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Most organizations find that there is a long road between the days of defining an IT strategy and actually realizing the potential business benefits of their ERP systems. Early in the stages of defining an overall strategy and roadmap for their enterprise systems strategy, organizations typically see virtually limitless possibilities and potential improvements for their businesses. But somewhere along the way for most organizations, implementations fall short of expectations, business benefits underwhelm executive expectations and organizations seem to end up a little jaded and less optimistic than they began in the earlier stages of their IT initiatives.
While most of our clients are able to navigate these challenges by leveraging our IT strategy, ERP selection and ERP implementation services, most other organizations aren’t able to avoid the many pitfalls of their ERP software initiatives. In fact, our 2013 ERP Report shows that most organizations fail to implement on time, spend more than they expect and fall drastically short of their business benefit expectations as a result of their ERP implementations.
Other than the fact that they hired Panorama to make their initiatives measurably more effective, what is the difference between our clients and other organizations that fail in their attempts? Surely, there has to be some common lessons learned that you can apply to your organization, right? That is absolutely the case.
Here are a few ways to instill a higher propensity for success in closing the gap between your IT strategy and your actual ERP benefits realization:
1. Be realistic about your ERP strategy and implementation plan. Our ERP expert witness practice area is one of our fastest growing and allows us to reconstruct and analyze some of the most dramatic and highly publicized ERP failures in the industry. One of our key lessons from our dozens of expert witness cases is that unrealistic expectations is commonly one of the first dominos to fall early in an ERP failure, which leads to a snowball effect of failure points throughout the initiative. Most organizations are woefully inaccurate in estimating the time, budget and resources to effectively implement ERP systems – and so are their ERP consultants, system integrators and VARs. The best way to avoid this pitfall is to leverage a third-party, independent consultant, such as the Panorama team, to help define a realistic and comprehensive implementation plan that is more designed to ensure success than to close the deal for you to buy a certain vendor’s software.
2. Benchmark against other organizations. One of the ways that we help our clients develop realistic implementation plans and budgets is to benchmark against other organizations like theirs. In addition to our extensive experience implementing Tier I and Tier II ERP systems for hundreds of clients over the last several years, we have researched thousands of ERP implementations across the globe since 2005. These qualitative, quantitative and experiential data points are unparalleled in the industry, which is one of the reasons that our clients’ ERP implementations have such high success rates compared to the rest of the industry. When setting expectations for your own ERP implementation, it is important to leverage reliable data points such as these.
3. Realize that execution is harder than most would like to admit. ERP success is by no means guaranteed or even likely, even with an airtight ERP implementation plan. Simply put, ERP implementations are long, drawn-out and tough initiatives, often with many casualties along the way. Unfortunately, most organizations are not conditioned or experienced enough to handle the pressures, complexities and unpredictable nature of such initiatives, which is why the smart ones turn to outside help in executing against their plans. The problem here, however, is that most ERP selection consultants don’t know how to implement and most other ERP consultants and system integrators aren’t very skilled at it either, which doesn’t leave many compelling options in the market. The only good solution here is to recognize that your ERP implementation will be difficult, so take the time to find the most experienced and reputable partner in the market to help execute.
4. Your likelihood of success will come down to business process reengineering, organizational change management and project management. Our ERP selection competitors all myopically think that choosing the right software is the key to success, while ERP vendors and VARs think their technology will enable success, but the unfortunate reality is that neither will make a material difference in your chances of success. Admittedly, choosing the right software and technical resources is important but there are plenty of good ERP systems and technical resources in the market, meaning these variables aren’t likely to be your biggest obstacles to success. Instead, remember the things that are proven to have the biggest impact on ERP failure versus success: business process reengineering, organizational change management and project management. Also keep in mind that most consultants will try to tell you they do these things but assess their methodologies and thought leadership in these areas to determine for yourself whether or not they can handle these important facets of your ERP implementation.
5. Connect the dots between IT strategy and your ERP system. ERP systems alone aren’t worth a penny if they don’t deliver business benefits and help you achieve your strategic goals. This business focus often gets lost or isn’t properly defined along the way, leading project teams to drift during implementation. Literally every decision you make regarding the selection, implementation and optimization of your ERP system should somehow relate back to your overall IT strategy. For example, if and when you start getting internal pressure to customize your system, let your IT strategy and plan provide the decision framework you need to make an informed decision rather than going with your gut. A well-defined IT strategy should serve as a useful project governance framework throughout selection, implementation and beyond.
Defining an IT strategy may sound like an academic exercise more suited for large, billion dollar organizations with plenty of resources and consultants on staff to help. However, this process can be efficient and effective for any organization that hires the right consulting partner. Further, an integrated approach to transition into an ERP selection and implementation process is key to ensuring your organization is able to connect the dots between your defined IT strategy and ERP benefits realized.
Learn more about our IT strategy and selection services by downloading Chapter One of An Expert’s Guide to ERP Success.