Johannesburg, 24 Oct 2002
Companies that take ownership, at an executive level, of their enterprise resource planning (ERP) implementations have a far better chance of a successful implementation than a company that simply champions or sponsors the project. This is the view of Stephen Howe, divisional manager of Comparex Tetra, Comparex Africa`s specialist business management solutions division.
A recent report released by The Standish Group reveals that only 28% of all software application development projects in the US came in on time and on budget. The group notes that executive management involvement has moved up to the number one spot as a critical success factor in these projects. Despite this fact, two out of five ERP implementation customers still choose to delegate ownership to the vendor.
One of the worst-case scenarios is where a company nominates an internal project manager at divisional or middle management level to take charge of a corporate-wide implementation project. Invariably this person lacks a 360-degree view of corporate operations and needs, and can only advise the vendor`s project team based on a narrow view of the spectrum, with dire consequences.
I recently experienced an implementation in which a large and successful South African organisation advised an external ERP implementation team that it had no stockholdings or warehousing requirements. The ERP system to be implemented would therefore not take stockholdings into consideration.
Luckily, as it happened, the vendor project leader chose to do a tour of all the customer`s sites nationwide, and was aghast to discover considerable stockholdings - worth millions of rand - at various depots. This necessitated a return to the drawing board to totally re-engineer the project, at a considerable cost to the customer.
Had the customer nominated a senior internal person, preferably at board level, to take ownership of the project internally, this situation might have been avoided.
The difference between ownership and championing or sponsorship is that of responsibility for final outcome. Taking ownership means accepting there is a clear line between best practices and poor practices when it comes to systems implementation, and then taking the trouble to move through the required processes and procedures methodically to prevent the type of disaster described above.
Ideally, once an organisation identifies a need to implement an ERP system, an internal champion emerges to sell the idea to the board. Should the board approve the decision, it then needs to sell the idea across the organisation. It is at this stage that a senior executive, preferably at board level, should take ownership of the project. However, this is not always the case and many companies choose to stand back from the project and allow an external party, such as the vendor, to take ownership of the project. While the client still supports the project and continues to champion it, its failure to take full ownership of the project usually results in considerable time delays and cost increases. This is because the vendor will take considerably longer than an internal project team to discover the intrinsic requirements of the project.
The entire project stands a far greater chance of success if an internal project team is identified up front to play the important role of driving the project internally.
Key tasks for the internal project team include first identifying the key people in the organisation who should be involved in specifying the project requirements and goals to the vendor. These staff members are then invited to an internal workshop where they can discuss and decide on the processes to be included in the implementation in preparation for the vendor`s joint application development (JAD) workshops.
Often, where the internal workshop is not held, staff members arrive unprepared for the JAD workshop. Other factors that affect the success of the JAD workshop are input from senior executives who have a better view of company processes and procedures, and a clearer understanding of missions and goals, than second- and third-tier employees.
The internal workshop is key to the correct specifications being transferred to the vendor. Modern ERP systems are all about simplifying processes, but this cannot be done if those involved in specifying the system up front have not thought through the processes and identified where the improvements and streamlining should take place.
While taking ownership of the project internally leads through to proactive steps that should result in staff buy-in and the ultimate success of the project, choosing to leave ownership in the hands of the external vendor is a passive approach that could have negative consequences. A passive approach fails because it does not pro-actively promote the project internally and leaves the project open to passive, negative influences such as key staff failing to contribute their knowledge and information to aid the successful outcome of the project.
There is no replacement for a proactive internal driver or owner in any ERP project. By driving a proactive internal campaign throughout the ERP implementation, the chances of missing important elements and success factors is greatly reduced.
We have also found that, in most cases, the cost of the project to the customer has been considerably less, and the implementation team has more consistently met the deadlines. This seems to be as a direct result of the team-oriented approach of active co-operation between the customer and the vendor.
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