Needless to say the negative impact on all involved is substantial.  This is the type of project where the client is unable to perform one or more very important functions.  In reality, these failed projects limp along until the major issues are resolved or everyone agrees to throw in the towel.  The relationship between the vendor and the client suffers permanent damage and in most cases will be dissolved by the time the dust settles.

The client is not pleased with the outcome of the project.  Suffice it to say that the distance between the dream and reality was far removed. 

Below 50%

These projects do not even make it to the “go-live” date.  In these implementations I have found that the dream and the reality are not even remotely the same.  I also believe that the client often suffers buyers’ remorse but the contract is signed anyway and some pressure is made to proceed in spite of all the omens.  The client is not in any way involved in the implementation.  The project managers find it impossible to move the project ahead.  These projects could end in litigation if the contract can’t be dissolved to both parties satisfaction.

Conclusion

It is my opinion that the success rate of an ERP Implementation is directly affected by the client’s involvement.  Where the client has been an active partner taking responsibility for the project and the outcome, the rate of success is much higher than a project where the client has only had limited involvement.  When the outcome of the project is left up to the implementation team, and the clients’ project manager doesn’t have the authority to make the necessary decisions, the project is not able to move forward successfully.

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Hanna Kounov is an ERP Implementation Project manager.  For the past twenty two years she has specialized in the implementation of SYSPRO ERP Software.  The last fourteen years Hanna has worked in Canada for Phoenix Systems, a Value Added SYSPRO partner with four branches across Canada and a branch in Portland Oregon USA.  Hanna Kounov is also a published author.  Hanna can be contacted  at hkounov@pho-sys.com

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